Our Emergency Fund Worked
My wife and I have stable jobs in the healthcare field. We live off 1 income. Theoretically, we don’t need an emergency fund because the chances that both of us will be out of jobs at the same time is very small. That said, I am very cautious by nature, so we have an emergency fund.
What Is An Emergency Fund
An emergency fund is a stash of money set aside to cover the financial surprises life throws your way. These unexpected events can be stressful and costly. Some of the top emergencies people face primarily a job loss, but could also include home repair emergencies or medical/dental emergencies.
Where We Stash The Emergency Fund
Our emergency fund is enough to cover us for 3 months should both of us lose our jobs at the same time. I actually keep the emergency fund conservatively invested in Betterment. I figured I’d make something on that money rather than having it sit in a low interest savings account.
Our home has 2 HVAC units. One is in the basement to heat/cool the first floor and one unit in the attic to heat/cool our second floor.
About 3 months ago, I happened to go into the basement utility room and noticed a pool of water around the HVAC unit. It was a minor issue that was quickly repaired, but it got me thinking about water damage in the home.
Water leaks can cause havoc in the home. A pipe could burst (that happened in my rental property), a pipe could leak, the water heater could give, or the AC condensation pipe could clog up….so much could happen! Thankfully homeowners insurance usually covers sudden and accidental plumbing leaks, but I want to avoid damage to the home and the home insurance deductible.
I decided to purchase water leak alarms. These are tiny devices that go under sinks, around the water heater, around the HVAC unit, behind the washing machine. It is a small device with tiny metal leads. If these leads come in contact with water, it screeches like a smoke alarm. They do make fancy wifi enabled water leak detectors, but I decided against them because of the cost. The advantage to the wifi ones are that you will be notified of a water leak if you are miles away from your home.
About 2 weeks ago, I heard a screeching sound somewhere on our second floor. I checked under the sink in our master bathroom as well as our kids bathroom. I finally checked up in the attic and sure enough, a tiny leak had started under the HVAC unit.
Had I not had the water leak alarms, it could’ve leaked through the ceiling and caused significant damage!
Long story short, our HVAC unit is 23 years old and needed replacing so it is going to cost us $5,000. Enter the emergency fund.
There is a bit of lag to transfer money from Betterment to our bank account so in the case of a true emergency, it wouldn’t work. There are other options we can use like credit cards and some existing cash in our checking account. However, since we had a bit of time between when the leak was diagnosed to when the unit is going to be replaced, I had time to make the transfer out of the Betterment emergency fund to our bank account.
Our HVAC guy is here today replacing the unit.
The Plan Forward
Thankfully we had our emergency fund in place. You never know what emergencies could arise. A leaky roof, the water heaters gives out, leaky basement, broken washer/dryer, furnace needs repair…so much can go wrong during home ownership. I hope I’ve mitigated as much as I can through insurance, counter-measures, and our emergency fund.
Regarding our current emergency fund, our plan is to fund It back to where it was for any future emergencies. We’ll likely be able to do it over the next few months.
Has your emergency fund come in handy?