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What a wonderful weekend we had. Sun was out, birds were singing and our water heater stopped working….wait. WHAT?!
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.
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:
- Purchase the required materials using our rewards credit card (more on that in another post).
- 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.
- 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.
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.
- 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?