Perfect Example As To Why You Must Have An Emergency Fund

This is a spontaneous post, brought on by my lingering frustration with how people still manage their money. Hasn’t towering unemployment, record foreclosures, and the looming threat of a double-dip recession (as if there ever was a recovery) taught people anything? For some of us it has, but for others, not so much. That is still better than before we were hit by this recession, BUT I feel I should remind you that we have proven to be a nation plagued by amnesia.

As soon as things improve, some of the very same people will go back to their old routines, not thinking a single second in advance about their family’s future. I’m happy to know that none of those people are you, because you read Enemy of Debt and have decided to nip it in the bud once and for all! Right? Let me get to the point.

Last week, I was waiting in Sears, so I could get the two front tires replaced on our paid for Volvo 940. While I was standing in line waiting to see what my tire choices would be, the lady in front of me seemed to be in a bit of a pickle. (Please know, that I do not intentionally make other people’s conversation my business, but this lady didn’t seem to mind anyone hearing. You should also know that her situation wasn’t so foreign to me, because I had been in her shoes before.) When I give you the numbers you’ll see exactly why I think she should have been a little more discreet about her “pickle”!

Here’s her situation.

Her muffler and exhaust system died on her and guess what? She did not have an Emergency Fund to cover the cost. SURPRISE!!

SIDE NOTE: The savings rate in the United States has been a dismal reminder that Americans do not think saving money is a priority. Perhaps the need for bigger and better cars, fancy televisions, and the ever important need to have the newest Apple product in their hand, has been quite the distraction. To quote an article on CNN Money, it is “worse than we thought“. The article indicates that the savings rate has dropped well below ZERO into the negative. A graph shows that while the savings rate has been a declining trend over the years, it’s worse than it has ever been going all the way back to 1952. SCARY RIGHT? Apparently not, so maybe the recession has taught us nothing after all.

So she had the commissioned salesman rapidly typing in her information for multiple applications of credit so she could fix her car. That’s right, she was going into debt to repair a car that she must have known would eventually have to be repaired. The four letter word of all four letter words, was her only option!

D-E-B-T

After hearing the results, I wasn’t sure if I should grab her head and gently place it on my shoulder, while signaling to the bearer of bad news to bring her some tissues, or just start crying right along with her. I was kind of glad that my long wait in line was cut short as the man that was helping me returned. Here’s what the man helping the lady told her.

“You did not qualify for a Sears card, but you did get approved for another card, which would give you a $400 line of credit. The card comes with a $59 annual fee, and has a 28% APR.”

The bad news was not that she got declined for the Sears card, nor was it that the line of credit she was approved for came with an extremely high interest rate. Nope, it was that she put herself in a situation to have to accept such an offer. To make matters worse, the $400 line of credit wasn’t going to be enough to cover the repairs. I must also point out that while Sears is considered by most to be a merchandising operation, it actually makes more money off of it’s easy-to-become-a-slave credit program. I guess the lady already had a rather large debt-burden to not be able to get a Sears card.

So not only is this lady out of luck, but the only option she has to get her car repaired is to add some more debt to her name! Is that really the only option you want to have? After living most of my life that way, and then turning my financial situation completely around, I can say with confidence that this is not the best way to live your life.

Having an emergency fund in place is the NUMBER ONE best way to avoid debt! If you have an emergency fund, IT DOESN’T MATTER IF THERE’S A RECESSION! It doesn’t matter if your car breaks down! It doesn’t matter if you lose your job, because you will have time to find another one. Anything that can, and usually will go wrong, can be covered by simply planning for the unexpected! By realizing that your financial security is more important than your wants and desires, you will empower yourself and remove a level of stress from your life you wouldn’t believe!

Someone with an emergency fund would probably say there is no such thing as the unexpected, and I would say they have an excellent point. In other words, you should expect things to go wrong whether you know what they will be or not. Expect life to throw a monkey wrench in your debt loving world, and instead give the debt free life a try. I know for a fact that it’s a much easier one!

Wondering where to start? Here’s some tips to get you started:

  • STOP borrowing more money! (Stop enslaving yourself.)
  • Create a financial goal list (It’s important to know where you want to be.)
  • Track your spending (Know where every penny is currently being spent so you can make some important changes.)
  • Put yourself on a budget! (Take charge of your money by putting yourself on a plan.)
  • Save an Emergency Fund as fast as you can! (Because it’s important!)

Take a financial stand, because you’re future should always be more important to you than the fun things you can buy yourself now. (Especially when you consider that you are going into to debt to get them.) Instead buy them later, and when you do, take solace in knowing that they didn’t come at the cost of your sanity, your financial freedom, or even worse…your family.

Do you currently have an emergency fund? If so, explain why it has been helpful, and if not, give your very best reason for not having one. (I won’t pick on you, I am here to help you. I am just curious as to why.)

Photo Credit: Bunmun

About Brad Chaffee

50 Responses to “Perfect Example As To Why You Must Have An Emergency Fund”

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  1. Pedro says:

    i like that picture. thats part of the expedition everest in animal kingdom… its a cool ride.

    http://disneyworld.disney.go.com/parks/animal-kin

    btw, this days you need to get a back loan to be able to vacationed with a family of 5 to disney LOL ;) its so magical that your money disappear

    • Brad Chaffee says:

      Haha! Yeah, I\’m not even sure it\’s worth the cost myself. I think Disney is highly over-rated. I\’d much rather take a Caribbean cruise. LOL However, I am sure I will end up taking my kids at least once. :)

  2. Technically speaking, we don’t have an emergency fund. Although I do have access to money which can be used to cover emergency situations. What I do have is a savings account where I hold monies for upcoming bills. For example we have three vehicles (two business related) and drive around 50,000 miles each year (combined mileage). Tires typically last 50,000 miles so we are usually buying tires for one vehicle or another each year. So I have $824 in savings – I guess these are sometimes called sinking funds – for when one or two of these vehicles needs another set of tires. When I was younger and poorer and didn’t live way out in the boonies, I got by on used tires which I’d buy one at a time for $25 as needed. Can’t do that anymore. It is too risky driving on the freeway (which in some areas is 75mph) with tires the history of which is unknown. So if something like a big car repair comes up, I would take from the tire fund and then build that up again. It wasn’t always like this. I have been in a dirt poor situation like the woman you describe. You never know what a person’s story is, and it’s unfortunate she doesn’t have an emergency fund, but maybe she doesn’t have enough money to make ends meet, let alone put aside money for emergencies. No way to know.

    • Pedro says:

      i agree.. today society is almost impossible to save and keep a certain lifestyle.

      I think what Brad is trying to address is that you have to make an effort to have that extra money. Cut on this and that if you can’t save and find ways to make a little extra until you have that emergency in place.

      Unfortunately, many people learn when its too late and they have so much debt that it takes them years to overcome that and be able to actually save a buck or two.

      • Brad Chaffee says:

        Right on Pedro! That\’s exactly it. If you make conscious effort to plan for the future, the future won\’t force you to take on more debt! Thanks for adding your thoughts to the conversation! :D

    • Brad Chaffee says:

      Interesting. So you have what most would call a sinking fund. One question. What if you have an emergency outside of the normal wear and tear, maintenance, or medical emergency? What if you had say, an emergency where you had a $2500 plumbing problem, or other major unexpected expense that totals more than you have in your sinking fund?

      You\’re right, there\’s no way to know someone\’s circumstances other than what is revealed, but I would argue that even if there are other factors, the fact is she had nothing set aside for a minor car repair and she was having to go into debt to have the repairs done. Not only that, but she was willing to accept 28% APR. I remember when I was living like that, I always had an excuse as to why I was never prepared and living paycheck to paycheck too. :)

      I learned that I would never ever live without an emergency fund ever again. Thanks for the comment! :)

  3. Julie says:

    Thanks for the reminder of the upcoming “wrenches” When things are going OK for a few months, it is easy to spend a little more than usual just because – Hey at least I am paying my bills. Then like you said it hits you like a ton of bricks – unexpected bills! Thanks again!

    • Brad Chaffee says:

      Life can get pretty nasty sometimes that\’s for sure. Even by being prepared, those unexpected events can really ruin your day, but at least if you have the funds to cover it, you don\’t have to use debt as a plan. :) Great comment!

  4. Jackie says:

    I observed a very similar situation as you did. However, I was at Tires Plus. A young woman next to me at the counter stated that she did not know how she was going to pay for her repair of $324. She was approved for a credit card with a limit of $1200. And she had additional work done since now she had a credit card to pay for it. Not only that she was dressed to the hills, fancy 4th of July fingernails and toenails and a fancy Coach purse. No wonder she didn’t have the cash to pay for her car repairs. I was thankful my 13 year son was with me – very good teaching lesson that I pointed out immediately.

    • Brad Chaffee says:

      What\’s it with the tire places? LOL So not only did she go into debt to fix the necessary repairs, but she used debt to do more than she would have. Unbelievable!

      Oh and way to go on the teachable moment with your child!! :D A lot of people would have just brushed it aside as unimportant.

  5. Den says:

    We started with a EF of $1,000 and then bumped it to $2,000. Would love to get that higher, but are now focused on getting rid of debt (Debt snowball baby!!!).

    I’ve been that lady in the past with no EF and I’ve been it in the recent past WITH an EF and it’s so much better and easier and less humiliating to have that EF. Car repairs (and other emergencies) will happen – it’s a part of life and we sleep so much better having that safety net. If you don’t have a EF, try it and you’ll never go back to not having one.

    • Brad Chaffee says:

      Yeah we did the same thing. we decided $1,000 didn\’t make us feel safe enough while we tackled our debt. I wrote a post that addresses this, and refer to it as determining your emotional minimum. What\’s the minimum amount you need to have saved that will give you absolute peace of mind? For us that was $2,000 in the beginning. Now that we are debt free that emotional minimum is $15,000.

      Kill that debt!! Rock on with your financial plan, you are doing great! All it takes is action and it sounds like that\’s exactly what you have done. Congratulations!

  6. Beth says:

    Unfortunately I don’t have an emergency fund right now. But I am in the process of selling my furniture and my car to help make a dent in my cc debt. I’ve stopped using credit cards but I know how important it is to have an emergency fund. I am hoping some of my “stuff” sells quickly so I can fund one. That is my first goal–to get $1,000 in an emergency fund. Thank you for the reminder!

    • Brad Chaffee says:

      Sounds like me and my wife on month one of our Total Money Makeover! :D

      We were selling everything, even the big TV and my beloved XBOX 360! Haha! Now I don\’t consider those things to be so important to me. Letting go of something like that would be much easier these days! nonetheless it was still hard at the time, but one of the best decisions I ever made!

      Good luck Beth! You can do it, just keep your goal in the front of your mind. Think about it often…like everyday! :D

      • Beth says:

        Thank you Brad! I know–my TV is gone and I don’t even miss it now. In my apartment if it’s not nailed down it’s going on Craigslist or in a donation bin! Progress–Yesterday I finally received a $200 security deposit refund from my last apt–Today I’m going to open an account at the credit union and start my emergency fund! One baby step at a time! ( :

        • Brad Chaffee says:

          Haha! That is awesome Beth! Reminds me of what Dave Ramsey says: \”Sell so much stuff the kids think they\’re next!\” LOL GREAT JOB!

          You are $200 closer Beth, just keep looking forward and you will reach your goal. Can I ask you something? I\’m asking this because I never did before my Total Money Makeover, but have you ever had an emergency fund before? (we would attempt to save before, but it would always disappear a week later.) :D

          • Beth says:

            Thank you so much Brad! I really appreciate your website and your support! To answer your question–no I never had an emergency fund. ): I finally just cut up my Amex Gold card a few hours ago–why do I feel so anxious and light headed LOL. Probably because I thought that was my emergency fund!

  7. Jenn says:

    We don’t have an official emergency fund, but we do maintain a $1000 balance in our bank account so that we never pay any fees, and I don’t have to worry about every accidentally going into overdraft. In a desperate emergency we could easily use that money and just pay the $5-10 in monthly bank fees.

    Truth is unless we both simultaneously become unemployeed and our benefits have run out, that wouldn’t happen. By choice we do without things others consider normal or necessary. We generally don’t eat out, we pack our lunches, we buy used cars with cash, we haven’t had cable in over 20yrs. We live massively below our income spending about 55% of our take home pay to cover fixed things (mortgage, property taxes, electricity, phone/cell/internet, life insurance) and the weekly groceries and gas. I also budget $60/mth for misc (hair cuts, coffee, parking, vending machine, mazazine, etc). Most of our recurring fixed bills happen on the first of the month, but every other week of the month we can safely assume there will be about $1000 of excess cash after the pay has been deposited and the weekly expenses paid. Every Friday I normally transfer this excess to our retirement accounts or make an extra payment on the mortgage. If there is a large expense (vacation, new tires, replace furnace, kids annual sports fees etc) I simply don’t make those transfers for as many weeks as it takes to cover the expense. At $1000/wk it generally doesn’t take long to cover any unforseeable emergency. When our dishwasher failed we did dishes for a couple of weeks while we researched and shopped around. When my husbands truck finally konked out we shared my car and he took nearly 5 months to find a new”er” one and by then we’d saved up the $15k to pay cash for it. We replace the tires on both vehicles every 3 years (summer tires and winter tires). When the time comes the extra cash for that week goes to the new tires. When we want to plan a vacation we let the excess pile up for several weeks and then book it on the CC for the travel miles and immediately pay if off.

    If one of us were ever laid off we’d have to change our process. We’d set aside a chunk of the severance as an emergency fund to cover anything beyond our normal weekly/monthly planned spending. Because we have cut our basic expenses so low we can live on one salary if necessary, we’d just have to temporarily stop the retirement contributions and extra mortgage payments.

    Sorry for long answer to a simple question, but I thought I’d provide a full description of how we manage things without an official designated emergency fund. Because we live on way less than we make, we have a $1000 emergency fund every week. If there is no emergency we transfer it out. If there’s an emergency or large annual expense that week we pay it and carry on the next week. I don’t think what we do is the standard way but it works for us. We are hoping to retire early so cutting all extras so we can pay off the mortgage and boost our retirement savings is the priority. It’s not really a dire as it sounds as we do splurge every other year on a major holiday.

    • Brad Chaffee says:

      Jenn, your plan is different but I have to say there\’s not much I can say against it. You are doing great and being purposeful with your income as well as your future plans. You realize that if something else unforeseen were to happen the plan would need to change. I LOVE IT! I especially like the end where you talk about paying down the house and funding your retirement, but I love more than anything how you used the word \”priority\”! That rocks, and is a word that is largely missing from most people\’s thinking. People often worry about getting the next new toy as a priority, yet complain about not having health insurance, or other more important items in their life. Oh yeah, I\’m ith you on the cable, we haven\’t had it since we started managing our money. It\’s really more of a rip-off more than anything. Our bunny ears work fine and then there\’s other cheap ways to entertain ourselves in front of the TV, like Netflix. :D

      GREAT COMMENT!
      I appreciate you sharing!

  8. Yana says:

    To me, an emergency fund, savings, retirement etc are all the same thing. It is money you haven’t spent. I like to pretend that I am my own bank and financer. I like to pay in full and never pay interest or use credit, and my favorite example of this is paying for car insurance for a year and then making monthly payments to our savings. It’s a great thing to do when buying a car with cash, as well, but you do have to start somewhere and that somewhere involves luck as much as frugality and saving ability.

    One thing I wonder about often, because my closest friend has different financial values and thinking than I do, is what will happen in the end? If I am frugal and save, but others think “Money is to spend”, will I really be better off later? I believe that my ways are rare, and the masses are headed to being broke quicker and by their own choices. Is it such a great thing to consider yourself responsible, just by comparison, if your neighbors will be just fine in the end because life or society bailed them out? One answer to myself is that I am doing exactly what I want to do, expressing my own values, so I won’t have anything to complain about. Nobody is forcing my choices.

    • Brad Chaffee says:

      Yana I LOVE how you pay your insurance for the whole year and then pay yourself what it would of cost you monthly! I may have to write a post about that! :D

      In the end, even if the people not managing their money end up all right, ultimately it is better to rely on your own efforts than the efforts of others. If those people get bailed out, which I totally disagree with, it only shows their true character. Not to be harsh but I would much rather die knowing that I did the best I absolutely could to provide for my family, than to live off of the hope that other people\’s hard work, would make up for my laziness, irresponsibility, and lack of priority.

      You are doing great!! :D

  9. Echo says:

    Technically we don’t have an emergency fund, although we have access to a $25k secured line of credit and a fully funded Tax Free Savings Account. We are a single income family, with my wife staying home looking after our 15 month old daughter. My job is fairly secure in the public sector with a defined benefit pension. We live well below our means, typically having $600 or more in excess cash each month after the bills are paid. Right now I am focusing on applying that extra cash towards our mortgage, rather than allocating it towards an emergency fund.

    I’m fairly detailed with our budget so I have projected for expenses like new tires, or the family vacation, etc. If something unexpected comes up we can always revise our strategy and allocate some of the $600/month towards it. Have to be flexible and change on the fly if need be.

    Great post and discussion.

    • Brad Chaffee says:

      Hi Echo, thanks for stopping by!! :)

      Honestly, I certainly wouldn\’t count a line of credit as an emergency fund, although I can\’t argue that it could be used as one, but certainly at a higher cost. To me that is like depending on a credit card for an emergency, which is kind of why I wrote this post. Not sure what you mean by fully funded tax free savings account, unless you\’re referring to a retirement account. In which case, I wouldn\’t consider that a good emergency fund either, as I do not recommend taking from one\’s retirement to fund emergencies in life. (could you clarify?)

      I do like the paying down the mortgage though!! :D I also like your attention to detail as far as upcoming expenses. I appreciate you sharing your thoughts on this topic. It\’s hard to agree with what everyone does but it helps to know how others handle their own money situations. Thanks!

      • Echo says:

        Hi Brad, sorry the tax free savings account is a Canadian thing. Introduced in 2009, you can contribute up to $5000 per year into this account. You can withdraw money at any time, and you are not taxed on the gains. And if I were to withdraw $1000 to cover some sort of emergency this year, I could re-deposit that money the following year (my contribution room would be $6000 instead of $5000)

        Hope that clarifies…so when I say this account is fully funded, I have contributed $10,000 (which has grown to $12,000).

        And to further clarify, the line of credit is secured to my house and has an interest rate of 3.25%. Hardly credit card interest rates.

        I agree with you that most people need to have an emergency fund, but I’m just providing you with an example of why I don’t have one. I take great comfort in the fact that we live well below our means, have no debt other than our mortgage, and would like to use my excess cash to pay down the mortgage faster or invest in dividend paying equities, rather than leaving it in a low interest savings account “just in case”.

        My personal belief is that using a budgeting or forecasting tool is the most important step in taking control of your finances. If you are spending more than you earn, take the steps to fix that first before even thinking about a savings or debt plan.

        • Brad Chaffee says:

          Oh okay, that\’s pretty interesting. I\’ve not heard of that before but it sounds like a good plan. I would definitely consider that a means to handle emergencies. Here is you take money out of that type of account you are taxed heavily. Thanks for clarifying too. I always enjoy learning new stuff from others.

          Agreed, the line of credit is nothing like a credit card in terms of interest rate, but it still is debt nonetheless. I have heard some horror stories from people about heloc\’s. It sounds like you would be safe from ever using that since you have the other tax-free option available.

          I hope you don\’t feel I was picking on you, because I wasn\’t at all. I just wasn\’t sure exactly as to what you were referring to. Thanks for clarifying everything. Keep doing what you are doing brother, it\’s working for you. Just stay away from that HELOC. LOL ;)

          Great conversation! Thanks for contributing to the discussion!

          • Echo says:

            Hi Brad, no I definitely didn’t think you were picking on me…no worries. This is a great discussion and I consider myself a bit contrarian on my views towards a traditional emergency fund. But I can see both sides of the argument, and can certainly see where you are coming from.

            I’m not sure what the American equivalent to Canada’s TFSA is? We have RRSP’s, you have 401k’s (retirement). And we have TFSA’s, and I thought you had Roth IRA, which was similar…but maybe not.

            I think HELOC’s were only introduced by banks to lure seniors back into the credit market. Bankers would say, “Hey, you’ve got all this equity just sitting here. Why don’t you take some of it and go on a cruise, or renovate your house, or buy a boat?” Could be extremely dangerous if not used responsibily.

          • Brad Chaffee says:

            Yeah…I have to admit I am not an expert i the retirement planning yet, as I have not quite made it there yet, per my Total Money Makeover. That is the next step for us so I plan to be reading a lot about nit real soon. You said it my friend! It\’s all about using things responsibly. I hate credit cards but understand that they can be and are used responsibly by some people. In America, SOME being the key word. LOL Take care echo, and please join the conversation anytime! I enjoyed it!

  10. Jenna says:

    That is rough. Maybe it would be better for her to find a local shop to fix her car rather than Sears? Hope she can fix her credit (that seems to be a bigger issue than not having an emergency fund).

    • Brad Chaffee says:

      Thanks for the comment Jenna! I would suggest that her lack of emergency fund is the reason for her bad credit. The only problem I see with credit is that it makes people believe they can\’t live without it. In trying to have good credit they borrow money to build it, which in most cases according to the stats shows to be a mistake.

  11. Penny says:

    I truely tried the emergency fund for a while, but it didn’t work for me. It was too easy to call things emergencies that weren’t because there was money. I’ve changed to a “freedom fund” or “sinking fund” philosophy and for me it works tons better. We have a car fund, a gift fund, vacation fund, an insurance deductibles fund, a property tax fund, etc. Giving a job to each dollar was what I needed. If a true emergency comes up, the vacation fund might suffer, but if no emergency comes up, a nice vacation is a nice reward for financial hard work the rest of the year. There are a few other funds that could be raided in an emergency, so after a nice vacation, there is still emergency reserves. Its easier for my mind to say is this “emergency” more important than a nice vacation. If it is, then it is, but most of the times I realize its not a true emergency. I realize that this system is probably just more paper work than having an emergency fund, but it works for me. For what its worth, most of the money sits in a higher interest account and I keep track of the individual amounts in Quicken on my home computer.

    • Brad Chaffee says:

      Penny, your plan or approach may be different but you are still covered in case something unexpected happens. That is KEY! I often say that money management is more psychological than financial. It sounds like your change in terms was more of a psychological comfort than a change in principle. You are still doing what you need to do, and you are doing what works for you. That\’s why they call it personal finance! :D thanks for sharing!

      • Penny says:

        Its a very psychological thing. For me it was what was an emergency for hubby it was what is a savings account. Hubby is very much once money is in savings it must never come out. By labeling all the money, it helps keep both of our minds at peace. Well as peaceful as one can be.

        • Brad Chaffee says:

          The great thing is that you both were able to agree together and form a plan accordingly. I believe very much in the \”emotional minimum\” idea. If you don\’t feel good about what you\’re doing then you\’ll never be able to be as focused as you can be on your other financial goals. :D

  12. We have our baby emergency fund while paying off debt and having that has been a blessing. The first year it seems like every appliance went out but (knock on wood) we haven’t had to use it.

    I also have a sinking fund for car maintenance/repairs so next week when it’s time for an oil change and tire rotation it’s not a surprise. Part of being fiscally sound is taking care of what you already own.

    • Brad Chaffee says:

      Awesome Bucksome! We have to get better about having a solid sinking fund in place, because we really enjoyed using that instead of our emergency fund in the early part of our Total Money Makeover. You are definitely right about it being a blessing!! Thanks for commenting even though wordpress seems to think you\’re a spammer. :) Don\’t worry, I will set them straight about you! Haha!

  13. I probably would have had the same initial reaction, but you never know the person’s situation. Perhaps she HAD an emergency fund but lost her job and used up all (or most) of her savings. I try not to judge too harshly, especially nowadays.

    • Brad Chaffee says:

      That\’s true, no way to know. She could have had her entire 6 month emergency fund wiped out recently, BUT I would be willing to bet that was not the case. The savings rate suggests that most people are not prepared for these kinds of emergencies though. In any case, I hope this post helps someone else prepare for the worst.

  14. It’s hard to say if she was irresponsible or not. I have a friend who was almost evicted because she was behind on her rent. However, this was due to her husband being 6 mos. behind on child support, and her hours at work were cut again. I think situations like these are why the US savings rate is dipping after rising for a while.

    That being said, this makes your point even stronger than you need an emergency fund! My husband and I have about $10,000 saved, and very little debt. We once had to weather almost 2 years of underemployment for my husband, and only avoided bankruptcy due to a large savings cushion and selling our house and moving to a cheaper state.

    • Brad Chaffee says:

      That\’s a great point Jennifer! Divorce is certainly one of those life events that could take you from financial security to financial ruins. I have seen it first hand myself.

      The large savings account really makes a big difference! I appreciate your comment and love your testimony!

  15. I don’t have an emergency fund right now, but I have started saving more and more recently, because I had a pet emergency recently and had to take out $400 that I did not expect, and learned to put some money away for those rainy days that we all have. Great tips for those people that are not saving, having a budget and goals are so important to move forward on the right path :)

    • Brad Chaffee says:

      Rock on! I tell you what, those pet emergencies can really catch you off guard. I have been down that road and so has my dad. My dad actually bought some very cheap pet insurance. Keep moving forward and keep plugging away at that emergency savings! :D

  16. Dixie says:

    My husband and I made good money together as DINKS and saved quite a nest egg for young professionals. THEN- disaster. I decided to stay at home and a year later, he was laid off in this terrible economy. A year and 1/2 later, we have reduced out savings by 1/2 even with cutting back heavily.

    • Brad Chaffee says:

      Dixie I am so sorry to hear about your struggles, but it is safe to say one thing. Thank God you had a good nest egg to help you at least a little through those rough times. I am hoping things turn around for you and your husband very soon! Keep hope alive!! :D

  17. Tim says:

    Good story, similar to my “lesson”. I had actually had a little emergency fund to pay for my frequent car break downs every few months but that last time I’d had it and decided to put everything I had into my otherwise reliable truck that ran flawlessly for 250K miles till the engine died.

    Replaced the engine in my truck, sold the Taurus for scrap and life was good but I did not start replenishing my car/emergency fund right away. A month later I noticed a bit of whining coming from the back end and realized my rear differential was leaking after sitting unused for a few years. I went by an auto parts store and gaskets and oil to fix it would have been $25 but I had just gone shopping a few days earlier and only had $2 to my name till I got paid at the end of the week so I decided to just baby it for a few days and fix it when I got paid.

    The next morning my rear differential seized on the highway leaving long black streaks down the roadway and nearly a pileup. My $25 repair ended up costing me $2500, a loan from my boss and a horrible payday loan to fix. Because I did not have enough when I really needed it it ended up costing me 10 times more, actually a lot more counting the 250% interest I paid on that payday loan.

    Never Again! Never again will I get caught without a cushion for the unexpected and never again will I put myself in a situation that I need to go to a predatory lender. I knew what I was getting into with my payday loan and it was still tough to get out of it. I painfully learned my lesson and since that day I’ve always kept at least $1000 in a separate emergency account. I have some automatically taken out of checking every paycheck and put into my emergency fund so I never miss it.

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