Observation #11: 911 is a Joke..The Emergency Fund

The emergency fund. Does anyone have one? When you are trying to pay off debt, isn’t it an emergency? How much should your emergency fund be? When do you use it? Is a new huge flat screen TV to replace a smaller TV an emergency before the NCAA Tournament? My brain hurts.

Three years ago we had a meeting with our financial planner. I asked him if we should set up an emergency fund. He said no. If we ever had an emergency, we could use our line of credit. So we did. Now I have this blog.

I’m not saying that my line of credit wouldn’t have gotten so high if we had an emergency fund but the line of credit option was just too easy. I feel like lines of credit are like Oxycontin and credit cards are like heroin. Oxy is prescribed legitimately for pain but before people know it, they are hooked. Normal well-meaning people using their lines of credit because they can. Credit cards are different. Everyone knows they are evil. Don’t chase the dragon at 20 plus percent interest.

Certain experts say that you should have an emergency fund that would keep your family afloat for six months if you lost your job. This makes sense. I mean I got my will done and took out life insurance to take care of my girls if something happened to me. An emergency fund in place would be essentially for them. Taking care of my wife and kids is my number one priority.

On the other hand, say you saved 10 grand and let it sit there for times of emergency, is it an effective use of your money? Couldn’t that money be working for you? Paying down debt or your mortgage or an amazing vacation.

I think it would be so tempting to use that money for something if it was just sitting there. We live in a house that was built in the 1980s and it has the original furnace. It will need to be replaced. We have a powder blue Toyoto Matrix that will need to replaced. (A) because it is getting older and (B) because it is powder blue. There is a Gibson SG out there that needs a home. There are big expenses on the horizon.

Do we save for those things separately? Do we fund an emergency bucket of money in addition to these things? 

I was going to end with those questions but it seemed like a cop out to start with questions and end with questions. So here is my plan:

I will continue funnel money into an emergency fund. It is just $50 a month from me and $50 from my wife. Once my line of credit is paid off, I will increase that amount. If a big expense comes up, I will burn half of the emergency fund and use the line of credit to pay the rest. The cycle will start again. F**kin adulthood.

Do you have a emergency fund? What is more important saving or paying down debt?

Observation #10 How Much is that Doggy in the Window?

My brother is pretty awesome. He is an aware person. He knows what’s going on around him. I admire that. He is good with money. The one thing that he is really good at is knowing how much things cost. I have no idea what things should cost. I mean I can ballpark. I’m not buying the Brooklyn Bridge or anything but I have no idea what smaller items are supposed to cost.

How much is chicken supposed to cost? I don’t know what a good deal is. My bro will say, “Hey, they’ve got a good deal on chicken at Pupo’s”. I take his word for it. He loves it when the flyers come out. He can spot a deal.

I think a really good app would be one that tells you what things are supposed to cost. Do they sell chicken by the pound? I could look it up quickly and say, “That is a good deal.”

I feel like I throw money away sometimes. I wonder if it’s okay not to worry so much about every penny. Unless you are rich, you’ve got to always worry about money. Damn.

I guess it comes down to consciousness and laziness. If you really take notice of what you are buying, the cost of things becomes second nature. This is especially true of things you buy all the time like groceries. The other part of this is desire. Do I want to drive to another grocery store to get a better deal on toilet paper?

I think when people switch to auto-pilot, they get into trouble. This just doesn’t only apply to money. On the other hand, I think everyone desires the auto-pilot point in their life. Imagine a time when money doesn’t matter. If you want something, you just get it and there are no worries. It is covered. Most never get there. Shangri-la.

Remember when you were a kid? When you got old enough, you would buy whatever you wanted. I’ll show you, Mom and Dad. That bag of penny candy just isn’t as cool as I thought it would be. At least I knew how much a penny candy cost.

Do you think you know how much things are supposed to cost? Feelings?