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Glad I Have an Emergency Fund

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If it was a typical week, you'd be reading a well-researched article on identity theft, right now. However this week has been anything but typical. Monday the plan was for my wife and I to meet at a friends' birthday party after work. However, I got a phone call that something was wrong with our 4-month old puppy, Jake. Being the curious pup that he is, he got into some mischief that isn't "dog healthy." My wife rushed him to the vet and I met up with them minutes later.

The good news is that Jake looks like he's going to be creating mischief in our lives for years to come. The bad news is that the vet bills were $350. (From a cost perspective, getting a Sony Aibo is starting to make more sense.) That isn't the way to start the week.

On Tuesday, I was on my way to work when I saw something that looked like a soda can or a coffee can. I know there's a big difference, but sometimes it's hard to tell. In any event, I thought I could just go over it. It really wasn't that high. Well I heard it hit the bottom of my car and thought, "That can't be good." The next day, I got the dreaded "Service Engine Soon" light. Upon inspection, my mechanic asked me if hit anything with the bottom of my car... Yep. I had knocked out some oxygen detectors which set me back another $200.

This got me thinking how people survive without an emergency fund. I would think that $550 in a couple of days could put a lot of people in financial trouble. I suppose they'd get by with credit cards. Ugh.

Posted on May 15, 2009.

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13 Responses to “Glad I Have an Emergency Fund”

  1. Garry - thisimprovedlife says:

    That is quite a bit of money to spend in such a short time. You are lucky you have that emergency fund.

    I had car trouble earlier this week and if I can get the repairs done myself then it shouldn’t eat too much of my money up. As yet I don’t have an emergency fund (although it is on my list) and am at the stage where I am simply getting rid of some debt.

  2. Sounds like what we have been experiencing. Among other things, our 20 month old daughter has to get glasses. We have vision insurance, but not on her. $200+ for glasses. Oh well, it’s a cheap price to pay if it addresses the vision problem, I guess.

    And that’s just the tip of the iceberg. Suffice it to say that our credit card bill is going to be pretty massive. Like you, though, we’ll be to handle it without much difficulty.

    Odd that HSBC didn’t consider any of this month’s activity to be suspicious, since the amounts are larger than the ones that triggered an annoying false-alarm fraud alert last month.

    Often, collisions with objects in the roadway will be covered by insurance, although a $200 problem is probably less than your deductible. Several years ago I had a larger problem ($700ish?) from hitting a pothole. It was treated as a comprehensive claim, suject just to the $100 deductible I had on comp. Companies differ in what they classifiy as collision vs. comprehensive.

  3. Jon Anderson says:

    I know it isn’t the point of the article, but you might want to consider another mechanic. A typical oxygen sensor costs about $50. The diagnostics take a few seconds and are usually free, which means you payed $150 in labor on a very quick part replacement.

  4. Lazy Man says:

    I knocked out two of them for $100 total. Then there was labor to install the new ones. I also got an oil change in the $200 total. (I would have normally waited another month or so, but it was there and handy.)

  5. Jon says:

    Well, I’d have whipped out the credit card and used it to get my cash back rewards for those emergency purchases, used the “float” time to get a little more interest (these days it’s VERY little) on my online savings, then transferred the money over to pay off the credit card in full a day or so before it’s due.
    My experience with these sort of events is that they usually come in “threes”, so drive carefully!

  6. Lazy Man says:

    I used my credit card. Chase has a way to set it up so that they take the funds out on the day it’s due. I never worry about transferring money.

  7. I currently don’t have an emergency fund and feel it does not make sense to have one until i am debt free. The interest charged on my credit cards is larger than the interest an emergency fund might earn. Assuming i had a Dave Ramsey suggested $1000 fund i’d be $1000 more in debt still. Any emergency costs would be cost me more with an emergency fund till my credit cards are paid off. Emergency Funds are a great investment. I will have one as soon as my credit card bills are clear.

  8. Eric Poulin says:

    A major problem that most people DO end up using their credit cards to get by, but don’t have a real plan for emergencies. Once debt starts to build from too many small emergencies, you can be in real trouble if a major one happens.

    Somehow, despite almost continual warnings to save for a rainy day, most of us don’t have an emergency fund.

    We try to keep 2 months of money easily accessible and a food supply of at least 2 months in case something happens. While even that won’t last too long, its comfort that we can weather an emergency.

  9. MoneyEnergy says:

    That’s too bad…. I agree with Eric above, just having even $500 set aside can be a nice psychological cushion to have to lean on. Knowing you’ll never be at the mercy of whatever happens to need your money NOW. So you can stay on course and not have your plans fall apart.

  10. jim says:

    Geeze, that’s a rough patch of luck… fortunately Jake is OK and so is your car. Hopefully life will give you the opportunity to get your fund back up.

  11. Yo Prinzel says:

    other people cover emergencies with credit cards or paying other bills late, floating checks, payday loans. No matter what, all terrible ideas. Every day that you are disciplined is a day to pat yourself on the back!

  12. Jon Anderson says:

    Good to hear – sounds like you did get a good deal then. I realized shortly after submitting the comment that you said “sensors”, not “sensor”.

  13. Well, I’m sorry for the run of bad luck, but I’m really glad you’ve got an emergency fund to take care of it! I couldn’t imagine not having mine. I’ve heard the arguments both way for having one or not, and frankly, I like the odds better with having one. I don’t want to have to rely on my credit cards for emergencies, I’d rather know that it’s taken care of and I’m not going to continue paying for the emergency long after it’s over. Plus, I’m secure in the knowledge that if I lost my job tomorrow, I’d be ok.

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