Some of you may be familiar with the Dave Ramsey steps. For those of you who aren't they are:
1.Get $1000 in the bank
2.Pay off all debt(not including home)
3.3-6 months expenses saved
4.Maximize Retirement Investing
5.College Funding
6.Pay off mortgage
7.Build wealth
There are all sorts of different financial step plans out there, and I like to combine several to make our plan. What I notice, and I am sure you do too, is that whether or not we save for emergencies, they happen. So, getting the $1000 into the bank is a mini emergency fund, for when you blow a tire or the hot water tank goes! Now, $1000 is a good goal and is a great starting place. Sometimes, it feels like a monumental task and no sooner do you get your $1000, but you also get your first emergency! The good news is it's you you borrow from, not a credit card or a bank! Eventually, we will want to get the 3-6 months expenses saved. This is the step we are working on. It has been a step we have been on for a very long time. Finally, we managed to get one month's expenses stashed. It seemed like such a big climb to get to this point and so my mind set is I need to keep going forward, save another month, not backwards(have an emergency).What is an emergency? My definition is an emergency is something you must have, a necessity(unfortunately a trip to a sunny place seems like an emergency in winter, but it's not).The fridge goes, that's an emergency. Now, the next challenge is what kind of new fridge do you get? Top of the line, all the bells and whistles? That's where personal choice and personal goals come in to play.
We just recently encountered our emergency. Hubby's crown(on his back tooth) popped off! So, we visited our dentist and he said it was going to be a several thousand dollar fix! Hubby wanted a second opinion as he was sure there were other options. So, he saw another dentist who did provide several options.
Option 1: Glue it back in $125...this is a temporary fix
Option 2: Redo it $1500...good for another 7-10 years
Option 3: Implant $4000...good forever
He also told us that this crown should not have failed so soon, it's only 3 1/2years since it was done. He suggested we contact the dentist and see if he has the standard 5 year crown guarantee. This sounds great, but the original dentist lives a province away!
So, we are trying to figure out what to do. First, I will check to see if our dental plan will cover any of it, we are told it's unlikely. We are looking at all our options and trying to choose the best one.
This is an emergency and therefore it is reasonable to use the fund. This is why this fund is set up. The fund saves us money, we don't have to charge anything we just use our own money. The fund gives us a sense of margin, room to breathe when bad things happen.What are your thoughts? Do you have an emergency fund? What kind of world would we live in if everyone had a little margin?
