Be Selective with Emergencies

An emergency savings account provides a lot of financial and mental security. We’ve learned, however, to exercise selective emergency savings account management to avoid using our emergency savings at every opportunity. See an example of this in real life.

A few months back, we blogged about a car accident we had with our Mini Cooper, otherwise known as Dita. Denver roads are horrible after last winter for no known reason, other than we apparently don’t pay enough taxes. There wasn’t more snow or freezing and thawing than other years. Anyway, we failed to avoid a Grand Canyon size pot hole and broke Dita’s rim and tire. Fortunately, we had an emergency savings to tap into for out of pocket expenses. Even more fortunately, we didn’t need to tap our emergency savings account.

Another “emergency” has come up, though. About a two weeks ago now, Dita’s “check engine” light turned on, suggesting a problem. We recently added oil, so we were unsure of the cause. It turns out the gas cap was cracked and needed to be replaced. We were fortunate enough, again, because the part only cost $25. Including the diagnostic test and labor, we paid $250 out of pocket. Again, there was no need to tap our emergency savings account.

The diagnostic test revealed another, more costly problem. The wheel baring for the wheel that landed in the Grand Canyon is cracked. This is likely due to our accident, but wasn’t caught by the tire company when they replaced the rim and tire. Also, two of the remaining three tires must be replaced. Once all is done, it only makes sense to correct the alignment. All totaled, this will cost us $900.

All of this work must be done and none of it is an indication that Dita is becoming more expensive than she’s worth. We decided, therefore, that this doesn’t constitute an emergency. We have a second car that we can use until we have enough non-emergency cash to pay for this repair. Once the work is complete, we’ll pay for it with our credit card to acquire travel miles. When the credit card bill comes due, we’ll pay it off with the cash we saved.

Part of us wants to get the work done to Dita and pay it off with our emergency savings just to get the project done. This is likely how most people would feel. Because we have a second car and because our emergency savings account makes us feel so secure, we’ve chosen to move this project from the emergency column to the high priority column.

An emergency for us would be the unexpected loss of a job, a medical issue, a broken refrigerator or both of our cars becoming undriveable at the same time. We’re fortunate enough that we can carpool to our day jobs. Not everyone has this luxury.

Our advice is to make every attempt possible to avoid using your emergency savings account, should you have one. Be selective when you use your emergency savings account, no  matter how small or large it is. If everything is deemed an emergency, there’s a chance you’ll deplete your emergency savings and have nothing when a legitimate emergency arises.

Of course, not everyone has a second card on which to rely or two cars isn’t enough. If that was our situation, we’d have to tap our emergency savings account. Fortunately, we don’t. Again, it’s still nice to know our emergency savings account is there.

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Comment List

  • I definitely agree that you need to think through things a little bit before jumping in to using your emergency fund because once you make that first withdrawal from it, it starts to get a little easier to rationalize using those funds for other things. That is why you need to define for yourself what a true emergency is and stick to that definition when things pop up.

    • John Schneider 27 / 08 / 2015 Reply

      Exactly! It’s so tempting to want to tap into that large amount of money. We had an emergency savings account that we depleted because we wanted to buy things for our new home. While these things were investments in our condo that increased our property value a little. We regret that mistake and won’t ever do it again. That’s why we’re more selective now. Hopefully this inspires people. Thanks for reading and commenting!

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