The baseline approach you’re talking about it really good–it’s an exercise that we often go through by re-working out current budget to reflect the worst-case scenario (protecting) as well as a goal scenario (planning).

It also helps to play with income shifts (what happens if income goes down 10%, up 10%, etc.>?)

Just flipping that around, going lean for a few months so we could always live on past income changed everything, loads less stress, a lot less hang ups and it sort of kicked off a series of wiser financial decisions.

We lapsed on Christmas this year and when there was a brief moving around of how I was paid it brought all that stress and crazy back in! I can’t believe we used to live like that all the time.

I think a good rule of thumb for taking on things like student loans and homes and such that are extremely difficult to pay from the past is to ask yourself what paying those things off would look like from your “zero” the reasonable worst-case estimation of where you’d be if it falls through for a while. When we had to take a small loan out for a car, it wasn’t based on our finances now, we based it on what would happen if we had to move in with a friend or relative and work a low hourly wage again. It helped keep our spending in check and kept us with a reasonable car payment.

Cars are definitely a really large purchase, but I think it’s a reachable goal for many just by waiting and saving a few years (getting “ahead of the curve,” so to speak).

I agree on the home point, even though it’s as big (or an even bigger) gamble than student loans, because you’re literally talking about the roof over your head. A responsible home purchase with adequate emergency savings is really important.

Glad to have made you think! Don’t ever hesitate to write as much as you want.