My Debt Blog

Well after having the issue with my car, I cannot stress how important it is to have an EF. I’m not sure if I ever commented on the EF before, but I’ll explain my views on it.

Characteristics of an Emergency Fund:

• Baby EF If you’re just starting out, like getting out of debt, have a starter emergency fund in place. It has been recommended that $1000 should be sufficient. If you have a family, it would be wise to double or triple that starting out.
• Full EF Maybe you don’t have debt or just completely paid off all your non-mortgage debt, time to save. A good emergency fund contains 3 to 6 months of expenses, not income.
• Emergency! Don’t rush to this money like it will make your problem go away. Sit on the issue at hand and see if you can get through it without having to resort to the money. If it won’t happen, at least you have this money sitting there for it. Christmas is NOT an emergency either, it comes every year in December people.
• Inve$tment? Too many people think they should take this money and invest it to make money on it. This money isn’t for investing, it’s insurance for when life happens. Don’t tie it up in a CD or bonds, a money market will do. Keep this cash liquid and accessible to access it when you need to. It will rain and you’re going to need an umbrella.
• Rebuilding Maybe avoiding the emergency situation was too much to handle, and you had to use it. Now that things are back on track, replace the funds that were used back into the EF. Avoiding this crucial step and leaving the EF underfunded could become a problem later.

There are a lot of cases where you might need this money. Covering the deductible on medical insurance, sudden job loss, mechanical breakdown (like a car?), death in the family, and the list goes on. As I stated before this money isn’t sitting there like a savings account you can go blow on Christmas or a vacation. You set the money to the side and forget about what else you could be doing with it. People just starting to get out of debt often skip this step. The reason it is there is to avoid having to borrow money in the event of an emergency. Why would you fix one problem by going into debt thus creating a new problem? The EF is there to avoid trepidation and ease the situation at hand. You know as they say: People who fail to plan, plan to fail.

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Last night I wanted to run an errand, and my car wouldn’t start. At first it was confusing which quickly turned into frustration then anger. I could hear the ignition switch kick in the starter, and the starter was turning over normal but the engine wasn’t firing at all. Not even a choke or a cough, no fire. At least the car is sitting in my driveway and not the side of the highway.

For the most part it sounds like I am at the mercy of a mechanic. I’ve got to get it to them, towing it there is going to run some money anyway, and then hopefully it will be something easy for them to spot. I’ve narrowed it down to spark or fuel. Either the spark plugs are bad or my fuel pump isn’t functioning. Either case I could be looking at $200-500 in parts and who knows how much in labor to replace stuff. What is sad is this is the first major breakdown my car has gone through. I change the oil regularly, check my fluids, change air filter, and don’t beat on the car by quick acceleration or hard breaking. Sometimes things break though so this is just part of life.

Hopefully this won’t be a huge setback, but I will most likely be part of the EF to handle this car issue. This is exactly the reason everyone should have an EF! I’m glad my wife has a job now too and we don’t have to go through this battle scraping by my income alone. Debt reduction could be limited this May, but my asset doesn’t have much value it doesn’t work.

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