Every Monday is Intents and Purchases day at Living Behind the Curve.
Direct your browser to just about any personal finance blog, and you’ll be able to find at least one post about emergency funds: why you should have one, how to build it, when you should start, and exactly how much (or how little) you should sock away. What I don’t see a lot of is emergency funds being used for, you know, emergencies. (A planned car purchase is not an emergency.) Maybe they don’t have many emergencies, or perhaps personal finance bloggers aren’t willing to admit it when their warranties expire. Whatever. Here’s some real life for you.
Since the day we bought this house, the to-do list has included replacement of the basement door. It’s warped and in sad shape. The jam is a little rotten, and it lets in water during really heavy rain. Still, it opens and closes and behaves in a sufficiently door-like manner that we weren’t all THAT worried about it, until today. Today, that basement door went from a “to-do” to a “to-do now“. You see, Friday night, Boo (the resident cat and benevolent overlord) caught a mouse.
For Boo, this isn’t a particularly unusual act. She’s a retired member of a hardware store extermination team, and it probably felt pretty good to shake the dust off the old stalk-n-pounce skills. She is a master mouser. For us, this isn’t so good. Nobody wants mice in their house. It’s just… oooky. *shivers*
But are mice an emergency? They are for us. A huge part of our frugality plan involves “shopping” in our basement, and we keep a very large pantry there. We find amazing deals on staples and basics and other things we use regularly that will store well, and buy them in bulk. We have something like 100 pounds of flour, 40 pounds of cat food, 20 pounds of pasta, and other miscellaneous dry goods on shelves next to flats of canned veggies and a freezer full of frozen meat and SRSLY meals. We have a few hundred dollars’ worth of food and sundries down there that would cost nearly a thousand dollars to replace on short notice. We really don’t want any furry little scavengers turning our basement into a 24-hour buffet.
Dani did some research, and we poked around our basement, and decided that the first important step was to either fix or replace the back door to eliminate the wide gap at the bottom (and the ham-handed repairs of the previous owner). If you have mice, it seems, the first step to eliminating them is to cut off their points of entry. If you have any sort of holes in your house, it’s recommended that you stuff them with steel wool — apparently, mice don’t like the texture, so they won’t chew through it. Mice can enter the house through any hole larger than a US dime — like the yawning gap under our basement door.
We went over to the local big box home improvement center and looked at the door seals, which were a little floppy, and at the thresholds that the door seals kinda need to work, and then at the hack saw that we would need to properly fit the threshold and the floppy door seal, and at the masonry drill bits that we’d need to attach the threshold to the concrete underneath the door. $75 later, we looked at the $150 steel door that we’d have to buy eventually, and the $300 fee to have a professional come out, measure your door and look for any expensive problems he might be able to fix while sussing out your house, take away the old door, rip out the old jam, and install the new door and jam and hopefully not leave much of a mess behind.
Dani balked at the $300 installation fee, until I pointed out that while we’re handy little suckers, we’d be installing a pre-hung door into solid brick. I may be cheap, but I’m not stupid. We scheduled the consult with the door man and headed home to set up Dani’s homemade mouse trap.
The consultation to make sure we’re getting the right door to fit the wall cost us 35 bucks, which will be credited towards the door once we pony up the other $415. The silver lining to this misadventure is that it’s all being paid for in cold, hard cash, because this really is a damn emergency. It’s a step toward not replacing all our food and soap products, toward preventing damage to our floors and baseboards and wires, and it’s a huge step toward keeping Dani out of therapy if Mickey decides to run over her foot while she’s sorting laundry. With a little luck, Boo and Dani and I will stalk and kill these little hidden costs of homeownership, the house population will be back to 3, and our soon-to-be-replenished emergency fund will continue quietly earning interest without a care in the world. It hurts to spend the money, but this is what the emergency fund is for.
Image courtesy of Morgue File.
Categories: buying in bulk| emergency fund| home improvement| intents and purchases| personal finance
If you read my post… You’ll see that I am using the INTEREST from my emergency fund to help purchase the car… and NOT the Emergency Fund itself… If you read my story, you’ll see that I used my emergency fund, several times, while getting out of debt.. NCN
@NCN:
Thank you for your feedback!
I did read your original post, and based my conculsions, in part, on the following section:
“For the 24 month period from January 2008 until December 2009, I will deposit a total of $7800 ($325 X 24). Adding that to the amount of interest that I will make during that same period of time (about $2200) and I will arrive at my grand total of $10,000. So, in two years, I could purchase a $10,000 automobile after making $7800 in “payments” to myself.
Notes: The above calculations assume that I will NOT have to use my emergency fund funds for any other purchases, that the interest rate in my ING account will not dip below 4.5%, and does not include tax that I will pay on interest earned.”
The second paragraph references the first, and therefore it appears that all of this money will be deposited in your ING emergency fund, and is cash you already planned to put there. My observation was that in the situation described, you would use the $7800 in deposits plus the $2200 in interest to buy the car (whereas on interest alone, you would be purchasing a $10,000 car for $2200). You also state that these calculations assume that you will not have to use your emergency fund for anything else during this two-year time frame, which is a long time to bet on nothing going wrong.
When I began researching links for this article, I performed a cursory search on a number of different PF sites for the term “emergency fund”; My goal was to see the results that a random visitor would get upon searching for that term. Once I read your comments, I returned to your site and drillled down further through that same search term. I did find this post from December 2006 five pages in. I apologize for the omission, but as a blogger yourself I’m sure you understand that it is not always possible to read every post.
I did enjoy your original post (I find studies of interest paid vs. interest earned fascinating), and I appreciate your taking the time to comment here.
Thanks for visiting!
No prob… just to clarify…
I keep my “emergency funds” (6 to 12 months worth of expenses) in the same “account” that I keep my general savings.. and, I can use the interest (plus additional deposits) to buy the car… I should have clarified, but I’m sure you see the point… I want a “base” amount of 20K (no matter what) and will build the actual “account” balance as i save for the auto… NCN
@NCN -
I think I see - you’re using separate accounting for savings and emergency fund, rather than separate physical accounts. I think that’s what I was hung up on.
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