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When A Financial Flood Hit, Our Emergency Fund Bailed Us Out

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Our emergency fund bailed us out of an expensive week. If you don’t have an emergency fund, here’s why you need one and how to start it - now!

I was standing in the icy cold, dripping with sweat after a long workout at the gym. It was raining and I wanted to get into my car quickly. I jumped in, put the key in the ignition and then heard the awful sound of nothing.

My car was dead and I was a stranded, sweaty mess.

I tried starting the car a few more times and got the same sound – silence. The car was officially dead, and I was stuck with no way home.

When it Rains, it Pours

 

The above story is one that happened a few weeks ago. Standing in the gym parking lot I was wondered how much this surprise expense was going to cost us.

The whole situation felt like what had been going on in our lives over the previous three days. You see, while it was raining outside it was flooding financially with unexpected expenses in our family. In my analytical mind, I was adding up the damage to see where we stood.

At the beginning of the week, the faucet in our kitchen sink stopped working. We called our plumber over to take a look at it and $850 later, we had a new, functioning faucet.

Two days later, we took our main car into our mechanic to diagnose a nasty sound we had heard for several weeks. He called us back Wednesday evening to say he discovered three problems, needed to special order a part, and then told us the damage – $800.

Without our second car, there was no way my wife could come pick me up. I called a Lyft and headed home. My wife was able to find a friend to drive her to the mechanic to pick up our car.

We then went back to the gym to wait for AAA to arrive so we could have it taken to our mechanic to figure out the problem. At just over $200 later we hoped the financial downpour was over.

The One Thing That Gives Peace of Mind

 

I don’t share the above for sympathy. I share it to say that sometimes life just sucks. We rarely know what will happen and when chaos explodes, it leaves us frantic as we try to stop the bleeding.

Thankfully, the near $2,000 in surprise expenses didn’t phase us one bit. Don’t get me wrong, the last thing I wanted to do at the beginning of the week was spend nearly $2,000 to repair or replace items.

Years ago it would’ve caused me to freak out, pull out the credit card and hope that somehow I’d still have room on the credit card for other things I might want to buy later in the month.

The reason for our peace today is our emergency fund, which helped provide shelter during a stormy week we had no idea was coming.

Emergency funds help us plan for the best but prepare for the worst. You know those times – when your child needs braces; your car requires a major repair; or something breaks in your house.

Let’s face it, those things never come at a good time, but an emergency fund helps you to sleep at night knowing you can handle much of what comes your way.

Our emergency fund bailed us out of an expensive week. If you don’t have an emergency fund, here’s why you need one and how to start it - now!

How to Build Your Emergency Fund

 

We see stories all the time about how poor we are at saving. Many of them show how many Americans can’t handle an emergency of $500 or less. Here’s the thing, when you’re starting with nothing saved it can be overwhelming to start saving money.

Breaking the paycheck-to-paycheck cycle can be difficult, especially if you think it’s not possible to be good with money or think it’s impossible to save what the experts say you should have in savings.

I get it. I used to be there myself, but you need to be mindful not to let it hold you back. The idea of an emergency fund seemed ridiculous to me, but now I see it as one of the best tools to manage your financial life as it has saved us a lot of grief over the years.

If you want to build an emergency fund, but don’t know where or how to start here’s what to do:

  • Start it right now. Commit to holding back a specific amount of money each week, month, etc. I don’t care if it’s $5 or $10; start saving it.
  • Find ways to save money in your life. Here’s a great list of ways to save money every month. Find a couple of things you can cut back on and add it to the amount you’re already saving.
  • Open a savings account. You need somewhere to put the money you’re saving. If you can earn a little something on it, even better. You can use a bank like Ally or Barclay Savings as they both pay at least 1% on your savings and they have no minimum balance requirements.
  • Set a goal. If you’re just starting out, a goal is key to keep you going. Start small and use it as motivation to grow your savings. Even if it’s $100, use that as a goal, then move to $250 and $500 and so on. You’ll be surprised how well having money like that set aside for true emergencies will help you sleep at night. Before you know it, you’ll have $1,000 or more saved – putting you on the right track to save even more.

The key is to start small and start with an amount you can handle. Without personalizing it, you won’t see success.

Looking back over our crazy week, I hate that it happened. There were a few less than pleasant moments, but everything turned out fine in the end – thanks to our emergency fund.

Remembering what similar instances caused in me years ago, I see just how much having an emergency fund helps in time of trouble. We all know those storms will happen; preparing for them helps you ride the wave without being crushed by it.

 

When was the last time life seemed to dump surprise expenses in your lap? Do you have an emergency fund to help you in times of storm, if not, what’s holding you back? How do you prepare for emergencies or surprise expenses?

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I'm the founder of Frugal Rules, a Dad, husband and veteran of the financial services industry. I'm passionate about helping people learn from my mistakes so that they can enjoy the freedom that comes from living frugally. I'm also a freelance writer, and regularly contribute to GoBankingRates, Investopedia, Lending Tree and more.

4 Comments

  • Tina says:

    I like this article–good points. My question–which I’ve not really seen answered completely in any similar articles about emergency funds-is what do you do if you have a number of unexpected expenses and it wipes out your fund and you face one more expense, or you’re in debt, are working on building an emergency fund, and face several unexpected expenses? Is the only recourse to go into more debt?

    • John Schmoll says:

      Great question Tina. I’m hard pressed to say to add more debt – that’ll only make the situation worse. That being said, I’d look for other options like a way to bring in some quick, extra cash to cutting a bill for a service you can live without for a month.

      If all else fails, I’d ask the service provider that’s providing for the service you have the urgent need for if they offer some sort of payment plan.

      Speaking personally, when I was in debt, I’d just put it on a credit card and wish I never would’ve done that – it just made paying off the debt take longer.

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