Why I’m Glad I Have an Emergency Fund

Why I'm Glad I Have Emergency Fund - picture of woman and child with broken down car in the snow

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Last Friday, Greg and I were heading out of town for a short weekend trip with the kids.  We packed the car with two suitcases, a cooler full of food and drinks, and anything else that we could think of to keep a four-year-old and two-year-old happy for the four hour drive.  It was Greg’s birthday and we were super excited for our little weekend getaway.  So, we hit the road at about 3:00 p.m. and chatted excitedly as we prepared for our weekend full of fun.

(Don’t worry, folks.  We’re still on FALL FINANCIAL LOCKDOWN.  Our weekend trip was free!  I will be writing about it later this week.)

But, Greg’s 2009 Toyota Prius was sounding a little funny.  Then, all of the sudden, the dreaded check engine light turned on.  So, Greg pulled over to see if he could diagnose the problem.  Unfortunately, after lifting the hood, he remembered that he knows absolutely nothing about cars at all.  “It looks normal,” he said as I started to panic.  We were only about thirty minutes from home, and it was his birthday.  I didn’t want car trouble to ruin his special day or his weekend trip, so we decided to turn around and head for home.  Once there, we would just load all of our crap into my periwinkle minivan and be on our merry way.

But, we started having more problems.  As we made our way home, the air conditioning quit working.  Then the brake light kept coming off and on.  Then, the power steering went out.  And unfortunately, we were on a fairly busy highway without much of a shoulder to pull off on.  So, we kept going.

Getting Stranded

At a certain point, the car literally died and quit driving.  Fortunately, we were able to pull it in to a nearby cemetery as it totally gave out.  And, at this point, I had no idea what to do.  Our car was filled to the brim with things for our weekend trip and my two little kids only seemed annoyed with the entire situation.  Frustrated, I did what any adult would do in this situation.  I called my mom.

“Ummmm…..mom?  We’re stranded on the side of the road.  Can you pick us and all of our stuff up?”

My parents picked us up and I called a tow truck.  For $84, they agreed to tow our car to the nearest Toyota dealership about seven miles away.  We finally got home and unpacked and repacked the car again before heading on our way.  But, this time, we weren’t as carefree and excited as we were the first time that we left home.  This time we were stressed out about the cost of car repairs.

How Much Will This Cost?

Unfortunately, neither of us know much about cars at all.  But, we figured that something big had to be wrong, right?  After all, the air conditioning went out!  The power steering went out!  The car was beeping and flashing! 

Considering all that went wrong in the span of about ten minutes, I just assumed that it was going to be expensive.  “Let’s just assume that something big needs to be replaced and it will cost $5,000,” I said.  “Then, if it’s less, we’ll feel super relieved and happy.”

Greg and I agreed to assume it would cost $5,000.  And as we drove further from town, we also agreed to not stress about the car repairs for the rest of the weekend.  And, we didn’t.

This is why I’m glad I have an emergency fund.

There was a time when I would’ve totally freaked out if I thought we would have to pay $5,000 for a car repair.  Even as recent as five years ago, the repair could’ve wiped out a substantial part of our savings.  Fortunately, times have changed and we have a healthy emergency fund set up for this exact type of thing.  And, the truth is, $5,000 isn’t what it used to be.  At this point in my life, I’m incredibly thankful that we have an emergency fund set aside to deal with unfortunate events exactly like this one.

The Final Verdict

The Toyota dealership called Monday morning and I braced myself for the damage.  “I have good news and bad news,” said the guy from the dealership.  “The good news is that your entire problem is covered by a recent Toyota coolant pump recall.  The bad news is that you need new tires.”

We had been talking about getting new tired for months, so we made our peace with that expense right away.  And at the end of the day, I ended up paying $750 for four new tires, front and back alignment, a brake light replacement, new wiper blades, an oil change, and something else that I can’t remember.  And although I wasn’t thrilled about the entire situation, I was truly relieved that I didn’t have to hand over 5K.  Now that part of my emergency fund gets to live another day, and I feel like I just scored $4,250 in free money.  Woot!

Do you have an emergency fund?  If so, when has your emergency fund come in handy?

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  1. I have two separate emergency funds, one for my rentals and one for personal household. The rental emergency funds is very important as that buffers me from choosing bad tenants as I can float vacancies. It came in real handy when we changed the carpet to flooring and the unit was vacant for a few weeks.

    1. I totally hear ya on that one!

      We have some renters moving out of one of our properties on January 1st and I am already dreading it. It will probably need to be vacant for at least a few weeks until we have time to get it repainted and cleaned up.

  2. Sean McNulty @ MyMoneyPlatform says:

    Nice article and definitely number one priority in my books. The safety net of an emergency fund alleviates so much stress in a household. An unusually high bill, a medical emergency, car trouble; all things we would freak out about and stress over normally are now allowed to be less relevant in the grand scheme of things…like they should be.

    1. Yes, I totally agree. My emergency fund keeps me sane!

  3. This post brought back way too many flashbacks from my car. There’s no worse feeling than driving along feeling fine when all of a sudden your car starts to fall apart. Glad it was such an easy fix for you guys and I 100% agree that this is exactly why it’s so comforting to have an emergency fund. This situation becomes merely annoying rather than catastrophic.

    1. Yes, exactly. It was a terrible feeling…especially because my kids are in the car!

  4. As they say, $hit happens when you least expect it and when it does an emergency fund will surely keep you afloat in the muck.

  5. Good that you people were able to enjoy the weekend despite of the car breakdown. It would be really annoying situation if you are heading somewhere with your whole family and such problems occurs. Well, in your case it ended in a better way and you could save $4250 from your emergency fund. These funds are real saviors in some unexpected situations and having a decent amount of emergency funds gives you a sense of relief to handle any kind of emergency situations

    1. Yes, exactly. I totally feel like I saved $4250 (or $4150 if you count the cost of the two truck) Either way….winning!

  6. Yes, we have a large emergency fund. It definitely makes these types of things less stressful all around. We have two older cars (fortunately we have had good luck with them so far) so we have the potential for repair bills on occasion. We don’t have any payments on them (owned free and clear) that that makes the occasional repair no big deal. Glad to hear you were able to head out on your weekend getaway.

    1. Thanks!

      I think that having the cars paid off also makes a difference. I’m not paying on them monthly so an occasional repair seems more tolerable for some reason! =)

  7. I love this story. I think my husband and I would be a bickering mess if something like that happened. I like how you set your expectations on a $5,000 bill and went about your day. What a great way to look at it. The added benefit is that anything less makes you feel like a winner. And yay to the Prius. I miss mine.

    1. Ha! It’s actually an awesome car and I’m so glad that we got the recalled part fixed. I had no idea about the recall so I’m actually glad it happened.

  8. $750 isn’t bad! We recently had about $1k in unexpected car repairs a few months ago…then the month after that we needed new garage door coils for our heavy wood garage door…another $500 or so. Thankfully we had the cash. I am more motivated than ever now to build a big emergency fund!

  9. I have an emergency fund, but I can’t say I’ve had a real emergency in where I had to use it. It definitely gives me a peace of mind knowing I have a back up plan should things go awry.

    1. This is the first time we’ve had to use much of ours. Still glad it’s there!

  10. I don’t have a large pile of cash sitting around. So now I don’t have a traditional emergency fund. I don’t see the point in losing money to inflation year in and year out. I do have about $2K in cash I can access right away, but other than that everything else is working for me. I can access the money within 2-3 business days and just use a credit card if I have to pay for something right away. I guess I’m just not as risk adverse as some people.

    But I won’t talk anyone out of an emergency fund if that is what you need to sleep better at night. I’m a big fan of making sure people feel comfortable.

    1. Yes!

      I don’t have tens of thousands of dollars just sitting around but I do have more than 2K. I think it just depends on a person’s comfort level, like you said.

  11. NICE!

    That is so awesome! Car repairs is one of the things that I just keep hoping won’t crop up before I have a chance to beef up my emergency fund. It can be really scary! So far my emergency fund has only been touched for things like car repairs and pet illness, we don’t own a house we’re free from dealing with that stuff just yet.

  12. And this is why I love having an emergency fund! It just makes life so much more comfortable because you don’t have to worry as much about expenses that may pop up.

  13. Sorry to hear about the troubles, but glad you got out fairly unscathed in only needing new tires. We do have an emergency fund and for reasons just like this. Life is just too unpredictable that I wouldn’t want to be in a lurch because something crapped out on us. Thankfully, we’ve not had to go into it for some time…hopefully it stays that way. 😉

    1. Yes, that would be preferable at our house as well!

  14. Congrats on getting out of the dealership without having to fork over a kid for payment. 😉

    Our emergency fund came in handy not too long ago when we found out the back deck had termites. Thankfully, they hadn’t got to the house structure so just the deck awning had to be replaced. It wasn’t something that could be put off as the deck awning is a continuance of the house roof so if it collapsed, so does the house roof. $1700 later, we had a new deck awning. Thankfully the emergency fund saved us from what could have been a horrible situation.

    The Warrior

  15. Gotta love the emergency fund. I know some people don’t like “losing money” to inflation, but who wants to have to cash in investments when the market is down?

    I always do the same when something breaks. In my head I’m sure it’s gonna cost a bazillion dollars. When it’s only $100 I then breathe a huge sigh of relief.

  16. I am the poster girl for why people should have an emergency fund.

    I did have almost $1,000 in an emergency fund but I got over-excited about paying down debt and I put it on my HELOC. Then my car needed 2 repairs and now I have a balance of almost $1,000 on my Visa. Lesson learned the hard and expensive way.

    1. Oh well. You can do it differently next time, right?

  17. Kyle @ Debt Free Diaries says:

    I love this post! Over the last few years our cars have broken down several times (the joys of having old cars!) and our emergency fund has always come in handy. Haha, actually almost every time our fund has finished being restocked we’d need to use some of it again…so I know we’re getting close to new repairs! I always try to over estimate the repair amount too, so I feel relieved when/if it’s less.

  18. Until last year, I was driving a 2002 Pontiac Sunfire. It was on it’s last legs when the engine started smoking one Sunday morning. It cost ~$700 to fix, but right after that the A/C went out. That was an estimated $1,500 to repair. The car was only worth a bit over $2k though! Doesn’t make sense to do repairs that were nearly as costly as the whole car’s value. So, sometimes dipping into emergency funds doesn’t make much economical sense (even though cars are never an asset to begin with).

    1. I wouldn’t fix it either! I would probably just drive in the heat.

  19. I have an emergency fund, but I’m trying to build up a second one so my first one can just be savings and used for investing.

    Glad to hear you were able to stay safe while your car complete crapped out and only had to pay for new tires!

  20. We are kind of like Brian who posted earlier. My husband hates to have a lot of cash sitting earning nothing so almost everything we have is invested somewhere. But we do have a special investment account set up for this purpose. Additionally, we have what we call a reserve fund for normal expenses that exceed our budget allotment for some reason. For example, if we underspend our budget amount on groceries, the excess dollars go into the reserve account. Then later if we exceed our grocery allotment, the money to make up the shortfall comes out of the reserve fund. We have a bunch of designated categories that coincide with our budget categories and we keep a running net total for each category. My husband is a retired accountant and I love dealing with finances so this works for us.

    1. Sounds like a great plan! As long as it works for you, that’s all that matters!!!

  21. Read my post tomorrow. I got some great advice recently about er funds.

    While in debt we have a small fund but will increade when debt is gone!

  22. Why I can say that is is good that you didn’t have to spend a lot of money to get the car fixed, that dealership ripped you completely off on the tires and all of the other stuff. $750??? I know the size of those tires and those should have been less than $400, probably $400 with the alignment, then about $100 for the other things. Should have been out of there for $500. This is why I hate dealerships.

    Sorry for my breakdown there, but I am never a fan of the stealership. They always overcharge and I know you were expecting a lot of money for the repair, but they still took you for an extra $250!

    1. Ha! There were a few other repairs in there as well. Plus, I chose the mid-tier tires and not the cheapest ones. I also had to have shims placed on the back tires because the alignment was completely off.

  23. Hope you had a great weekend! I tend to dwell on my worries and probably wouldn’t have had a good time.

    We’re still working on an EF…have about $320 in there now. It’s slowly growing (very very slowly).

  24. That story sounds SO sadly familiar to me when my car died in the middle of the freeway in LA at rush hour back in March. I also had a decent emergency fund but my car actually did end up costing 5k when it was all said and done (I think I got taken for a ride by a sketchy mechanic). It does feel good though to know you can pay cash for that kind of thing. You take a hit, but it’s better than going into debt for it. Sorry it was a hiccup in your weekend plans but sounds like everything turned out OK. Glad it wasn’t more money!

  25. Hey guys, first off, happy belated birthday Greg!!! As far as the emergency fund goes, yes, I do have one! I think it’s incredibly important. It hasn’t come in handy recently but, it did help me move to Oregon on a whim 2 years ago!

  26. Whew!!!!! When I read the part about assuming the repairs would cost 5k, I got a serious lump in my throat. SO glad it wasn’t that much, and even more glad that 5k isn’t too terrible of a bump in the road for you guys. Way to go!

  27. Ugh. We got 4 new tires (6 if you count the bike tires!) as well this month. It’s never fun, but knowing that you’ve got it covered and can absorb the blow sure makes it much easier to deal with stress wise.

    1. Yes, definitely. That’s part of owning a car, unfortunately!

  28. Holly! This is bitchin’!!! Exactly how we think. We overestimate the amount we think something will cost, then celebrate when it is less than we thought!!! Rarely, does something cost more than we estimated because we are so ridiculous in our very high bidding. Then, of course, we go blow another $20 on lunch to celebrate, but ya gotta live, man. Gotta live.

    The ES-Fund is far better than Lunesta or any other sleep aid. So happy we have it sitting there waiting to cover our ass when we need it. Have a blaster of a Tuesday!!!

    1. Ha! We actually hit Subway on the way home from picking up the car from the dealership. We totally celebrated!

  29. Amen to that. MY emergency fund is finally 3 months of expenses, and it seems that I have an emergency every week now!

  30. I have AAA so I get free towing…it has been worth it for the peace of mind, especially since I have a long commute. AAA also offers discounts on various things so that makes up some of the costs. If the cost of the repair was anywhere close to $5000 for a 2009 car, I’d think it was time for a different car.

  31. Your story was kind of funny. Greg opens the hood and “everything looks normal” lol and then the car died on you guys and you pulled off at a cemetery. Anyway, I just started an emergency fund like 2 months ago and it has already rescued me. I do not know what I would have done without it when my car decided to break down.

    1. That’s what he said! Haha! Really, we don’t know much about cars at all.

  32. That’s pretty funny that Greg opening the hood and remembering he doesn’t know anything about cars. 🙂 I think emergency funds are for sure handy when it comes to car repairs – even though repairs and maintenance all come with owning a car, it’s always a bummer to pay out for some reason even though it’s used on a daily basis (or that might just be me). That’s awesome that it only cost less than $1k, and for stuff that was needed, anyway. Happy Belated Birthday to Greg!

    1. Thanks Anna! Yeah, I thought it was pretty sweet. Our tires were basically bald…so we saw that coming anyway. We were going to try to work it into the budget in September. Oh well!

  33. Oh my gosh, this has happened to me! I am happy you guys were able to enjoy your weekend and that the final cost wasn’t terrible. It sounds like your emergency fund gave you the peace of mind you needed to enjoy your weekend. Nicely done! We are still working on building ours.

  34. Great post, Holly! Thank heavens it didn’t cost the full $5000! But this is why it’s always smart to purchase a car that’s somewhat below your means–problems like this always seem to crop up, no matter how new and reliable your car. It’s better to leave some cash in the bank, in an emergency fund.

    1. Yes, totally. I hate having a new car anyway. People run into it, birds crap on it. Totally not worth it IMO.

  35. I’m a huge proponent of emergency funds. They aren’t very glamorous but they are your BFF when you need them. And I don’t think I’ve ever meet anyone who hasn’t needed to dip into their emergency fund at some point. Glad everything worked out and you were able to enjoy Greg’s birthday weekend! And Happy Birthday to Greg too. 🙂

  36. We had a similar experience this summer, and it turned out to also be a warranty repair. We weren’t happy about having a potentially big repair bill, but the E fund does make it not such a big deal. The bigger deal would have been getting home from 5+ hours away, which is easily fixable with a rental car, also covered by the E fund. Otherwise, the credit card bill that couldn’t be paid off in a month could have reared it’s ugly head, a path I refuse to go down again.

  37. Emergency funds are great! They’re perfect for situations just like this where financial stress can rear its ugly head. We have a decent sized emergency fund and so we rarely feel stressed financially. So far we’ve only had a few unexpected costs covered by the fund like emergency furnace repair and for an exterminator to remove some birds getting into a vent.

    1. I like to have a big one too. It helps me sleep at night!

  38. This is so funny. I just said the exact same thing to my husband yesterday. Thank God we have an emergency fund. August has been sucky for me and I’ve had to spend nearly $500 on doctor’s appointments, test and meds so our emergency fund was very much appreciated. A year ago, I would have been completely screwed so boy am I glad I have an emergency fund. Now we just have to put $500 back in there and we’re good to go. Glad everything worked out for you guys as well. By the way, my brother in law had the exact same issue a couple of months ago with his prius and it was covered due to the recall as well.

    1. Really? See, I had never heard anything about it. Over all, I’m just glad it got fixed and no one was hurt. Having the car die on a highway was super scary!

  39. If we saw emergencies coming, they wouldn’t be emergencies, so the fund is a necessity.

    Without one, people end up underwater and drowning fast.

    Cars are such a killer! Sweet relief on the warranty though.

    1. I know! I never expected that in a million years!

  40. ah yes.. the Prius troubles! I once nearly missed my plane because my dad´s Prius broke down before we even got on the road… an E-fund is such a must!

  41. Just knowing my EF is there is what helps me. It took us over a year before we steadily had $1,000 or more in an EF. But this past Christmas my boss gave a very generous bonus and we were able to boost it to $5,000 and then put aside some more in a regular savings account.

    Really, it’s just the peace of mind I get when I stare at the balance on the bank website. Silly, but it works.

    That said, we will finally really have to dip in thanks to some costs that accrued this month. We had to pay the yearly insurance bill and we finally sucked it up and bought a plan for our A/C. (We’re in AZ, so it’s important. Plus it’s only $50 more per year than the cost of the yearly checkup. It’s just that we had to pay five years all at once.) In other words, we’re being hit for $1,800 just for those two items.

    Honestly, I’ll probably still take it out of savings because I love having that intact EF. It’s completely psychological, I know.

    1. That’s ok. I do all kinds of things for psychological reasons. Some things – like peace of mind- are priceless.

  42. Holly, I really love that you were able to go on and enjoy your weekend. We do the exact same thing – overestimate and then (hopefully) celebrate when it turns out to be less than expected. We didn’t have an emergency fund when our two A/C units broke within a year of each other (TX summers…ahh!!!), so we ended up with credit card debt. It is now paid off, but we resolved to never be without an emergency fund again.

  43. I do not have a standard emergency fund because I keep my money working for me. It helps to do some really good planning too.

  44. Bf says I’m pessimistic, but I always like to over estimate how much things will cost. Like you said, that way I’m pleasantly surprised when the cost of something is less than I planned. Glad your car only needed new tires. Sounds like a steal of a deal considering how serious it all sounded.

  45. I have done this many times! Knowing that something is going to be expensive, and then inflating the expected price in my mind keeps me from panicking when I get the final bill! My emergency fund is there for when true emergencies happen, and even though I know I should feel fine falling back on it, I am a worrier, and using this trick helps to ease my mind!

  46. I hate when trips start out with something like that! I’m glad you were still able to go and have a good time. I do the same thing – assume it’s going to cost a ton, and if it doesn’t, I do a happy dance. That’s great the issue was covered under a recall. I’d have been flipping out as my boyfriend and I aren’t too good with cars. I was once in a car where all the lights on the dashboard started going nuts for no reason. Turned out something was up with the sensors, but it’s still scary! Happy belated birthday to Greg as well!

  47. That’s a stressful situation but I’m glad the costs weren’t as bad as they could be, and I hope Greg still had a great birthday. Emergency fund to the rescue!

  48. Currently I don’t have an emergency fund. Between trying to save for a new place in the city, pay off debt, and saving for my dream vacation to Europe, I haven’t been able to build one quite yet. I will start trying after reading this article. I know you have to always be prepared for the worst. I guess in the event something happens my trip to Europe fund will become my emergency fund but I’m hoping that doesn’t happen.

  49. Aside from the fact that I don’t have an emergency fund and this makes me lose sleep at night, the really important thing here is that I hope you REALLY thanked your mom for saving you butt! Moms can drive us crazy at times, but when push comes to shove, they are there for you.

  50. Thankfully you do have an EF! Even if the repair was covered (which, by the way, you are so lucky!). It gives you the peace of mind and helps you avoid a complete money meltdown, haha.

  51. Hi Holly,
    Unfortunately, many people do not realize the value of an emergency fund until after an emergency happens and they do no have any money for this. Your story is a typical example of being ready for such situations. It should serve as an eye-opener for all of us.

  52. Great post on the importance of an emergency fund. I had an interesting situation where our emergency fund saved us big time. My son was due to be born in early January. Knowing that the hospital bills would keep coming in despite pretty good insurance coverage, I signed up for about $2000 of flex spending money through my employer.

    As fate would have it, my son was born 2 weeks early in late december. When I tried to pay the hospital bills with the FSA account, they informed me that the service had to be done in 2013, and my son was born in 2012. Just missed it by a few days. So we essentially had to pay a couple of thousand dollars in medical bills that we didn’t expect. Thankfully our emergency fund was well funded and we were able to easily cover the bills. I don’t want to imagine how stressful things would have gotten if we didn’t have that emergency fund.

    Now we have around $2000 in FSA money to use before the year is up. My wife always did want LASIK…

  53. I also had a recent car scare. I was on vacation and it hit me that the issues I’d been experiencing with my car might actually turn out to be bigger (and more expensive) issues than I initially wanted to admit. Because I was on vacation, not with my car, and had no answers, I decided to not let it ruin my time on vacation (and away from stress.) The issue could have been a $5 fix, or a $5000 fix, but I didn’t know and because I had an emergency fund, I chose to not become fixated on the problem until I had my answers. I had an emergency fund and knew that if the worst case scenario played out, I would still be able to live comfortably.

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