Building Your Cushion
It is good to have some “just in case” money set aside. It is not easy for a one truck owner operator to build the cushion up. I can be compulsive. If I have cash in my pocket, it is easy to spend. When I am low on cash, I find ways not to spend it. My dad always had a $100 bill stashed far away in his wallet. It was not until I was in my late twenties that I knew it was there. We had to go somewhere, and on the way back we were hungry and neither one of had much cash on us. We stopped to eat at a place that would not take credit cards. Dad pulled out this bill that may have been in his wallet for a decade. It was his cushion.
Credit cards are not a cushion. My business credit card has a large limit on it. That is for a major breakdown on the road, and is not a personal cushion. The idea of having a cushion is to avoid going into debt if the unplanned happens. Credit card debt is a barrier to building a cushion.
Building a cushion begins with spending less than you make. Assuming that we are all making as much as we can, it comes down to cutting expenses. One thing that I do is take more food with me, and buy less on the road. I used to eat all of my meals out of fast food places or truck stops. Now, I am on a meal plan. Each meal costs me less than $4 and that includes my beverage. Building a cushion starts with saving.
The best cushions have layers. My first layer is my loyalty cards. Occasionally, I will use them for my morning coffee. Other than that I will use them if I find myself short on cash near the end of the week. My checks are directly deposited. The quicker that I get money out of checking into savings the better. When your savings is above what you need to pay your taxes, consider buying a certificate of deposit. They are available in increments and have differing lengths of time involved. There is a slight penalty for early withdrawal. To me, that serves as barrier to spending it, but is not significant enough to not use for emergencies.
Think about an escrow account. Put more aside than you need for maintenance and repairs. While, I am off now that money is getting used to cover my $180 a week in fixed expenses. Whole life insurance gives you less bang for your buck than term life insurance. In theory, it is a bad investment. It is also a great place to stash money. It is not money that you can see and is difficult to get at. But, it is there if you need it badly enough.
When you bleed the cushion, use the most liquid assets first. Start with your checking account. Then move on to your savings account. I have been using my escrow account to pay for my fixed expenses. I will get out of this one without breaking a CD or borrow from my life insurance. Like, a lot of things in this business, building a cushion is hard, but worth it.