Emergency!

I spoke a little about emergency funds in an earlier post.  What exactly is one and why do you need one?  In our family we have a lot of “emergencies” that arise. Just last month we had an unexpected bill and had to tap into our emergency fund. In my mind, an emergency is something you did not plan on in your budget, but needs to done. For example, an unexpected medical bill or unplanned repairs to your car.  My husband and I started using a budget with an emergency fund after we had a lot of debt from credit cards. If something unexpected happened, we would just use the credit card and we went further and further into debt. We knew something needed to change, and using a budget has greatly helped us stay out of debt. 

One emergency we've dealt with happened when we lived in Portland. We had a snow storm close to Christmas.  There was over two feet of snow with drifts over four feet tall in places. In our front yard it almost came to the top of our front porch. We could literally walk right off the porch and land gently in the snow.  This made me a little nervous because we planned on visiting my parents house for Christmas, and we were not sure if we could make it there safely. Since my husband was a pastor of a church, we were not planning on leaving until Christmas Eve, but because of all the snow the church decided to cancel the Christmas Eve service, so we were able to leave earlier than planned. We loaded up the car and off we went with our chains on ready to venture out on the snowy roads. Once we made it to the freeway, the chains needed to come off because the roads were bare enough. As we went on the freeway, we could see other cars' chains littering the road.  Unfortunately our car hit one and a flat tire ensued.  This was not how I imagined our trip: on the side of the road trying to put on spare tire in the cold. Fortunately, a stranger saw us struggling to put on the spare and stopped to help. My family and I finally made it to the tire store with our poor car. The tire store was able to replace the tire and off we went only an hour or two behind schedule.  Luckily we had some money in our emergency fund to cover this unexpected cost.

You might be thinking, that sounds great, but how do you start? You set aside a certain amount of money each month. You can keep it in your checking account or savings account. I recommend putting it in a savings account that you don't touch until you need it. You can also keep track in a budget app. Every Dollar is an app I recommend.  Some months we set money aside, others we aren't able to. If we get extra money from taxes or selling things in our house, we will occasionally put that in our emergency fund.This is different than saving for a big item, like the sofa we saved up for. This is for things you weren't expecting to happen right away.

When an emergency happens, we just transfer what we need to our checking account.  After we use the money, we try to build it back up again. Ideally, saving up 3-6 months worth of expenses is a good goal to aim towards to have in your emergency fund, but an initial goal of $1000 is a great starting point. 

Having an emergency fund gives me peace of mind that we have some reserves saved up in case we have a rainy (or snowy) day.