The family and I recently went on vacation. Nothing glamorous like Hawaii or a place where people speak a foreign language. We travelled a few hundred miles and visited some historic sites and amusement parks. Before we could leave for week of fun, our emergency fund would be stretched to its limits.
For weeks, the middle age minivan was making a strange noise (and not just the noise that I make when I sing along to the radio). I let it go as long as I possibly could, but since I didn’t want my family going up in a ball of flames while we were driving down the highway. Okay, that wasn’t really going to happen, but it is pretty cool in the movies. I finally took it to our mechanic, who has worked on our vehicles for years and has always been fair with us. We needed new rear brake pads and the rear rotors machined. I had dollar signs floating around my head, but it only ended up costing us about $200. Not too bad.
Flash forward a few days later while we were driving down the highway and the middle age minivan began making the same noise, but worse. I took the van back to the mechanic and had him look at it once more and he determined that it was not the brakes or any other part that he could tell. He suggested that it may be the transmission and that I take the van to a transmission specialist to have it checked out. The dollar signs that were once floating around my head for the brakes now tripled. The transmission specialist quoted us $3,000 to rebuild the transmission. Holy Crap!
Now Middle Age Money Woman and I were now faced with a decision. Do we keep a 7-year-old minivan and put $3k worth of repairs into it or look for a certified pre-owned vehicle that would be nice and reliable?
We decided to look around for various reliable certified pre-owned vehicles and see what various dealers would offer us for a trade-in on our minivan. We looked at a Subaru Crosstrek and Chrysler Pacifica. Both reliable vehicles with low miles and we were actually able to get the monthly payments down to a manageable level. My wife and I kept going back and forth about the payments versus just getting our current, paid off, vehicle repaired.
It came down to the Monday before we were leaving for vacation (we were leaving on Friday). It was going to take 4 days to rebuild the transmission if we were going to go that route. At the 11th hour, we decided to make the frugal decision to repair the vehicle that we already had. It seemed like the lesser of two evils and worked out better on paper even though it has almost 100,000 miles on it.
So the emergency fund gets tapped once more and is pretty much hurting at this point. It is almost ready to raise the white flag and surrender. And with a family vacation on the immediate horizon, we are tight to begin with. We pick the van up the night before we are ready to head out and pack it up with all of our crap for the trip. At the butt-crack of dawn, we are out the door and on the road. Twenty minutes into our drive, I hear a noise that has been etched into my eardrums and memory forever.
This sound, that is worse than any karaoke singer on Earth, stayed with us for 10 days of family fun and vacation. This sound, that is worse than any two cats fighting in a back alley, haunted us for 10 days of driving with two children over 600 miles. It also involved our vacation budget being cut a little tighter because I wasn’t sure what was actually wrong or what it was going to cost.
When we arrived home, I immediately called our mechanic. I think I am now on his Christmas card list by the way. I told him how the noise returned and that we had the transmission rebuilt, etc. He looked at the van again and determined that it was a wheel bearing. I could just see our emergency fund clutching its throat and gasping for air. This was going to cost me another $500.
So that is a total of $3,700 spent on 7-year-old vehicle that has been paid off for a few years. When we were looking to trade it in, we got an offer of $7,000. The Middle Age Money Family was reeling from all of these blows it was taking financially. I didn’t even mention the $2,000 we had to put out for a new water heater just a month before that. I felt like I just went ten rounds in a heavyweight fight. It was lucky for us that we had established an emergency fund of 4 months of expenses.
This is one reason I always keep telling you to establish a solid emergency fund. Life is going to throw you a curveball, always. You will eventually have a water heater go bad on you. You will eventually have car repairs that will drain the life out of you. It is just a matter of when it is going to happen.
Were these occurrences painful? Hell yes! Were they life ending? No, thanks to proper financial planning. We are definitely going to have to build our emergency fund back up and that will take a little bit of time, but it will get back to where it was. We will get some life back into it and hopefully nothing else will happen before we get it re-established.
The takeaway from this story is that life is going to happen. If you follow the basic steps of personal finance and protect yourself from things that could possibly arise, they become inconveniences instead of life changing events. It is almost like a bullet-proof vest. You will definitely still feel pain, but it greatly decreases the chances that you are going to die. Okay, that is a drastic comparison, but you know what I am trying to say.
I would love to hear what you have experienced with your emergency fund, or lack thereof.