I took a break from my 401k practice this afternoon to make a Costco run. Coffee. Shampoo. Face wash. Chlorine tabs for the pool. Simple in and out visit to Costco, back at my desk in an hour, right? Nope. 5 miles down the road and the tire pressure warning light goes off in my Tesla. In case I was not paying attention, I get a similar warning text on my phone, followed by an insistent beep on my watch.
I limped to the nearest gas station (an electric vehicle pulling into a gas station?!) and proceeded to fill up the left rear tire. I had a feeling things might be dire so I decided to drive back home/ switch cars/ go to Costco and deal with the flat tire later. Nope. I made it two blocks before the tire pressure warning light was back on. When I looked at the left rear tire, it was in even sadder shape than when I had pulled into the gas station.
The tow truck took me to the tire shop as I was not going to make it there on my own steam. And what should have been one $315 tire became two as the right rear was about to go. Add in two lifetime replacement certificates ($118), state required tire fees ($4), disposal fees ($7), install and labor charges ($48), and tax and you get $852.83.
As I walked through Costco afterwards, I contemplated this experience. I am thankful to have the wherewithal to pay for the two tires without blinking or thinking. This might not be the case for someone with constrained cashflow even if they were driving an ICE car with regular tires.
I am grateful the flat tire did not occur while I was driving my wife to one of her Congressional campaign stops. As it was, the flat tire occurred while I was moseying down a main thoroughfare at a reasonable rate of speed. Ending up in the hospital certainly is not on my bucket list.
And finally, the cost of the tires really drove home what inflation is like. As a matter of fact, the $179 for chlorine tabs for the swimming pool seemed like a bargain by comparison. So where does this leave us?
It harkens back to my talk with all 401k participants about the need for an emergency savings. Depending on relationship status and financial needs, somewhere between three and six months of monthly expenses should be held in cash (ie, a savings account). Think of this as the rainy day fund.
Beyond that, folks should save for retirement via one of a myriad of plans designed for just that. If the plan is offered by an employer, take advantage of any match. Regardless of the plan type, save. Give until it hurts. Make the savings amount a stretch goal. Remember that some retirement plans allow the ability to borrow and repay yourself with interest. But this only works if you have saved in the first place.
And yes, we cannot have a savings discussion with a healthy discussion on living wage jobs and the economy. We might even throw in a Universal Basic Income (UBI) discussion as well. It might be worthwhile to expand the Stockton, CA UBI experiment to see if UBI could improve the lives of ordinary citizens.
Depending on the study you read, some 40% of Americans cannot afford a $400 unexpected expense. Given the cost of my two flat tires and the Costco run, I was well over $1,000 when I finally got back home. There may be multiple answers to solving the need to save but one thing we can agree on is that we must start now.