Weak vs. Strong Personal Finances: Impact of Mess-Up

Looking back on our first month of debt-repayment 

When I was just a newbie blogger in July of 2012, only one month into our journey out of debt, I wrote a post about the discouragement I felt after a financial mess and an emergency had compromised our inaugural debt repayment. A repair job on our van, a lack of communication about a property tax bill, and a higher-than-anticipated Visa bill meant that we fell short of our debt repayment goal by $1,500. “I’m surprised at how disappointed I am,” I admitted at the time. Welcome to debt-payoff, Newbie.

DH’s tax mistake 

Last weekend, DH and I did our taxes. (They are due at the end of April here.) I was cooking a double recipe of spaghetti and meatballs in the kitchen Sunday afternoon when I heard an expletive burst forth from DH’s office. I paused in my work and waited to see if there was more to come. There was. A few follow-up expletives built upon the first.

I thought it best not to question DH about the cause of his obvious agitation right at that moment, so I let a number of minutes pass before I asked what was wrong. “I did it again,” he said. “I didn’t put enough aside for taxes. I didn’t factor in the CPP portion.” (Canada Pension Plan.) “How far off are you?” I asked. “About $1,700,” he told me. It was not as bad as I thought it would be, given the energy behind his swear-fest. But DH can be a perfectionist, and I knew that his exasperation stemmed more from frustration about his mistake than about the impact it would have.

“That’s OK,” I said. “It just means we won’t double up the mortgage payment next month.” Our goal for each month these days is to save a set amount towards our emergency fund and to pay as much above our $1,500 mortgage payment as possible – up to a maximum of $3,000. We’ve doubled up for the last two months, and we were hoping to do the same for May. But we weren’t going to be able to manage it, and while that was unfortunate, it was not the end of the world. DH sighed, still irked by his oversight, and kept working on his taxes.

Buffer absorption

A little while later, he came into the kitchen. “Sorry,” he said, suitably humble in light of the foul language.  “It’s not so bad really,” DH continued. “We’re going to be able to double up still.” This was a surprise to me. “And still save for the e-fund?” I asked. Affirmative. “We have buffers from our reserve funds and in my business account,” he reminded me. But I still couldn’t quite believe it. Sure, we had line items on our budget for reserves – to take care of property taxes and household and car maintenance. And I knew that our intention was to have a buffer in DH’s business account too – to keep us relatively steady with his variable income.

But in practice, our buffers always ended up being chronically thin. We would tap into them to cover any number of oversights, and then there wouldn’t be enough to actually pay the property tax bill or to actually cover repairs or to actually even things out through slow business months. Clearly though, somewhere along the way we had managed to build up our reserves. Because here they were – full and ready to serve their purpose.

So we could absorb the $1,700 mistake with barely a ripple. (Apart from the cussing.)

It took a while for this new reality to sink in. And once it did, I experienced a light-heartedness that lingered for the rest of the day – even through the grunt work of my taxes. What a difference it makes to have a buffer or two in place! What a contrast between the impact of an error when we first started out on our debt-repayment four years ago and the non-impact of an even bigger error now!

A sure sign of growing financial fitness is not so much the absence of mess-ups as it is their diminishing impact. I don’t think I ever realized that before. It’s part of the “freedom” of debt-freedom and financial freedom: The freedom to mess up.

Have you ever been surprised by your ability to recover from a financial blooper? Your comments are welcome.

*Photo courtesy of Ryan McGuire.


11 comments on “Weak vs. Strong Personal Finances: Impact of Mess-Up

  1. I always think about what these bumps would be like in the past, before the plan was in place for your money. Much different I’m sure, more stressful. When I lost my job last year it stung, but we knew we would be okay because we had a plan, and savings in the bank. The recovery is in part due to future planning, and wow does it soften the blow when these bloopers pop up.

    1. It sure does soften the blow! Before, I only thought of savings as a way to deal with unfortunate turns of events beyond our control – like possible job loss. But they also help with mistakes like this – totally within our control. Because we’re human, we make these errors from time to time. SO glad they’ve become an inconvenience rather than an emergency.

    1. Thank you! I wonder if you’ll be as disoriented by the positive ripple-effect changes that come with this shift as I have been. (By the way, DH is concerned that now you know he swore last weekend : )

  2. This is awesome!!! I know I would have the same knee-jerk reaction your husband did (I would eventually get over it too). The knowledge that you have the flexibility in the budget and it’s not an emergency is an incredible feeling.

    A lawsuit from a minor fender bender was brought against us several years ago when we were in debt, living on one income and had no savings. Panic is the only word that can describe my feelings at the time. I’m grateful it worked out in the end, but hope to never have that feeling again!

    1. I too hope you never have that feeling again, Amanda. That’s a very stressful situation you’ve described! Imagine that very same lawsuit if you had an emergency fund and no debt . . . It would be annoying, but nothing to cause panic. That’s a place worth getting to.

  3. “It’s part of the “freedom” of debt-freedom and financial freedom: The freedom to mess up.” That was beautiful, Ruth. I admire you guys so much for your commitment to this thing. I have to admit, that $1500 mortgage payment got my attention. Wow!!! Keep up the great work you guys! You have an online fan club rooting for ya’s! 🙂

    1. Thanks, Kay. We upped our mortgage payments when we renewed after paying off all non-mortgage debt. We are being intentionally aggressive with it, and most months, we’re paying significantly more that the $1500 basic amount. We are more than ready to be done with it! I think I can; I think I can . . .

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