I’m waxing philosophical right now.

I had an interesting experience recently that involved helping a neighbor that got me to thinking. My wife would have you think that me thinking is rarely a good thing. But I digress.

Day 1 of the Situation

I was asked to help a neighbor that I don’t know move. The family had only been in the home for about three or four weeks as a home tender (or house sitter), so I had only had the opportunity to introduce myself briefly on one occasion. As I was packing the boxes into the U-haul, I learned more about the family’s situation.

Through a series of unfortunate events that occurred about all at once, the husband was left stranded at work. With no hope of anyone going to pick him up, I offered to drive the 30 miles and back to retrieve him. With our gas tank nearly on empty, I had to fill up. We’ve had a few extra expenses lately and so I had to use money from savings in order to pay for the tank of gas as the trip was unexpected.

The tank of gas is a trivial expense in the grand scheme of things. However, it begs the question, why do we have savings? Is it just to reach our financial goals?

Day 2 of the Situation

To briefly continue the story, the family was still working to pack everything into the U-haul the next day. I’ve rarely seen so much stuff in one place (all those years of playing Tetris really paid off). On my way home from work, my wife called and asked if I would pick up pizza for the family and the other neighbors who were helping the family move and clean. Again, we had to use money from savings to pay for the pizza.

Again, a fairly irrelevant expense.

So here’s my point

My wife and I live on a budget. Not perfectly, but we try to manage our money appropriately and save for our needs. But just as life happens to us, we occasionally come across others who have had “life” happen to them. So should you open your savings account to help them out? What if you knew that helping them this one time wasn’t really going to change their situation. In fact, you may even be an enabler. Would you still help?

Maybe a blog isn’t the right forum for this discussion, but I have to start somewhere.

I find myself pretty annoyed and frustrated when I see friends and neighbors make foolish financial decisions and then require the help of others to get by while I don’t get to make the same foolish decisions because I’m too busy supporting my family…and theirs. So should I tell them, “Sorry no. You got yourself into this situation. Now get yourself out.”

And as much as the conservative in me screams, “Heck yeah!” the compassionate in me says, “You don’t know the whole situation. So just help.”

For me, part of the answer has to do with the legacy that I intend to leave my children. I would like for my girls to one day think of their father and how he always helped those around him. I want them to have had an example of giving even if it meant self-sacrifice (as if having children isn’t evidence enough of that characteristic).

My decision is to keep helping

Though, I need to admittedly figure out how not to be so annoyed.

So where do you stand? Are your hard-earned savings and assets intended to benefit only your family? Or do you use them to benefit others, even if they don’t “deserve” it?

One of my colleagues up and quit this week. He found himself in a situation where he felt that he could not advance within the company. So he decided to go to law school.

Fortunately for him, he has enough money in the bank to just quit his job and live off of savings until law school next Fall or until he finds a temporary job. Either way, he was able to walk away from work because he had a “Go to Hell” (GTH) fund.

Basically, a GTH fund is sufficient money in the bank to tell your boss where to go and how to get there and not leave your family destitute. I’m certainly not advocating that you readily quit your job, but having the security that you can walk away if your sanity is being challenged makes life and work a little less stressful.

Is a Go to Hell fund the same as an Emergency Fund?

There are two ways you can create a GTH fund.

1. Use your Emergency Fund – If you are smart, then you already have or are in the process of getting an Emergency Fund that is the equivalent of six months worth of expenses. A fully funded Emergency Fund can act as a GTH fund if need be.
2. Setup a dedicated GTH Fund – Alternatively, you can setup a savings or money market account that is specifically for quitting your job. If you take this route, then you don’t have to touch your Emergency Fund. Although this approach will take longer, it offers additional financial security. Similar to the Emergency Fund, you should have six months worth of expenses saved up.

Quitting your job in style

In the past several months, the media has covered several individuals who sporadically decided to quit. Two of my favorites are: Girl quits job on dry erase board and JetBlue flight attendant goes AWOL. Hopefully, both of these now unemployed individuals had a GTH fund ready to go. If not, these admittedly funny events may turn tragic.

A few tips on quitting your job

Please understand that I use the phrase “Go to Hell” fund a bit tongue in cheek. Meaning, I actually do not recommend that you ever tell your boss that (unless it’s a case of sexual harassment or something similarly egregious). Rather, leave on good terms. When you have had enough, simply hand over a cordial letter of resignation giving the company two weeks notice that you’ll be quitting. Then, work hard and leave with a clear conscious and an unburned bridge.

Leaving on poor terms or with much fanfare, can come back to haunt you. For example, when you apply for your next job, a new potential employer is likely to call your old company/boss and ask about you. The last thing you want is for former boss to give you a negative review.

Also, keep your resume and a cover letter up-to-date. If you decide to leave your employment with short notice, then you’ll want to have your resume in tip-top shape in order to begin job hunting.

Last, take every opportunity to network within your industry. Many times, you will not be switching industries rather just companies. Having a rolodex of friends and colleagues that you can call will help you find a new job or even strike out on your own.

My own situation

I hesitate to disclose too much information, though I think it fair to give some personal background. While I’m not looking to tell my boss to “shove it,” I am interested in pursuing some of my interests on my own. Unfortunately, we don’t have enough in the bank to walk away and dedicate all of my time to my true passions. So we are forced to compromise. I will be spending my evenings for the next several months preparing for and taking the GMAT, writing personal statements, and applying to MBA schools. Once applications are, my evenings will be dedicated to pursuing some side business that will hopefully fund, in part, MBA school.

It’s moments like these that I wish I could dedicate all of my time to my goals and ambitions rather than a minority of my time. Had we created a GTH fund and fully funded it, then like my friend, I could walk away.

What has your boss or company done that made you wish you had a Go to Hell fund?

(Photo credit: Y)

My wife operates a swim coaching business. From time to time, she teaches clients at a local gym. Her membership was set to expire last week. The salesman offered a great deal for both her and I to sign a three year agreement.

First, I could stand to spend some time at the gym. However, in order to pay for my membership (all due upfront), we would have had to use our emergency fund. I’ll be honest, I was very tempted to make the deal. However, it suddenly dawned on me,  ”This is not an emergency!” Although I would enjoy working out with my wife, a gym membership is not what my emergency fund exists for.

This simple event started me thinking about what other things we as consumers are tempted to spend our emergency fund money on that aren’t actually emergencies. So I have created a list of expenses that should not be paid for with money from your emergency fund. I attempted to group them for easier reading.

Disclaimer: I’m not saying you should not buy any of things listed below. Rather, I’m saying that you should save for them and not use an emergency fund.

49 Non-emergency expenses

Activities

1. Date night
2. Vacation
3. Bungee jumping
4. Sky diving
5. Tuition
6. Community classes (karate, art, etc)
7. Crafts
8. Clubbing

Entertainment / Electronics

1. Books
2. Magazines
3. Music
4. Movies
5. Video games
6. Laptop
7. New iPhone 4 (unless you dropped yours in a bucket of soapy water)
8. iPod
9. iPad

Financial (unless you lose your job)

1. Mortgage / rent
2. Insurance premiums
3. Debt (go ahead and argue with me)

Home

1. Indoor plants
2. Home decor
3. Furniture
4. Home improvement (not home repairs)
5. Artwork
6. KitchenAid mixer

Outdoors

1. Tools
2. Lawn care
3. Outdoor plants
4. Vegetable garden
5. Grill
6. Charcoal (is there any other way to grill?)
7. Camping gear
8. Tent

Personal

1. Gym membership (-sigh-)
2. Clothes
3. Accessories (shoes, purses, etc)
4. Make-up
5. Exercise gear
6. Gifts
7. Art supplies

Random

1. Firearms (unless there is a zombie epidemic)
2. Ammo
3. Musical instruments
4. Purchase a car
5. Car seat

Things you shouldn’t waste any money on, ever

1. Gambling
2. Alcohol
3. Cigarettes

Hopefully this list gives you an idea of ways you shouldn’t use your emergency fund. When using your emergency fund, stop and ask yourself, “Do I really need to have this item/service? Am I willing to trade my financial security for this item/service? Is there another way that I can pay for this? Can it wait until I save up the money?” You may just find yourself putting the item back on the shelf.

Is there anything that you would add to the list?

Although many of the principles that I practice and preach are founded in religion, my goal with this blog is not to preach my religion. However, I am a Christian and believe that we will answer one day for how we handle the resources given to us in this life (which includes money). In this post, I want to briefly touch on one particular verse in the Old Testament that holds my fascination.

“Now therefore thus saith the Lord of hosts; Consider your ways. Ye have sown much, and bring in little; ye eat, but ye have not enough; ye drink, but ye are not filled with drink; ye clothe you, but there is none warm; and he that earneth wages earneth wages to put it into a bag with holes. Thus saith the Lord of hosts; Consider your ways.” – Haggai 1:5-7

Little did you know

But God is actually a financial planner. In fact, He was the first to give that age old advice, “S-A-V-E!” What I love in particular about this passage is the phrase, “Consider your ways.” He is inviting us to take a moment to reflect on our financial habits. What that suggests to me is making and keeping a budget! Without a budget, how can I account for my expenditures and find the areas that cause me to, “bring in little.”

It seems to be a commandment to me

I feel safe arguing that not only are we being invited to “consider our ways” but that we are being commanded to. Knowing man’s propensity to self-indulge and the need to save for a rainy day, the Lord has helped us out by giving us this straightforward commandment, which is for our ultimate good.

G.O.K. Fund

If any of you are fans of Dave Ramsey, then you are probably aware of what he calls the G.O.K. Fund – God only knows fund. You can count on unexpected events to occur in life. Not only is the Lord aware of these unexpected events (car breaks, basement floods, broken arm), but He has given us a way out. And that way out is preparing and having an emergency fund. The Lord isn’t interested in seeing us fail even when He allows unexpected things to happen. So let us follow His counsel and be prepared.

Whether you are Christian or not

Take some time today to reflect on your current habits. Have you “sown much, and bring in little” Have you to “eat, but ye have not enough”? Have you to “drink, but ye are not filled with drink”? Do you “clothe you, but there is none warm?” And most importantly, do you “earneth wages to put it into a bag with holes.”

Don’t be the debt ridden person that puts his hard earned money in a bag with holes. Please, consider your ways!

(This article was featured in the 84th edition of Money Hacks Carnival)