HI,
My wife and I got married while I was in the Military stationed in Japan. She is a Philipinnes citizen. After we were married we had that great earthquake in japan and she was able to get a B1/B2 visa for an emergency evacuation. She has been in the US ever since then. Her I-94 is expired. Her form I-130 has been approved and we have been saving up money to file the form I-485. Is this the correct way to handle this? Is it OK that her visa is a B1/B2 and that her I-94 is expired?

It's correct. If it were me I wouldn't have filed I-130 and I-485 separately; the I-130 and I-485 can be filed concurrently, and filing I-130 first gives no benefit whatsoever (it does not allow her to stay here, but rather lets the government know that she's here illegally). Anyway, that's moot now.

You should file the I-485 ASAP. She is eligible for Adjustment of Status because she entered legally and she's in the Immediate Relative category so she doesn't need to be in status to apply for AOS. While I-485 is pending she is authorized to stay here and not deportable.

I know that the fee is a little much, but it's a small amount for peace of mind and protecting her from deportation. I would borrow it if I were you. Plus for Adjustment of Status, you will need to file an Affidavit of Support, where you will have to have income satisfying a certain level, or if not get a joint sponsor who will also file an Affidavit of Support and meet the requirement, so if you're having trouble with the filing fee, how are you going to do the Affidavit of Support?

With entry on B1/B2, there is also the question of did she lie to the officer at the border because you cannot have intent to immigrate on this trip when you enter on B1/B2. So if they let her in they must've thought she didn't intend to immigrate on this trip. It would be best to have an explanation for why and when she changed her mind. Although maybe this is not too hard considering the earthquake.

Nothing's wrong, though I would recommend filing I-130 and I-485 concurrently.