My stove broke. We had a technician out to check out the 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 landlord’s problem (thank goodness!), but the stove is ours, so we are on the hook for the actual stove expenses.
I’m pretty grateful that the gas problem was caught because it’s 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 it’s 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 these types of situations turn people off from having a fully-funded Emergency Fund as a goal. It’s better to have budgeted for this situation in the first place.
I beg to differ. The 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 the “All the Things I can’t Budget for because I Am Human” fund. The point is the same: it’s 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 it’s nice to have that option.
Our other “Emergency Fund” is what we are still building. This will hopefully have 6 months of 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 again at $1,000. Then we resume putting money into our “Emergency Fund.” It is 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.
Over complicating budgeting, savings, and finances are not really in your best interest unless these types of things fascinate and excite you. Simplification is the key to consistency and successful results.
This goes double if you have joint lives or finances with someone else. Chances are, even if you are endlessly fascinated by budgets and line items, the other person in your life is probably not (and if you both are, then this blog is probably not for you). Simplifying, reducing, and combining as much of your budgeting and finances into simple, manageable pieces will go a long way to having a successful budget and a clear way to financial security.
Good thing we have a Life Happens Fund- our stove saga continued with some good and some bad news.