EMERGENCY! Or Just Minor Inconvenience?

EMERGENCY! Or Just Minor Inconvenience?

What a wonderful weekend we had. Sun was out, birds were singing and our water heater stopped working….wait. WHAT?!

This is what we woke up to after realizing we had no hot water.

Yup, it finally happened. Owning a home had finally caught up to us and we were about to fork out some serious dough to get our precious hot water back. People had warned us about the “true” cost of home ownership. Many people said homes are a burden compared to renting because of all the repair costs. And it seemed like we were about to prove them right by forking out $1000+ on our first home repair ever.

Be Prepared

And then I remembered that we had actually thought ahead a little bit before diving into home ownership. First, I remembered we had access to the internet, so there was no need to hire someone to replace the unit. I just searched “how to replace a gas water heater” and viola, step-by-step instructions. Second, we had an emergency fund in place for situations just like this (I recommend having at least three months’ worth of expenses in a savings account before purchasing a home). Weirdly enough, I was actually excited to spend the money on replacing the water heater. I felt like the office safety coordinator who had been walking by the fire extinguisher every day, waiting for my chance to break the glass and save the entire building (I may or may not have very nerdy social fantasies…). My emergency fund is earmarked for “emergencies only“, so imagine my joy when I finally got to dust off the ol’ fund and put it to use!

This is the process we use to put our emergency fund into action:

  1. Purchase the required materials using our rewards credit card (more on that in another post).
  2. Add up the total cost and transfer that amount from our ING Direct Money Market Savings account (where our emergency fund is stored) into our BECU checking account.
  3. Pay off the credit card right away so it does not interrupt our normal monthly budget.

And that’s it! As usual, spending the money was the easy part. I then followed the step-by-step instructions with a LOT of help from my brother-in-law, some helpful hints from my father-in-law and some tips from a friendly neighbor. Though it took most of my Saturday to replace the unit, we were only out $550 instead of the possible $1000+ had we hired out the labor.

New water heater installed and working that evening.

There are two things I would like readers to take away from this story:

    The internet can save you money. If you are reading this blog, then you have access to the most powerful, comprehensive knowledge database in the history of mankind at your fingertips. As the saying goes, “knowledge is power”, but it can also save you from paying for someone else’ knowledge or labor. I am from the school of thought that you can be your own emergency fund on some occasions if you take the time to educate yourself on how to find information on the internet. I distinctly remember a sign posted on the door of our IT department at school. It was a picture of the Google homepage printed out, and it said “Have a question? Try here first.” Pure genius.
  1. You MUST have an emergency fund in place before you start doing anything else with your money. I started my financial journey using Dave Ramsey’s “seven baby steps” and definitely think that he has a solid approach to handling your money. He suggests having a “baby” emergency fund of $1000 before you even start paying down your debt. Though I don’t follow his advice of “never use credit cards” (see above), I do recommend that for every credit card purchase you make, you have the cash on hand to back it up.

Comments: Do you have an emergency fund in place? If not, have you had any instances where you wish you DID have one in place? For those that do, what situations have you used it in? Also, my fantasy baseball team is just awful this week. Anyone want to trade for Puljos?



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  1. Great DIY project. Seems to be a rash of water heater problems these days. I think this is the 3rd story I’ve seen this week.

  2. Congrats on saving yourself big money on the labor. That always feels satisfying when you can take on a project like that and avoid paying a professional. It sounds like the emergency fund paid off too. I admit I don’t have an official emergency fund, but I do try to keep $1000 or so somewhere that I can easily access it if I need it. Luckily I haven’t needed to use it lately.

    • I love DIY! It’s almost as satisfying to complete a project myself as it is looking at the savings. We keep $1000 in a savings account at all times for immediate needs, and our 3 to 6 months of expenses fund is in a money market account, but it takes a few days to transfer out of it. Helps us keep our hands off of it, and justifying vacations and new cars as “emergencies.”

  3. DebtsnTaxes says:

    We don’t have an emergency fund right now…kind of. We have money in savings, but it’s not earmarked for an EF yet as we are waiting on our refi to go through. Starting in June we will have more organized accounts that are earmarked for certain things. I truly believe that having one will not only save us eventually, but it will be a huge stress reliever not having to worry about unexpected expenses.

    I agree with you on learning how to do your own maintainence. I do most of the work on our vehicles and our home. I haven’t had to mess with anything electrical yet. Learning how to do something ourselves can really be a money saver in the long-run.

    • You will love the security you get with an emergency fund. It turns these HUGE, LIFE-ALTERING PROBLEMS such as your water heater dying into just a small bit of work with no effect on your monthly budget. You hardly notice when these things happen after a while.

      I have an entire post about this, so I won’t go into it now, but you should definitely NAME ALL OF YOUR SAVINGS ACCOUNTS so that you don’t have an ambiguous lump of money. Sounds like you’re getting it together in June, though, so congrats on that. Getting organized relieves stress and increases fun! 🙂

      • DebtsnTaxes says:

        For sure, we have been trying to do all of this long ago, but had some hiccups come up with our refinance. Really hoping it gets done this month, then we should start seeing some good progress.

  4. Congrats on the ReFi! We haven’t been able to qualify due to negative equity and PMI. Sounds like you’ve got some fun financial times ahead :D. BTW, I’m diggin’ your budget spreadsheets you have posted on your blog! I color-code mine too!!! 🙂

  5. Oh man, I feel your pain! That happened to me 2 years ago and it flooded the basement! DISASTER!

    Need to change the water heater first BEFORE it blows! Everybody check!

    I don’t have an emergency fund. The reason is in a post entitled, “The Emergency Fund Fallacy”.

    • Bummer about the basement. We got lucky because it was a slow leak that didn’t ruin anything, but definitely could have been WAY worse! I read your post, definitely an interesting way to look at emergency funds. I am a big fan of having SOME liquid cash in a fund earmarked for emergency, but not as a means of enabling frivelous spending. I agree that it can lead to complacency, but even more so if you have a pile of cash sitting there with no name. I think we may agree here, as your idea is that if your savings is not earmarked for emergencies, then you are able to put it to work. I think that you should have a small EF ($1000 or so) completely accessible, but your larger EF can be doing some work, but be somewhat liquid.

      In my case, we just had a kid and we barely have enough income to cover the necessities (which is a whole other story, coming soon…), so we keep $1000 in a bank savings account, and about 5 months’ expenses in a Money Market account. We need immediate access to these funds on a monthly basis to cover our necessities, so it would be detirmental for us to lock away the cash in a CD.

  6. Very nice job on replacing that without hiring people! I wouldn’t have done it by myself. Kinda glad i’m renting right now, don’t have to worry about anything except paying the rent and electricity

    • Renting is a great idea for reasons just like this! My old self would have never taken on a project like this, but getting married really motivated me to think about provision for my family, and one of the things I felt was important was learning maintenance for cars and basic home repair. This allows us to save some serious cash in the long run and really helps because we don’t have a lot of breathing room in the budget at the moment. I remember back in the day, though, I didn’t know where my oil dip stick was in my car, and my girlfriend (now wife) had to show me :). I’ve definitely come a long way, and again, I thank the internet for providing much of the information!

  7. Reading these posts makes me worry about my own house. I’m getting another water alarm because we live in a split level – no basement. Very cool you were able to install it yourself.

  8. Thanks John! Seriously, I love the access we have to “how to” videos and step by step instructions these days. I feel like I can tackle almost anything. And good idea on the alarm. Flooding the entire downstairs of your house would definitely drain your savings in a hurry!

  9. I totally agree with you re: how good it feels to have the money available to solve an emergency rather than having to use debt to do it. It might have been Dave Ramsey who said something like this: “If you have an emergency fund, your emergency isn’t actually an emergency after all, because you’ve been preparing for it to happen.”

    • It is just nice to know that something like this won’t sink us. I used to live in such a way that didn’t allow for anything like this, and it was much more stressful.


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