The unexpected will always occur; however, if we prepare better for them, we won't have to react drastically.
Last week we talked about being too frugal. Yes, it can happen. Most people, however, have the opposite problem: overspending. There's only two things you can do with your money after you pay your taxes: you either spend it or save it. In 2005 our savings rate was actually negative, which means we spent more than we took home after taxes. That means we went into debt.
While The Fed is concerned about rising prices, especially crude oil, one of the members of The Fed, William Dudley, drew sharp criticism when he spoke in Queens, New York last Friday when he excalimed that he thought underlying inflation was low despite rising food an energy prices.