My Emergency Fund to the Rescue!!
We have been hearing a lot about emergency funds in recent months because of the state of our economy; saving money has become the new black. I think it is great that people are finally getting serious about building and emergency fund and I honestly don’t understand how people can go through life without it. It is suggested that people now have an emergency fund that’s equivalent to 6-8 months of your income. I am a total realist and understand that this is not possible in every situation and honestly it is not expected to happen overnight, but at least have a couple thousand saved up. You are probably thinking that you aren’t in the position to put money towards an emergency fund. For some, that may be true, but what about using your tax refund? Most people I know cannot wait until January 31st so they can do their taxes and get a refund. Well, instead of spending that money on clothes, a TV, or some other material items, put some of it towards your emergency fund. You can also use those extra paychecks that some receive if on a 26 weeks pay cycle and open up a Bank of America card and sign up for their Keep the Change program. Whatever you have to do, DO IT!! so you can have piece of mind and not totally freak out when problems start knocking at your door.
Our problem this month was our 2001 Nissan Altima. It is started to shake when we went over 55 mph and it was puttering. The car has over 166K miles on it and we have no intentions on buying another car, so our only alternative is to get it fixed. My husband was a little upset, but I, the cheap, frugal, penny-pinching queen, was fine. Why? Because I know we have an emergency fund and I figured the repairs would not cost more than $1,000. I was almost right; the repairs needed to FIX the car only cost $1,000, but I was able to talk them down to $900 (yeah me!!) However, of course, they found everything else under the sun that needs to be fixed which would have cost an additional $700. We did not get those repairs done yet, mainly because they are not life threatening and because I just was not mentally to prepared to pay more than $1,000 even though we have the money.
But I started thinking, what if we did not have our emergency fun, our credit cards were maxed out or cancelled because credit card issuers are closing unused cards, we only had the one car that’s not working, and can no longer get to work. Result: we take out a payday loan, (the worst thing ever invented) get fired because we could not get to work, some other problems comes up which prevents us from paying back to loan, and they take our car. I know this is an extreme situation, but it is a “very” real situation.
Thank God our emergency fund rescued us from this situation, but there are many people who are not as fortunate.