Emergency Fund to the Rescue

Yesterday, as I pulled in to my driveway, my car all of a sudden sputtered a little bit. I didn’t think anything about so I put my car in reverse to park it next to the house. When I tried to set it on park, I noticed that the car would not switch gears. Even when I moved it to other gears, it would still stay on reverse. Now I found myself stuck in the middle of the street. I turned off the car. and pushed it out of the way so it wouldn’t block any traffic. By this time I knew that I had probably have a transmission problem. I may not know a lot about cars, but I do now that fixing an automatic transmission is never cheap. Yet, for the first time in my young adult life I didn’t panic in a high money situation.

I didn’t panic because I knew that I had an emergency fund set up for incidents just like this. So what would become a stressful moment in life became a minor nuisance. That was not always the case for me. Before, I didn’t have any money saved up, especially not for a rainy day. So when something unexpected happened where money was involved, I would scramble like a mad man trying to figure out how to pay for it.

I haven’t read a personal finance book that doesn’t insist on having some type of emergency fund set up before tackling debt, or starting to save in general. Some lean towards three months your salary, but the majority suggest having three to six months expenses put away in an account where it is easy to get a hold of. Something like a money market account, or a high-yield savings account Personally, I have my money set up with HSBC Direct Online Savings Account. It took about twenty minutes to set up, and their customer service so far has been excellent. They have a comparative interest rate and I can transfer money back and fort between HSBC and my local brick and mortar bank easily. My brother uses ING Direct and has nothing but positive things to say about them as well. J.D his a great post discussing how to choose an online savings account.

In the end, the cost to fix the car was $120. Thankfully, it was just the shift cable. Mentally I was prepared for the worst, so I thought it was going to be over $1500. Either way, I would of been okay because I have enough money saved up in my emergency fund to cover both amounts. I guess our grandparents knew what they where talking about when they told us that we should stash some money away in case of rainy day.

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