budgeting

Christmas is NOT A Reason To Use Your Emergency Fund

I’ve got a confession to make to all of you. I’m not ready for Christmas. This isn’t one of those typical Midwesterner complaints stating I’m not ready for snow and cold temperatures. It’s really much more serious than that.

I’m not financially ready for Christmas.

Normally, as the leaves start to turn color in September the family budget has a line inserted that reads, “Christmas Savings.” This year, for whatever reason, that didn’t happen. Each budget period I told myself that I’d add it next time. So here we are at the beginning of December and it hasn’t happened yet.

With this realization, my wife went into a full blown holiday budgetary crisis. Where would we come up with the funds for gifts and the normal yuletide spending? We discussed the amount of funds we would need, and options as to where we might find that money. Our eyes met, and we each knew what the other was thinking.

“Christmas is not an emergency,” I said.

My wife threw her head back and laughed.

Neither of us had said it, but we were both thinking of the emergency fund we had sitting in the bank doing nothing. Using the emergency fund for our holiday spending would be a bad idea for a couple of reasons:

1. Real Emergencies : The obvious issue with using the emergency fund for a non-emergency would be, what happens if a real life crisis arose? Our emergency fund would be depleted and we’d then have to scramble to deal with the unexpected expense. We might even have to use credit to pay for the unexpected. HORROR!
2. Extend the Pain : If we used the emergency fund, as soon as the holidays were over we’d have to begin to rebuild it. That would require us to take some amount of money out of our weekly budget to pay back what we had borrowed from ourselves.

Instead of punishing ourselves through a prolonged period of time after the holidays, we decided to take our lumps now. We’re essentially declaring that Christmas is our entertainment for the month of December.

• No outside entertainment (movies, going out to eat, comedy club, concerts)
• No Luxury spending (salon trips, new running clothes)
• Reduce gift spending between each other
• Redirect all entertainment funds towards gifts to our son and other loved ones and other spending that goes along with holiday travel

Our reasoning is, we dug our own hole by not altering our budget, so we’ll dig ourselves out without putting the rest of our financial health at risk.

Have you ever just flat out not prepared financially for an expense you knew was coming? How did you handle it?

Brought to you courtesy of Brock

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Brock Kernin

Brock is a software engineer by day and personal finance blogger at night. He is a fitness junkie and enjoys grilling and smoking meat. Married with two children,  Brock strives to improve his skills as a husband and father, and is always on the lookout to stretch his family’s budget as far as he can.