It all started with a root canal. An hour and a half sitting in a dentist’s chair with the majority of my mouth frozen and I now have a tooth drilled out of my head. If I had overcome my original embarrassment and the cost behind purchasing a night guard, I may have avoided a costly root canal. Ironically, I still have to buy the night guard, as the other side of my mouth may be going the same way. Oh, joy of joys! I find it amusing how the human brain works and we think we can postpone certain things in life. We inevitably make the problem only worse. To resolve the monetary issue, I now have to dip into my emergency fund to pay for anything not covered by benefits. Thank lucky stars I have an emergency fund!
[quote]A recent article from CNN Money reports that roughly three quarters of Americans live paycheck to paycheck. The shocking truth is that 50% have less than three months of a money cushion saved, with 27% having nothing at all to rely on. [/quote]
Why my Emergency Fund is going to Hate Me
The money madness doesn’t end at a root canal. The money is literally stampeding out of my wallet for the month of August like a herd of buffalo. What are the August money dilemmas? First up, there’s the root canal that will total approx. $2700 once it’s all done, about $800 out of my own pocket. Next, my poor cat is sick and I had to shell out $225 yesterday, with a potential for more if I have to buy medication. Third, my car appears to need the brakes changed; the loud squealing usually means it’s time for brakes. Brakes you can’t postpone because you either stop or you don’t stop. I don’t feel like using another car and/or wall to stop my car.
I also decided to add to the money circus by taking vacation, buying another pair of sunglasses while on vacation and choosing August to get my hair cut and a mani/pedi. Clearly, I enjoy a challenge, as I have quite the marathon to run to recover from August.
What if you had no Emergency Fund?
How would you handle it if you couldn’t cover all these emergencies? For many, we go into more debt. What if you had no credit? What if you had no way to pay for it? Would you be willing to starve? Would you sacrifice your internet, cell phone or TV? I regularly toss around in my mind giving up the “little things” to compensate for major financial dilemmas like August. It’s been debated in the financial community and blogosphere, especially through the “latte factor”. Make your own coffee; don’t make your own coffee. Give up the little things that nickel and dime you, don’t give them up. Does it really save you money? Time is money…and on and on like a droning robotic voice.
We like to think we have a choice but I honestly believe those of us in debt don’t have a choice, or, in all reality we shouldn’t. No, not like lock you away in an asylum if you have debt, more akin to you shouldn’t buy expensive lattes and clothes when you essentially have no money. We’re like automatons, we just buy what we think we need whether we do need it or not out of sheer convenience. If you want to be out of debt as quickly as possible, you need to cut all non-essential spending. When you owe, you have no lifestyle. Our lack of mental fortitude to our own emotions keeps us in a spending spiral. You have to want to change. Life is worth so much more than stuff.
Lessons I Learned about the Importance of an Emergency Fund
- You can’t budget for everything. Even though we would like to, it’s just not possible to budget for every little thing that comes up in life. For those that think budgets suck, it’s even more important to have an emergency fund. Honestly, I love my budget, it makes it much easier to set and track my financial goals. It also helps me learn about myself.
- When it rains, it pours. The universal law of truths; whatever can go wrong usually does go wrong and all in the same period of time. Lesson being, have enough emergency money saved for several things that may come up simultaneously or within a few weeks of each other.
- Being proactive pays (or saves). However, you put it, keeping yourself (and your pets) healthy will save you later on down the road. If you keep things running in top form, you’ll be less likely to have to dip into your emergency fund too heavily.
- Low interest rates on savings. Just because the banks pay little to no money on your savings does not mean you should not save! You still need money for those unexpected things that come up. No, not a case of beer, that’s not a real emergency. Sure, 1.4% may be dismal interest but paying 19.9% on credit card debt is just plain stupid.
- Be careful what you use it for! I thought it would be super fabulous to get my haircut, have a manicure/pedicure, and use money from my emergency/travel fund. Realistically, this is not what an emergency fund is for.
I’m staying positive, focusing on abundance instead if lack and working my butt off to get a large commission at work to cover, so here’s hoping.