Wednesday, December 29, 2010

How I Used My Emergency Fund

Well, it just happened to me. A rainy day. An emergency. Emergency might be too strong a word. But I did have something break that required repairing. Two days ago the a leak started on my water heater. I didn’t realize it at first. I saw some water on the floor and later that day no hot water.

I called around to get some prices for a new water heater. I called Lowe's and Home Depot they both had good prices. It turned out I had a 10% of coupon for Home Depot so I went there. The cost for the heater was $420. I got out the checkbook for the Emergency fund account and went down to get the heater. The store was offering 10% off if I opened up an account with them. It was tempting, I could have another 10 percent off. I was justifying it that I could open the account and just pay it off, then close it. Use credit or pay by check. 
Of course I chose the latter and paid by check from my emergency fund. 

But it was because I had erased my debt and built up an emergency fund that I was able to deal with this in a calm state of mind and not worry about where was the money going to come from to make this repair. I didn’t panic and place the payment on a credit card. I had the cash in reserve and I used it. Of course my wife and daughter laughed at me because they kept joking how it “hurt” me to part with the cash. And they were right – I hate parting with my hard earned money and savings. But better that than to go back into debt.

Sure, $420 may not seem a big deal to some folks. But to others it could be the source of great stress if they don’t know where the money will come from. Others may feel self-defeated and think, “stuff always breaks and I have to put it on credit card. I’ll never get out of debt.” But with a plan to erase debt and build an emergency fund, an emergency will just be an inconvenience and not a nightmare of falling further into debt.

Erase your debt and you too will have the money to take on life’s surprises.


  1. This is the perfect example of why emergency funds are so important!

  2. Not yielding to temptation is the greatest victory of all! Instead of getting enslaved by cc debt, you chose to be free! You. Are. Awesome. :)

  3. Having the money for emergencies has made our life so much better.
    I LOVE that you avoided another credit card!
    Having cash is even better for us. When the power went out for a week in our area last winter- only cash could be used....We got everything we needed by taking our own flashlights and using cash. It really did feel like the old west:>)

  4. We are in the process of replacing our hot water heater as well. What kind of hot water heater did you get, and what size? My husband is getting ridiculous prices of around $1200.00 to replace our 50 gallon hot water heater.

  5. Budget, Moneycone, Janette, It was hard to not use the credit card, I hate to part with that cash. The credit card doesn't hurt to use, cash hurts to part with.

    Sharon, What I did was go down to Home Depot and bought their 55 gallon electric water heater. The trick is I put it in myself. I have the flexible water connections that just screw on and off. I had a plumber install them years ago. I have been in my house since 1991 and this is the third water heater for us. I put the old plug on the new water heater, filled it up, plugged it in and I was done.

  6. Ah, that makes sense. We have gas, and our county requires a permit and inspection upon installation. Installation costs are around $500.00, the water heater is around $708.00. Where did you get the coupon? That will definitely help us.

  7. With a gas water heater it makes sense to have it installed professionally. I did the same at a small motel we used to own. At home and work I get to do all these types of repairs. I go to Home Depot all the time to get my building materials so I always use a coupon there. If you want some Home Depot coupons, there aren't any, but I use a Lowes coupon at Home Depot. They take competitor coupons even Ace Hardware coupons. I get all my Lowes coupons from EBay. I usually get them 20 at a time. I pay around $1 each for them. It's great because I spend almost $100 each time I go to Home Depot, 10% off every time is saving a lot of mone,. you can probably get 10% of on the instalation too.

  8. Great post here Dave! Thanks for submittin' this to the Festival o' Frugality this week. Perfect execution of use of your emergency fund!

    How many months expenses do you keep in your fund? I tend to go with about 6 months.

    Another interestin' decision that I have been ponderin' lately in Frugal Holler is whether or not it is more important to build up an emergency fund or pay down credit card debt.

    What do you think?

  9. I like to keep about 3 months of expenses in my emergency fund. I would think a lot of people have debt because they didn't have an emergency fund. Taking money from the Emer. Fund to pay off debt makes me nervous. But if you needed 1/3 of it or less to finish your debt off. I'd say OK but build it back up quick because Murphy will see and he'll go to work on you.

  10. You can get the Lowe's coupons for free at your local post office. They come in the change-of-address kits that are lying around.

    I still use a credit card for these kinds of expenses ... and pay the bill immediately. Depending on the card that can either get me a 1-3% cash rebate or miles towards our next trip in first/business class overseas. While there is an annual fee for the mileage cards, a recent free flight to Germany last year would have cost at least $8,000 so we are coming out WAY ahead. ;-)

  11. Thanks, Bob. I didn't know that. I have been getting them off EBAY for years. I usually pay $1 each.


Join 1000's of People Following 50 Plus Finance
Real Time Web Analytics