Financial Wellness Tip #3: The Importance of an Emergency Fund

Stick to your budget by eliminating crisis induced spending with an Emergency Fund

When you are swimming in debt, and have creditors calling you every 30 minutes, the *last* thing you think you can do is put away for an “emergency”! Isn’t the aforementioned debt and creditors an emergency?!?

What happens when your tires are so bald that the shop won’t even rotate them for you when you get your oil changed?

What happens when your washing machine breaks mid-way through the wash cycle of your cloth diapers?

What happens when your garage door spring breaks?


No. If you are serious about getting out of debt (or at the very least, not adding to it), you need to stop borrowing money!

But life happens, right? Washing machines break, and tires go bald. Typically, that would completely derail your budget, especially if you had a “zero sum budget” (more on that in another lesson). But not if you had an Emergency Fund!

I speak from experience. All of the above “emergencies” happened to us while we were getting out of debt and had already closed all of our credit card crutch accounts. There was no going back! When our tires needed replacing 2 weeks before Christmas, and we came to find out the tires could only be specialty tires, we wrote a check for $697. Two weeks before Christmas. And didn’t cry.

When our washing machine broke mid-cycle (3 times so far. I’ll never buy an LG appliance again, and at the writing of this post, an appliance repairman is working on our LG dishwasher… AGAIN), we wrote a check.

When the garage door spring broke (our main method of entry to our house), I wrote a check.

Those emergencies never derailed us. If anything, it kept us motivated to keep plugging along because it put even more trust in the program we were following!

We have been asked, “what happens if you have an emergency that costs more than $1000?”

For one thing, in the 2+ years we were paying of debt, that didn’t happen to us. However, I could imagine a situation that it could have happened, such as our dog having to have surgery. Again. The last surgery cost $1,200, but had it happened while we were in this phase of our indebtedness, we would have only had to have found $200 instead of $1,200!

Another thing, we have really good insurance (for us, not the dogs. That stuff is a rip off), so massive medical bills aren’t high on our “emergencies” list.

I know it’s scary to put money away just to sit there. But consider yourself one of the lucky ones if you don’t have to use it!

What’s an emergency you charged (and accrued interest on) that would have been covered with your Emergency Fund?

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