As I’m writing this article I’m sitting at my kitchen table waiting for the plumber to arrive and install a new hot water heater in our laundry room.
The day before yesterday, I was running around the house cleaning up and getting everything ready for the holidays. We’re hosting Christmas dinner at our house this year and there are still plenty of things left to do before then.
My wife and I were in the in the kitchen with the kids getting ready to whip up some delicious oatmeal raison cookies when I realized the cookie sheets were still tucked away in the garage. As I cut through the laundry room to get to the garage I stepped in a puddle of water. Splash!
My first thought was that one of the kids had spilled something and neglected to clean it up, but I quickly realized there was way too much water on the floor to be a simple spill. Plus I could see the puddle growing and reaching towards the door to the kitchen.
As I grabbed some nearby towels to clean up the mess I realized that the water was coming from the hot water heater.
Great.
I knew immediately that it had rusted out and would need to be replaced. Oh boy! A nice hefty bill just in time for the holidays!
A $1,300 bill to be exact. Ouch.
It Pays to Be Prepared
Everyone faces some kind of unexpected expense from time to time. Maybe your car breaks down and needs a new transmission. Or maybe you get hit with some medical bills when your son falls off the swings and breaks a leg. Or maybe your water heater craps out like mine.
We all get hit with these kinds of unexpected expenses from time to time. So while there isn’t really anything you can do to avoid them altogether, you can do the next best things and prepare yourself for the inevitable.
Replacing our water heater for $1,300 was certainly not something I planned to do anytime soon, but fortunately I have an emergency fund set aside to cover unexpected expenses like this. I keep it in a high-yield savings account so all I had to do was transfer the money to my checking account and write out a check to cover the parts and labor.
Related: Emergency Fund Calculator
If I didn’t have an emergency fund I probably would have had to charge everything onto my credit card. In that case I’d just be stuck digging myself even deeper into debt and when you add in interest I’d be stuck paying way more than $1,300 in the long run.
To me, having an emergency fund is non-negotiable. Not only does it help protect me from unplanned expenses that could otherwise be financially catastrophic, but it also gives me peace of mind. Just knowing that I have some extra money set aside in case something goes wrong puts me at ease.
What about you? Do you have an emergency fund? How big is it? Where do you keep it?
Petrish @ Debt Free Martini says
December 17 at 5:43 amIf you asked me this question a year ago I would probably say no. Thank God I woke up and realize how important it is to have an emergency fund. The worst feeling is having something important to take care of you don’t have the funds to support it.
Jayson @ Monster Piggy Bank says
December 17 at 6:28 amAfter having my emergency fund and religiously saving, I am confident that I’m financially ready when unexpected expense occurs. I’m glad that I started saving since 2010. Now, I have less worry.
John @ Wise Dollar says
December 17 at 8:57 amSorry to hear about the hot water heater, I’ve been there myself as well. That said, love that you could just transfer the cash over and had it covered. We have a separate emergency fund just to cover home repairs like this. I hate having the cash sit there doing nothing, but it certainly pays to have it when things like this pop up.
MoneyMiniBlog says
December 17 at 9:20 amOur emergency fund is the foundation of our finances. Without it, we would be stressed out. It seems like unexpected expenses rarely pop up now that we have one though. It’s funny how that works!
Kurt @ Money Counselor says
December 17 at 11:55 amRight on! A healthy emergency fund is one of the keys to staying out of credit card debt. Too many think of credit cards as their emergency financial back-up. These are the folks that end up paying $2,000 for a $1,300 water heater by the time they pay off the charge at 19% APR! Tough to get ahead when you overpay for everything!
Kayla @ Everything Finance says
December 17 at 12:08 pmI’m still working on building a small emergency fund to rely on while I continue to work my way out of debt. I have a lot of consumer debt and student loans at pretty high interest rates, so until some of that is gone I’m only shooting for about $1-2K in my emergency fund.
Michelle says
December 17 at 3:18 pmAh that stinks! Water-related home problems are one of my most hated things.
An emergency fund is definitely needed. It makes life so much less stressful!
Shannon @ Financially Blonde says
December 17 at 5:08 pmI hate when unexpected home repairs pop up!! Whenever you have to get a plumber or an electrician out to the house you just know that you will have to pay. We recently experienced a financial surprise and were thankful that we were prepared for it. It’s scary to think about what you would have to do if you weren’t prepared.
Gary @ Super Saving Tips says
December 17 at 11:54 pmWe had our hot water heater rust out just past warranty last spring and it came at the worst possible time. Fortunately we not only have an emergency fund, but we have some repairs and appliance replacements built into our long term budget. It’s important not only to have that safety net for an emergency, but to rebuild it afterwards so you’re prepared for the next thing that comes along. ‘Cause there’s always a next thing.
Laurie @thefrugalfarmer says
December 18 at 8:24 amOuch!!! SO glad you guys have that emergency fund to take care of this. How much less stressful is it, knowing that all it takes to solve this problem from a financial standpoint is a transfer of funds, instead of having to spend weeks or months stressing out about this purchase and how long it will take to pay it off?
Stefanie @ The Broke and Beautiful Life says
December 18 at 10:48 amThis happened to me with my dental implant. So not how I planned on spending $1,500!