The following post contains advice from Angi Christensen Harben, the Director of Communications for Georgia Credit Union Affiliates. When she was younger, a credit union stepped in and supported Angi’s finances and life. Now, she enjoys supporting credit unions and spreading the financial wisdom she’s gained.
I walked out to the garage and something wasn’t right. There was a pool of water, and it was spreading. I could hear a faint gushing sound and it took a second to sink in.
It was the dreaded busted pipe (insert ominous music here).
It was also freezing. The kind of freezing that turned the water pouring out over my driveway into a sheet of ice before long, and it made the next hour an uncomfortable exercise in frigid futility as I frantically searched for the water shut-off valve.
I learned a few valuable lessons that night. First, you should know where your home’s main water shut off valve is before you need to find it. (If you don’t know where yours is, go find it now. It’s probably somewhere in the vicinity of the water heater.) Second, I am not as graceful under pressure as I like to think. Thirdly, it is imperative to have some money stashed away for such things.
I’ve heard financial planners advise people to have a fund built up that could completely cover all living expenses for three months, six months, eight months or even a year. I live in the real world. It would take me so long to reach the goal of an eight-month emergency fund that I’m not even going to try.
But I have formulated a strategy that will at least get me a bit of a cushion next time an emergency comes up.
- Aim low. My plumbing problem cost $225, so my first goal is to save $225. This goal is largely symbolic to me and completely arbitrary. Your goal might be $200 or $500. But you’ll feel successful if you set a reasonable goal and attain it.
- Find places to save. Whether you get the cheaper cable package or cut back on the non-fat, no foam, no water, 6 pump, extra hot, chai tea lattes, there is money to be saved. This isn’t about carving hundreds of dollars out of the budget. It’s about $10, $20, $50 a week. We are on the PB&J-for-lunch-no-room-for-extras budget for the next month to cover the cost of the plumbing repair, so putting aside a small amount every week should be quite doable.
- Out of sight, out of mind. When my paycheck is deposited, my credit union automatically moves a small amount into my savings account for me. To me, it’s taken out like FICA. I don’t even view it as available for withdrawal.
- Don’t go crazy. I’m going to hit my $225 goal in a couple of months. I’ll set my next goal at $750 or $1000. Nothing too unattainable. Something I know I can do.
- Use it when necessary. If an emergency comes up before I’ve reached a goal, I will use the fund. It’s better not to use a credit card and be charged for the accompanying interest.
- Short term action, long term view. Keeping my automatic savings plan in place, my next goal will be a single month’s worth of living expenses. Then two months. Then three. I’m not sure I’ll ever hit the eight-month mark, but I will be able to breathe easier if I ever hear that gushing sound in my wall again.
While I was waiting for the plumbers to arrive, there was a knock on my door. It was my neighbor telling me he noticed the water in my yard the night before and now had the same problem at his house. He was wondering where the water shut off valve might be located. “Check near the water heater,” I said, like I knew what I was talking about.
“I just don’t have the money to deal with this right now,” he muttered as he walked away in search of the water valve.
Next time, I will.