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.
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.
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.