Financial independence – unexpected expenses

Lately I’ve had the feeling that we’re haemorrhaging money, although in my more logical moments I can admit this is an exaggeration. We have had a couple of large and major expenses which we didn’t expect.

Last week, our car developed an electrical burning smell, although it still drove. This turned out to require a replacement fly wheel and clutch, and the cheapest we could get this done for was £1,270. We do budget £100 per month for car expenses e.g. insurance, MOT, tax and repairs, but knowing that we have to renew our insurance in January we had to leave an amount in the funds for that, and we still wouldn’t have had over £1,000 anyway.

Yesterday, our solicitors got in touch with our remortgage final balance, which turned out to be around £1,000 more than  the mortgage provider had estimated for us a month ago. This was really frustrating, as I had budgeted for the mortgage provider’s estimate and even saved a couple of hundred pounds more as a safety net, but had assumed that they knew enough about their business not to be £1,000 out. I am hoping that they have not taken our latest payment on 15 December into account and that we might therefore get some of the £1,000 back. But in the meantime, to avoid delaying our remortgage which should go ahead on 2 January, I had to cough up.

This kind of expense is where being frugal really helps out. We already had a partial safety net of savings (car fund and remortgage over-estimate) so we didn’t have to find the full amount of £2,270. We also both have emergency saving funds of around £5,000, so that if this kind of expense comes up, we can take a hit, deplete the savings without causing ourselves any day-to-day hardship and then work to build the savings up again as and when. As it happens, we were lucky in this situation, as we had been saving to get our windows double-glazed, and the company had been really slow about providing a quote and about confirming a date to do the work. So we could take the money from the double-glazing fund and will just have fewer windows double-glazed when the company comes through.

In terms of lessons learned, I will over-budget more strenuously if we need to remortgage again (although this may not be the case). I could also up our monthly payments into the car fund to build a bigger safety net for repairs. However, I’m hoping that this one major repair will now keep the car going for a few more years so will probably not bother for now (given that future major repairs could also be covered from savings). Our car is a second-hand company car so it has done a lot of miles for its age, meaning we didn’t expect it to be risk-free. Now we are driving it more like 11,000 miles per year, its mileage will become more commensurate with its age and we will probably aim to sell it off before it becomes much older than ten years.

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