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My stove broke. We had a technician out to check out gas line and he discovered an issue with our gas line and where it connects to our stove. Since we rent, the gas line is our landlords problem (thank goodness!) but the stove is ours so we are on the hook for the expenses to the actual stove. I’m pretty grateful that this was caught because its pretty scary to think that we may have used the stove without realizing there was a gas issue. For now, we can’t use the stove until its resolved and we are not sure how much it will cost yet. A technician is supposed to come tomorrow. Meanwhile, we are stove-less.
Luckily we have an Emergency Fund!
This is what the emergency fund is for! This is pretty much the definition of an emergency: we can’t push this off (We need our stove to cook especially since the High Holidays are coming up pretty quickly), we can’t skimp on the repairs and we can’t DIY since the gas company will need a licensed and insured technician to sign off on the appropriate repairs.
Should I have Budgeted for this?
There has been discussion about the importance of an Emergency Fund. Someone on Twitter mentioned that its these types of situations that turn people off from having a fully-funded Emergency Fund as a goal. Its better to have budgeted for this situation in the first place.
I disagree. Fact is, you can’t really budget for every eventuality. If we did have an appliance repair line item in our budget- we would have maxed it out a while ago as for some reason all our appliances are needing major repairs this year. I don’t really see the point in budgeting for so many different eventualities. The amount of money you are putting away is the same- the numbers don’t change just because you have more things to budget for.
You have a specific amount of money that needs to be divided up into your budget categories. That specific amount does not get bigger just because your budget items do. If you get bogged down with too many categories and line items and envelopes and funds- that is what gets you discouraged. How can you keep up with that? How can you even keep track?
Introducing the “Life Happens Fund”
You don’t need to call it an emergency fund. You can call it an “Inevitable Fund”. You can call it a “Life Happens” fund. You can call it “All the Things I can’t Budget for because I Am Human” fund. The point is the same: its a fund for things that come up unexpectedly.
How We Do It
Currently, we have two “Emergency Funds”. One is the $1,000 Emergency Fund which I think from now on I am officially renaming the “Life Happens Fund”. We picked that number because Dave Ramsey suggests it and it seemed like a good idea. That fund is in a CapitalOne 360 Savings account. If we can, we put the “life-happening” on a credit card and then pay it off (thereby getting some points as well!) but we also can withdraw the money in cash if we need it. Many technicians offer a discount if you pay in cash so its nice to have that option.
Our other “Emergency Fund” is what we are still building. This will hopefully have 6 months living expenses in it. This is in a high-yield savings account (Barclays) and is growing awfully slowly. The reason for the incredibly slow progress is because every time we have to use our “Life Happens Fund” we stop funding the “Emergency Fund” and put our money towards our “Life Happens Fund” until it is a again at $1,000. Then we resume putting money into our “Emergency Fund”. It is a definitely a one step forward, two steps back type of situation. But at least there is movement!
Simplify. Simplify. Simplify.
How do you Budget for Unexpected Expenses?
By creating a “Life Happens” Fund you can save money for all those things you didn’t budget for.
Good thing we have a Life Happens Fund- our stove saga continued with some good and some bad news.