Two weeks ago, Angelsong wrote me to tell me about how her emergency fund had come in handy recently. I always love to hear success stories, so I asked her if she’d write her story in a post. She did, and here it is!
Last year, my husband and I bought a new home for the first (and likely the only) time. Becoming a homeowner has done much to make me aware of certain attitudes I have about money. I have been reading Being Frugal and a few other personal finance and frugality themed blogs since shortly after we bought the house and made a commitment to living a frugal lifestyle so that we can pay for it in less than the thirty years of our mortgage.
One of the central themes Lynnae and others write about is the importance of having an emergency fund. While the idea of an emergency fund is one I agree with, we did not have one until just a few weeks ago. When the budget is tighter than tight, saving money appears to be impossible. Expenses always seem to expand to absorb the funds available, and then some. Saving, my husband and I agreed, was a nice concept, but in reality, it was not happening . . . until we made a fundamental shift in our thinking.
I’ve always prioritized my spending in what I thought was a responsible manner. I pay the mortgage before buying food, for example. The more I read, the more I realized our priorities were not altogether what they should be. We needed to remember the old adage, “pay yourself first.” If we take money and put it aside before paying any other expenses, we don’t miss it, and it’s money we can put into savings. We also realized we don’t absolutely need to set aside hundreds of dollars each month (although that is an eventual goal). I believe everything counts.
When we were considering options for a savings account, we decided we did not want an account at our local bank, because we do not want the money in the account to be too easy to withdraw on impulse. We opted to open an online savings account with a single ATM card for withdrawals (because my husband is even more an impulsive spender than I am and I didn’t want two cards to double temptation), and we opened the account in mid September with a ten dollar deposit. I already felt great, because the ten dollars was nine dollars more than we actually needed to open the account. We were setting ourselves up to succeed.
Just as we pay the mortgage each month and add “just a little extra” for the principal and escrow because everything counts, we take a little money from the checking account each month and transfer it to savings. We promptly began to ignore the money in the account, except for making transfers into the account each month. In other words, money goes into the online savings account, but it does not come out, unless the need is dire. I soon discovered how valuable the savings account really is.
My job is such that I can work from home most of the time, and I absolutely need my computer to do my job. My employer does not supply the computer, and does not pay for repairs, so I am responsible for ensuring the machine is in working order at all times.
Last week, I was reading personal e mail, and the computer abruptly rebooted for no apparent reason. I thought it was a fluke. It wasn’t. I was at work later in the day, and the computer again rebooted several times without my input. Some of my work is time-critical, and I cannot afford to have delays due to a computer acting up. I realized something was wrong that I could not fix myself. I contacted a computer technician near my home who agreed to have a look at it. Meantime, I contacted my supervisor in the office, and told him what was happening. I ended up borrowing my husband’s computer for several days while mine was down.
The technician found I needed a new motherboard, which was an expense I was not expecting. I was not in full panic mode, only because I knew I had money in the savings account for just such an emergency. The computer is back up and running, thanks to the emergency fund. This was money we had not budget for and would have had difficulty coming up with, had I not been putting aside those few dollars each month.
Do you have an emergency fund? If not, consider starting one with just a few dollars. As Angelsong said, every little bit adds up!
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I'm just an average mom, trying to live a frugal life and get out of debt. I write about things that have (and haven't) worked to improve my family's financial situation. What works for me may or may not work for you, and you should always consult a financial advisor before making important financial decisions.
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