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Do you ever feel guilty for using your Emergency Fund?

by J. Money on Thursday, October 23, 2008

Reader MailEven when an emergency comes up?! Hopefully none of us have to go through anything TOO crazy, but in life there’s always some issue we’re dealing with – and it usually involves money.

So when these issues arise, are you/were you prepared to pull from your Emergency Fund and put the crisis out?

That’s the gist of an email i got from a reader here at Budgets are Sexy. I ofcourse have my own opinion on the matter, but I thought i’d share her email w/ the community so she can get a variety of thoughts on it. I mean, that’s why i have you guys, right? :)

Here’s what she sent:

J. Money
I’ve been reading your blog for a few months now. Thank you for publishing such great content!

My problem isn’t as severe as most people out there. For all intents and purposes, I’ve done everything “right.” I’ve got an emergency fund with about 6 months of expenses. I invest in my 401k. I own my home and am able to make the payments. I don’t have any credit card debt and I save every month.

My water heater just broke, which stands to cost me about $1500 for damages and to replace it. When I complained to my coworker about the hassle I had when I discovered it was leaking, she said, “good thing you have credit cards.” And at that point, I was so thankful that I have an emergency fund.

My problem is, however, that I feel guilty for using my emergency fund. I don’t want to take the money out of my e. fund because then I have to focus on building my fund back up and the money won’t be there if I were to have a greater emergency next week.

Please talk me out of my craziness and re-affirm that this is, indeed, what emergency funds are for. Or am I wrong?

Thanks.

First off, thx for the nice comments – and you’ve got some MAD financial skills! 6 months of expenses in an Emergency Fund, no debt, avid 401k investor – talk about a savvy saver :) So okay, she has a great head on her shoulders, but what do we do about the guilt?

That’s a tough one for sure. The thought of taking a huge chunk from my own E. Fund would certainly give me the shivers. I mean, we spend mooooooooooooonths building that bad boy up ya know? And in most cases, we (as in the general public) rarely meet our goals before having to dip back into it.

YES you’re gonna feel guilty about it, and YES you’re gonna have to dip into your Emergency Fund. It’s what it’s there for :)

The odds that something even MORE serious hits next week is extremely doubtful. And if it does? Whelp, back to the E. Fund again :( It’ll suck for sure, but unfortunately it’s just one of those things we have to deal with as homeowners. Now, there ARE other options as you hinted about, but they wouldn’t be my first:

  • You could throw it on a credit card. You’ve already told us you’re against it, and rightfully so – no point in paying all that interest when you have the money stashed. If you’ll have to make installment payments anyways, might as well “pay” it back into our Emergency Fund. On the other hand, you COULD use it to delay your pain for a good 30 days and then pay it all off in full.
  • You could pick up a Home Warranty. Again, not the BEST option as it’s probably too late here, but you never know…i’ve known a few people to pull it off. You’d basically have to take it right away, and then wait for the 4-6 window to close so you can file your first claim. Be sure to ask about “pre-existing” issues and all too, as that may be an issue. It’s DEFINITELY something to consider in the future though! You can never predict this kinda stuff :( Home Warranties can usually be picked up from your Mortgage company, and it’ll cost around $400-$600 per year with a $100-$200 deductible – all depending on coverage.)

All in all I think you’re on the right track :) And for what it’s worth, “it’s only money” ya know? it’s gotta be used at some point. GOOD LUCK, and keep us updated! (readers – how would you cope with this? Anyone totally against the E. Fund?)

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