Emergency Savings

Brad over at Enemy of Debt wrote about a woman who had to go into debt in order to get her car repaired in Perfect Example As To Why You Must Have An Emergency Fund.

I just feel really sorry for people in situations like this, because I have been there myself.

That’s how I got into debt the first time… fixing a car that I thought I couldn’t live without.  I was a divorced mother of two and I was getting only a small amount of child support so I was also on food stamps and getting a welfare check from the state.  I had really great credit though, so I was able to keep my old bucket of bolts running.

I never liked the idea of having credit card debt, and when it got up to $6000 I had to do something about it.  Back then you could go to a debt consolidation company and didn’t have to worry they were in the business just to rip you off.  I wrote out my budget and paid $160 a month for 52 months to pay off my credit card debt.

But I had to go without a car in order to do that. And I had no emergency savings.  When things broke at my little mobile home, I had to figure out how to fix it, or live with the problem.   As a result, things that should have been fixed piled up over the years.  Luckily I was home schooling my children and we never got into the daily social events that kids and parents love so much, like soccer and karate, etc.  And I was living off the government.

The woman that Brad wrote about?  There’s no way to know her situation.  Maybe she’s newly divorced and had to take an entry level position because she’s never worked before.  Her credit certainly wasn’t very good.  Maybe she’s a young widow with children.  Or, maybe she is just a silly girl who doesn’t have an emergency fund.

I know of a young couple that was recently in quite a pickle, to use Brad’s terminology.  The husband lost his job, and that left them with no way to survive as the wife can’t work (illness and a young baby).  They had no emergency fund and were contemplating selling everything and moving home (Arizona) but they wouldn’t have anything once they got here and there really isn’t anyone who can take them in.  No one in their family is in a position to have extended “guests”.  I guess the young couple and their baby could sleep on the couch somewhere for a few days, but it takes longer than that to find a job, if he can in this economy and then have enough money for a first and last month rent.  Luckily apparently the employer was at fault, contacted the young man and apologized and he’s taking his job back. But when these things happen, it’s probably only a matter of time before the employer starts being a jerk again.

I have told the young couple they need to get some money saved in the event this happens again. They need to do a thorough and in depth assessment of how much of his paycheck they need to survive and put the rest into savings.  They insist they are stretched to the limit, even though the young man is actually working part time as well.

How is your emergency fund?

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