Latest posts by Joe Pawlikowski (see all)
- Top 5 Apps All Small Businesses Need - May 12, 2013
- 5 Crucial Tips for Buying a New Smartphone - March 9, 2013
- 5 Steps To Turning Around Your Finances - February 20, 2013
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Do you remember the agony of the last unexpected expense you incurred? For the unprepared it means breaking out the credit card and racking up even more debt. Not only that, but it also means paying far more for the expense than required, thanks to interest. Since the unprepared typically take months, or even longer, to pay off these expenses, that interest can take a toll.
The only solution is to start preparing now. Need a good reason to start an emergency fund? Here are seven big-ticket items that can break any time — and that might make you really consider socking away some money every week.
1. Computer
We’ve come to be dependent on our computers. This isn’t necessarily a bad thing — we can do things on them that we just cannot in offline life. The biggest drawback is that when the computer breaks, and computers do break often and for multiple reasons, we need a quick replacement. Since a new computer will cost you hundreds, or in the case of a Mac thousands, it’s best to start saving now for that inevitable day when your computer dies.
2. Refrigerator
When you rent an apartment you don’t really think about these expenses. If your refrigerator goes your maintenance man comes by with a new one. But when you own a home that’s just not the case. And do you know how much a decent refrigerator costs? Maybe you don’t want to know. Maybe you’re better off just starting to save now, so you’re thankful for those savings when you finally do need to replace yours.
3. Car repair
There is perhaps no greater hassle in life than when something goes wrong with your car. It means you have to find a reliable mechanic — good luck! — and then deal with not having a car while they fix it. Having an emergency fund for these instances can mean covering the cost of repairs and maybe having enough for a two- or three-day rental. And hey, you never know when you might end up needing a new car.
4. Medical emergencies
Even if you have insurance, you never know what it might not cover. This goes especially for dental insurance, which can get quite technical. (Try getting your non-impacted but still bothersome wisdom teeth removed and you’ll see what I mean). Need to stay in the hospital? That could cost you, too. Insurance is nice, but it doesn’t cover everything. Best to have a little socked away just in case.
5. Water heater and furnace
Here’s something else apartment dwellers never have to face: a broken water heater or furnace. Like the refrigerator, this is something you need fixed immediately, so there’s really no time to scramble for cash. Again, you don’t want to see the price of a new furnace (with installation, of course). A water heater isn’t quite as bad, especially if you go with a new-fangled tankless water heater. They’re cheaper and take up less room in your basement.
6. Pet emergencies
There is no doggie health insurance. Sorry, but you have to cover Rover’s costs out of pocket. My sister-in-law’s puppy just had to spend three days at the vet, and of course they got hit with a steep bill. Pets might not be as expensive as children, but they’re not cheap either.
7. Emergency travel
Unexpected events occur all the time, and because they’re unexpected we’re typically unprepared for them. While there is no way to prepare emotionally for an unexpected death in the family, there is a way to prepare financially. An emergency fund can help you cover travel costs and your portion of the funeral costs. It’s not fun to talk about, so I’ll stop here, but you just never know when you have to book a last-minute flight.
Not convinced yet? Then you’ll never be. But take it from someone who has racked up immense credit card debt due to unpreparedness. Start socking money into an emergency fund and don’t stop until it can cover any possible costs. Chances are you’ll never get to that point, because you’ll be dipping into it frequently.
Twitter: iseocompany
Hi Joe,
I must say that I have never come like this before and I definitely appreciate your post for this. These seven points that you have just highlighted above are the necessities of our daily life. Yes, I would definitely agree that we need to maintain some funds for the emergency purpose and if any of these necessities goes down. Thanks for the update!!
Twitter: Part_TimeTed
Smart advice Joe.
For years now I have always made sure to keep a few grand stashed in an untouchable savings account for situations like these. I can’t imagine not doing it to be honest. Any time I have had to draw down that account for some reason, I immediately start feeling anxiety about it and force myself to replenish the account.
I haven’t been a paycheck to paycheck guy for more than 20 years now. I never understood how people could do that to themselves and not have any kind of safety net for when things go wrong.
Ted recently posted..Who Makes Money And Who Does Not Make Money Blogging
If someone says to another to save the money . The first thing they say that they have no money for saving. However I think we should follow this formula – Income – Saving = Expenditure. We don’t know when the bad time will be start to follow us. We should always be ready to tackle that time.
There are literally hundreds of reasons why you should have an emergency fund! Saving up for emergencies and any unexpected/uncalled-for events is called being smart. Good post, thanks!
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Twitter: WerryAdnan
Great Posting Joe
If you don’t have an emergency fund and are hit by any of the unforeseen events listed below, you’ll be forced to rely on credit cards, take out a loan or tap your retirement account. This could leave you drowning in debt or without enough money to fund your retirement. It’s really nightmare..
Thanks Joe for your great tips. It’s help me to budgeting my money wisely. I’ll be waiting for your next tips
Werry Adnan recently posted..Dicari Reseller Kaos Bola Untuk Setiap Kota
lolol i got to mention this one…. lolol but… hahahaha you forgot emergency money to pay Taxes!!
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He he yes, thats a good one. Tax is important, more important then anything else in this world!
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Yes it is lol unfortunately though!
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In today’s world when life has gone so unstable, we must have emergency funds with us for any unforeseen event. I believe everyone must save atleast 20% of his monthly earnings and create a pool of emergency fund.
Sameer recently posted..How To Improve Relationships At Work
Yeah emergency fund is a must
Sparing 10% of income every month is a good way to make it
Jean-Luc recently posted..Lancement de la Scpi Primovie
LOL, all these thing are unnecessary. The only thing you need today are self discipline and a fat wallet to survive!
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Twitter: HappyHealthyetc
Emergency Fund is a must and I ,personally, think that everyone should have one besides having regular savings account and 401k. You never know what will happen tomorrow and it’s always good to be prepared. Thanks for a great article!
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Crazy, most people are one disaster away from bankruptcy. All it takes is a few dollars a month in a savings or invested.
Joe S. recently posted..How to keep your vehicle clean and clutter free.
funny you stopped at 7 the list could go an and on. Suze Ormon recommends at least 6 months income to fall back on. Easier said than done.
Twitter: prosperouscoach
Oh yes. Six of these have happened to me over time. The vet is the one that happens out of the blue and resisting pulling out the old credit card is difficult to do. One thing I do is take my expenses from the year before and average out all expenses, putting away an amount monthly into my savings account to take care of such issues. Suzanne
Twitter: bhar
Unfortunately people are not saving. People need to save some money every month for those rainy days or an emergency otherwise getting hold of emergency cash can be difficult. Something like this cannot be ignored.
Shalu Sharma recently posted..Places to visit in Bangalore
I agree with you that sometime we spend money on things which are not so necessary.After spending on some things we felt about that but there is no choice.So we should save money for our emergency and future.
Bhushan recently posted..Travel Portal Software Development Delhi Noida
Hey,
I dont know why you are posting these kinds of Article ?
I guess you have left tax for emergency fund !
thanks
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I know it’s important, but sometimes it’s just incredibly difficult. I don’t often spend more than I have to, but still never seem to be able to keep an emergency fund.
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Twitter: tricky_techno
you are right we always keep emergency fund with us…because we never no what is coming next..!!!
mohit rajwani recently posted..Add and Manage Accounts in Windows 8
I’m agree with you Joe
In life you should expect the unexpected, and this is why you need an emergency fund. The best you can do is to prepare for emergencies that require access to additional money and having an emergency fund is the ideal solution.
Pindahan Kost recently posted..Jasa Pindahan Kost di Benhil
People definitely underestimate the things that can happen without warning. I just moved out and have been trying to have a safety net just in case. How much do you suggest saving a month to have a good safety net?
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Twitter: @alexconde
You’ve listed a lot of things that might cause you to spend your emergency fund, but the peace of mind is the biggest reason of all in my mind!
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Twitter: Aditya Antil
From these all points i prefer to save money for medical mis happenings which can happen anytime.One cannot take care of rest of all points if he/she is not fit to do anything.
One cannot travel in emergency,one cannot take care of pets,repair care etc etc.
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great advice, recently my macbook air broke down and I can’t really afford to replace it. And that is very inconvenient. Maybe I should just go for a cheaper one.
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Hi Joe,
All of the reasons you have stated here are true. Most of the times, we save up for emergency purposes, especially for medical expenses. I think another reason would be to save up for car expenses (repairs or getting a new/secondhand one, or simply for fuel expenditures). You’ll never know when you’ll need them, but hey, they really will be handy anytime you’re in need.
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Twitter: Teach_Computers
Things always happen at the most inopportune moments too! Good advice and great post!
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Excellent post – and we got hit hard last year when both my partner’s and my computer broke at the same time. We’ve made sure to have enough funds for emergencies ever since.
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Hi Joe ! This is very interesting Article. The first thing they say that they have no money for saving. However I think we should follow this formula – Income – Saving = Expenditure. We don’t know when the bad time will be start to follow us. We should always be ready to phase that time.
Well thanks for sharing this post.
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It’s always good to have a strategic reserve for car repair. Furthermore, people should make sure they understand their coverage, and now who they’re dealing with as a mechanic. If you don’t do those two things, you can end up needing additional, unexpected reapirs because the insurance company refuses to pay for the claim, or they get steered to a DRP “preferred” shop.
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Twitter: ULBlog
I love this post. I have a small emergency account myself, and it has helped my out with a medical emergency. But I know so many people who don’t have such accounts, and when asking them how they deal with emergencies, they fully depend on loans.
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I totally agree with this one. We can’t really tell what happens to us so it would be best to have an emergency fund. We spend a lot of moneys on other things, why not spare a little for emergencies? Thanks for sharing this one Joe, I enjoyed reading it. Great article!
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True! Everybody should consider having an EMERGENCY FUND, everyone of us need it. We don’t know what will happen to us tomorrow or the following day. At least, whatever happens we have something that we cant take out from there and use it for really important cases or situations.
Twitter: @rommysunnyblog
In India it is termed as “Roti,Kapda aur makan” It means people just need food clothes and home to live.this post recalls me those days when our country was so poor and Now yes Now we can also start to think on the points that you mentioned.
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Twitter: @bestofshayari1
i agree but i would add one more point right now i need emergency fund for the hosting …for me time has come to pay hostgator
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Twitter: peachesgolden
What about unexpected vet bills. If my dogs get sick I consider that an emergency.
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