The comment reminded me of myself four and a half years ago. A reader of a post featuring my get out of debt story asked for insight regarding how I handled unexpected expenses during my debt pay-off period.
I’d like to say that I had done everything perfectly during my four and a half year quest to eliminate $109,000 of credit card debt, but there were plenty of bumps along the way. If I had to single out one thing as my biggest mistake, it would be not having an emergency fund in place from the very start.
The importance of an emergency fund is discussed frequently here at Enemy Of Debt. In my Friday posts, I’m even tracking my goal to have a $1000 emergency fund in place by the end of February. But for someone that is just starting the process of getting their finances in order, this concept may not resonate as deeply.
I certainly didn’t fully understand the importance of an emergency fund when my wife and I first enrolled in our debt management plan. Unexpected expenses were an exercise in crisis management:
- When our washing machine broke down, we had to go to the laundromat a couple days a week until saved up enough money to have it fixed.
- When we needed new tires on our van, we borrowed money from my mother-in-law and then scrimped and scraped for a few months to pay her back.
- When our van’s brakes were wearing down, we kept driving it knowing we were wearing down the rotors ultimately resulting in a higher repair bill once we did save up the funds to have them fixed.
- We did dishes by hand for months because we needed to save up to fix our dishwasher that broke one Thanksgiving day.
During our debt repayment we viewed an emergency fund much like we viewed saving for retirement: Something we didn’t have the funds to do right now, but would definitely look into once we completed our debt management program. Interesting fact, each time we had an unexpected expense, we found a way to eventually save up the funds needed to do the repair, or pay back borrowed money.
It seems we had the ability to have an emergency fund all along, we just didn’t execute correctly.
The emergency fund is one of the fundamental building blocks for being successful with your finances. Do yourself a favor and get that emergency fund started. It’ll be hard to cut spending a little bit more, but unexpected expenses ARE going to happen, it’s not a matter of if, but when.
So, EOD Nation, do you really have an emergency fund, or is it simply something you’ll do “later?” How do you handle unexpected expenses without an emergency fund?