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How an emergency didn’t become a crisis

October 2, 2012

Beautiful Day

In my last post I briefly wrote about how my husband needed an emergency route canal.  Prior to having an emergency fund, this situation would have been a crisis.  Not only would we have dealt with the physical components of having a route canal (the pain, discomfort and inability to work for a few days while on pain meds) but we also would have dealt with the fact that we didn’t have money to pay for it.

Since we had an emergency fund, it made the situation so much easier!  We actually had money to cover this unexpected expense and didn’t have to worry about all the extraneous decisions that come with not being able to afford it.  After reading Dave Ramsey’s “Total Money Makeover” it made sense that emergencies will happen so why not prepare for them?  He recommends having a 3 to 6 month emergency savings of your monthly expenses (the bare minimum you need to eat and pay the bills.)  We saved enough for a 3.5 month emergency fund. Unfortunately the route canal and the computer breakdown happened within a few weeks of each other, it was like a one-two punch but we were still able to afford both.  We are now down to a 3 month emergency savings and deciding if we should totally replenish it next month, or just leave it and keep paying down the house.

Questions for you: What do you think? Should we replenish our emergency fund next month (approximately $2,000) or should we leave the emergency fund alone and use that money to keep paying down the house?

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19 Comments leave one →
  1. October 2, 2012 10:37 am

    well…I would recommend building up a 6-month emergency fund [I think Dave would too] before really buckling down to pay the mortgage off. What a relief that you were prepared 🙂

  2. October 2, 2012 11:10 am

    I would replenish it. You guys are kicking butt on the mortgage, and who knows when the next emergency route canal is going to come up?

  3. October 2, 2012 11:20 am

    I’d build up the emergency fund first. You never know what’s coming your way. Have a great day!

  4. October 2, 2012 12:06 pm

    I would replenish as well.

  5. October 2, 2012 1:11 pm

    I agree with everyone else, build up the emergency fund. A mortgage will be there and you know it is due each month, however, and emergency is unknown, so it is best to be prepared… I guess I should practice what I preach too. Thank you for making me analyze my financial situation and motivate me to make a change.
    Hope all is well.
    -CAT

  6. Healthy Glow Nutrition permalink
    October 2, 2012 2:42 pm

    I am happy that you had your emergency fund and didn’t have the added stress that comes with paying for unexpected emergencies. In this case I would focus on rebuilding the emergency fund, you’re on a roll with paying off your mortgage so it is probably best to have that fund replenished 🙂
    Hope your husband is doing better.
    Eva

  7. October 2, 2012 4:35 pm

    i would rebuild the emergency fund first… emergency funds are wonderful things

  8. October 2, 2012 6:42 pm

    Just like everyone above, I would build up the emergency fund to where you and the hubby are comfortable with. As Dave put it, everyone has a different size “Security Gland” and the emergency fund should reflect that! It’s cool to see that the emergency fund really helped you guys out with your situation. It’s scary to think of all the emergencies that can happen at any given moment. Luckily, you guys were prepared to handle it with stride!

    Strong Work!

    • October 5, 2012 11:26 pm

      Totally! Thanks Ron! I never thought we would really have to use it. So glad we prepared for the unexpected. It’s just a bummer that I think you guys are all right and I need to buff it up a little again before we make another major payment towards the house. How is your new place?

  9. October 2, 2012 9:42 pm

    You sound torn, so I would almost consider splitting the money. Say you have $1000 to put towards either each month, put $500 to both. Also, your emergency fund won’t need to be as big once you’ve paid off the mortgage, so maybe build up a 6 month emergency fund at the level without a mortgage payment?

  10. sensaatio permalink
    October 3, 2012 5:37 am

    I’m definitely not the best person to ask for help on financial stuff but I would put the money to the emergency fund… one never knows what can happen!

  11. October 3, 2012 6:05 am

    Replenish. Possibly cut spending if you can so you can get back to your mortgage goals faster.

  12. October 3, 2012 9:31 am

    I think it really depends on what the job market is like for both you and your husband. If you are in an industry where it will take longer to find a position, replenish your EF and possibly look into upping that to 6 months worth. If you are both in fairly stable industries, pay down the mortgage. I say this because even with the root canal and the computer, you have only been set back half a month and you guys seem to be on a roll with the mortgage repayment.

  13. October 4, 2012 6:55 pm

    This emergency fund calculator is used to estimate how much money should be set aside to pay for financial emergencies. The calculator takes the total of all essential living expenses, and uses this information to determine the size of a minimum and optimum emergency fund. From this value, the calculator subtracts any money already set aside for this purpose to determine the additional savings required to meet this need.

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