Nov 14th, 2012 by Jennifer Lynn
The cash portion of our family emergency fund, anyway, has nearly been wiped out…
Are you in danger of being wiped out?
… and quite honestly, it blows. M. took his car in for inspection and the word came back yesterday: we are facing close to $2,000 worth of car repairs.
However, I keep reminding myself that the entire purpose of an ‘emergency fund’ is to be used when needed, and not to feel discouraged. Frankly I hate spending money on anything that doesn’t appreciate in value so it is totally aggravating when a vehicle is chewing away at such a huge chunk of our family savings. Unfortunately, a car is a necessary evil for our current situation and there is just no way to maneuver around these expenses right now.
Thankfully we can pay this bill off immediately, and the plan is to plop these unexpected repairs onto my rewards credit card and pay the balance off in full, to maximize my rewards potential.
The cash is readily available—usually I will accrue a highly liquid stash in order to pounce on investment opportunities on items at local estate sales, and such.
The advantage of credit cards and being able to tap into a line of credit
Let’s say, however, I did not have access to immediate cash to pay for these car repairs, and the mechanic is demanding payment by tomorrow. Here is another huge benefit to a credit card—I could use my available line of credit through my card to float the cost of repairs until I was able to sell (liquidate) some of my investments, and then pay off the balance in full.
This is why a lot of folks eschew an ‘emergency’ savings account, as they would rather not tie up large balances in a conservative account with paltry interest rates. This type of strategy, however, requires excellent credit and discipline.
I can not reiterate enough the importance and good financial sense of accumulating savings. Little bits add up and really do matter. It can mean the difference between dodging scanty annoyances and experiencing complete financial wipe-out.
Our family savings cushioned us from what may otherwise have been a hefty and dire financial pounding; instead, this car situation is just a minor nuisance.
Time to bravely soldier on.
=^..^=
Ouch! Sorry to hear about the car repairs, but glad you're able to cover it. I know that having your E-fund in cash earning little is not sexy, but it really can be a life saver. We usually put things like this on our card as well to get the points and then pay it off with our savings.
OMG this same thing happened to us in the Spring! We had saved up a bunch of money from our tax returns and then his stupid car broke! Thousands in repairs. And he needs it for work. I'm glad you all had the savings, and that we did, too. Putting it on credit would not be fun. But man, does it suck to have auto repairs eat up everything you've been saving with.
I'm so sorry to hear about this, but I'm glad you had an emergency fund to cover the costs! Unfortunately it seems like these things come up far too often.
Well, you sound pretty happy that you had that money saved and you should be. Too many people rely on a line of credit but I also realize some people it's their onwly reality. I say start small every dollar counts and it will add up over time. Starting over sucks, we will be the same when we pay off our mortgage. We see how much money we have in the bank and then what we will have once we pay it off-sucks but that's life. We just start building it up again. I was just posting on another blog about how I hate buying things that depreciate and it was a post about computers.. ya it sux! Mr.CBB Keep smiling and keep on going.. you won't be sorry..
Ouch, that sucks! To stay positive, it is just a money emergency and you guys are ok.
I'm glad you had the money available to pay for the needed repairs. I understand, I've been there… I would do the same thing~ charge it on my rewards card & immediately pay it off to avoid paying interests.
I will suggest that in addition to an emergency fund, ideally you'll eventually have a fund for things like car & home maintenance. If you have a car or a house, you know that eventually you're going to have repair costs. It's not really an emergency, unless you didn't plan for it.
For now, you should just start saving again & do whatever you can to rebuild the emergency fund.
I'm sorry to hear about your car troubles. I had a 98 volvo s70 for many years that made my life a living hell and repair bills higher than the car's worth. Seriously… I know what you're going through. It's one of the reasons I always wanted a "newer" car. We were lucky to save enough for a 2010 nissan versa (not the fanciest of vehicles by any means) but Japanese and reliable – that's all I care about. Its great that you had some money saved up though, it would be a bummer if you didn't. If you're like me, you're probably thinking about all the things you could have done with 2,000 right? Every time I have an emergency and money is gone to practically NOWHERE I feel so sad just thinking about what I could have done with that money if it weren't "thrown away".
@John S., we're thankful to have the means to cover these unexpected expenses and I just can not imagine needing to finance those charges right now. Stress-ful!
@Femme Frugality, yes! It is SO enormously frustrating. M. and I are discussing ways to help mitigate the walloping money pits our cars have become, including perhaps renting an apartment nearer to his work. Because every time we believe we're ahead, one of our cars poops out.
@DC, ya, this is the third time this year for car repairs (ridiculous) but we don't have quite enough yet to invest in a new, gently used vehicle. Crossing fingers that these repairs will tide us over at least another year or two while we build our funds up.
@Mr. CBB, sage advice, as usual. Resorting to credit cards as an only means is certainly a scary reality for some, and we will keep plodding along. Thank you for the encouraging insight.
@Pauline, absolutely. Although it sucks, it is only a minor glitch—as long as not a continuous glitch. Maybe the time has come to trade ol' rusty in for a bike.
@Diane, a separate car and home maintenance fund is an excellent suggestion, thank you!
@V., absolutely. It's $2,000 just…pissed away, on a depreciating asset. Gah!
Good point about the emergency fund making the repair a minor nuisance instead of a dire situation. Sorry about the car, though. That stinks.
I hate it when things like this happen. We recently lost a couple of appliances in the house which added up to about $1,500
I guess that's why you have an emergency fund, it just sucks having to use it and then build it back up again.
Have you found a way to get your last $23.99 yet so you can hit the $1,000 mark?
Sorry to hear the news. That really sucks. Perfect example of why everyone should have an emergency fund, as you say. You can't control bad things happening and it will always suck, but at least you are ready.
Ugh!!! That sucks. I'm sorry. It's always 2 steps forward and 1 step back though =(
Ugh that stinks but that's why you have an e-fund right? make sure you get the best deals from a good mechanic though, too much swindling can go on with cars. We need to get our safety done next week too!
I really hate when this happens! Especially with car trouble – that's the worst thing to spend your money on.
Sorry to hear about the unexpected car expense, but way to be prepared with your emergency fund! Good advice on being disciplined and using your line of credit to float the repairs!
I'm sorry to hear that. I can agree that it hurts to spend money from your emergency fund.
I'm also a firm believer in using CC rewards if you're very responsible with them.
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As you stated, it's money well spent to repair an old car (save on car payments) and that's what an emergency fund is for. You also just saved on credit card interest charges as well!!!
It's funny, isn't it, that we save up emergency fund money, but then we are annoyed that we actually have to spend it on an emergency!
That was good planning to have saved enough to cover the car repairs when they were needed. It was clever to run it through the credit card to max out the rewards – assuming, of course, that you pay it off during the grace period.
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