Having an emergency fund is the best way to prevent budget busts, but are you prepared for everything? If you think you’re above it, think again. These 22 personal finance experts should have their sh*t together, yet read on as share their latest budget buster.
Normally I’m very on the ball about saving for expenses, but a few years ago I completely forgot to budget for a damage deposit for my new place! It equalled half a month’s rent and I had to take it out of my emergency fund. I’ve never forgotten about that expense since!
– Jordann from My Alternate Life
We never planned for our dog to need emergency attention on an Easter Sunday. The vet bill for fixing her two broken toenails was about $140 up front and another $150 before all was said and done. Luckily, our emergency fund covered these expenses, which we quickly replenished.
– Lance from Money Manifesto
My husband’s teeth have wiped out more than $17,000 of our cash in the last 2 years. It happened over several visits but still beats me in the face when another filling pops up. We didn’t have dental insurance, but since more than half of that was for an anesthesiologist that wouldn’t have been covered anyway, we would have only saved a few thousand dollars overall. We’re still not insured but we did increase our emergency savings by $5000 for when other dental bills pop up. Moral of the story – BRUSH AND FLOSS every day at least once starting as young as possible!!!
– Crystal from Budgeting in the Fun Stuff
My husband recently chipped a tooth and it needs a completely new crown. The dentist said it would look weird if just one tooth turned pearly white, so he suggested doing four or eight teeth. Needless to say, we’re considering some options and it could be $1,000+ in dentist bills.
– Cat from Budget Blonde
After hiring my tennis buddy to be my contractor for my fixer upper, I soon realized hiring a friend was not a good idea. His English wasn’t very good, and we had all sorts of communications issues. Our biggest budget dispute was the cost of the hot tub. I thought for the price we agreed upon, the $4,200 hot tub was included. It turns out it was not, and we had a huge shouting match. He threatened to quit the remodel midway through, so I finally acquiesced and had to budget for another $4,200.
But $4,200 wasn’t the end of it. I soon realized that I couldn’t trust my friend to do a good enough job building my new master bathroom from the ground up downstairs. He was fine remodeling my existing bathroom and my kitchen upstairs. As a result, we parted ways, I paid him extra for his labor, and I hired a more costly professional to build my bathroom all up to the latest code. The real extra cost was more like $15,000, which came from my cash fund that is earmarked towards investing some money in the market every month.
Remodeling always costs more and takes longer than expected, no matter how on the ball you think you are. But in the end, my master bathroom turned out like a dream (before and after pictures), and I’m glad I took the time and spent the extra money to do it right the first time! The total cost for the bathroom alone was $58,000, which is supposedly cheap after a couple other contractors came by to guess the price of the build.
– Sam from Financial Samurai
Ups and downs of Freelancing
I am new to working for myself and had an emergency fund before I left my previous job. I didn’t replenish my emergency fund quickly enough and ended up dealing with a financial crisis at the end of the year as I waited for thousands of dollars of income to come in. My money had run out. NEVER AGAIN. I can’t state enough how important it is as a self-employed person to over-estimate the amount of money you will need in the event of a cash flow drought. I am in the process of aggressively: paying my most important bills a couple of months ahead and boosting my emergency fund to twice what I had before.
– Michelle from The Shop My Closet Project
I had planned to have an income for the next 3 months to cover the cash flow for 2016. I was let go at the end of 2015 but I had already put my remaining cash into investments (locked-in) betting on this new income that I could not withdraw without losing a lot.
To combat this, I cut way back on expenses and started digging into my emergency fund ($25,000) and will wait until I get another contract to make more money to be able to handle the cash flow issue.
– Sherry from Save Spend Splurge
When I was in grad school, I was working on a big project for class when my laptop decided it was time to stop working. It took me by surprise since it was just 2 years old. I ended up not replacing it at first. I just went into work (was going to grad school at night while working full time) early every morning to get the project completed using my PC there. I then used some of my emergency savings for a new laptop and put the rest on my credit card. I’ve since beefed up my emergency fund to cover me for other times when things you typically don’t think of rear their ugly head.
– Jon from Money Smart Guides
Last minute emergency travel
When it looked like my mom was going to lose her ten-year battle with cancer, it was going to be just over $3,000 for my wife, son and myself to fly back to Des Moines. We had planned on my mom visiting us over the Christmas holiday but she wouldn’t be able to fly and the doctor’s thought this holiday might be the last.
I love living abroad in Medellin where our cost of living is a quarter of what it would be in the U.S. but travel back to Iowa is insanely expensive. I accepted a new credit card offer to take advantage of the 0% no interest for six months on the expense. I’ll pay the card off before the introductory expiration and am adding an extra $150 per month to our emergency fund.
– Joseph from Peer Finance 101
Early in my career when we were struggling with money, my van died. I don’t mean “needed to get fixed.” I mean: it was dead and wasn’t coming back. I had a fledgling career, young twins, a spouse still in school, and horrible credit. Everyone said they give car loans to everyone. Not me. I ended up asking my father-in-law to cosign a loan for me. Lesson learned. When I got my financial house in order, job one was to create an actual emergency fund. I don’t want to use someone else’s money for a new car, and I certainly don’t want a co-signer on a loan ever ever ever ever (enough evers?) again.
– Joe from the Stacking Benjamins podcast
My old Volvo station wagon, a hand-me-down, broke down while helping a friend move. The repair estimate was more than the car was worth, so I was quickly on the hunt for a replacement. I got my new car (with a loan) a few days later, though I did have a significant down payment thanks to an emergency fund. Because I was on a serious mission to avoid debt, I made double payments or more most months and was able to pay off my five-year loan in less than half the time.
– Eric from Personal Profitability
My husband was laid off from his high-paying job last year and we were stuck with trying to afford a life that was geared towards a $100,000 income. We went through our emergency fund pretty quickly ($1000) so we had to really buckle down and cancel services, pay out debt, and lower our general cost of living. We had to dig into our retirement savings to keep ourselves afloat for the better part of a year. Now, we are selling our home so we can pay off the rest of our debts and give ourselves a chance to start over. Moving forward, we’ll be able to rebuild our finances and work on a bigger emergency fund and a more balanced financial life.
– Lindsey from Cents, Sense and Sensibility
In the summer of 2014 we were in the process of adopting a baby (a huge expense in an of itself!) The week before we were to drive out of state to adopt our daughter, our basement flooded due to heavy rains. It was a disaster that ended up costing us almost $7000. Our ONLY saving grace was the fact that we had been squirreling away extra cash in case there were any last minute adoption or child-related expenses. So we raided the emergency fund and luckily there were no significant last minute adoption expenses. We are now parents and keep a little more money stashed away because of that- but also because you never know when a week of heavy rain will wreak havoc on your basement- and your life 🙂
– Dee from Color Me Frugal
On my birthday, I was run over while riding my motorcycle, and lost my job a few days later, leaving me injured & unemployed with a demolished savings account and over $10K in medical bills. Recovery was painful – I landed a good job, and set and followed a strict budget, including negotiating a payment plan with the many medical bill holders, and paying a little, even if it was just $5, towards each bill every month. 18 months later, I was back in the black financially, along with the emergency fund, uninsured motorist insurance, and discipline to avoid similar emergencies since.
– Jack from Enwealthen
Student loans from years back
I was just out of college. In the back of my head, I knew the college bill would be coming, but I definitely wasn’t ready for the $75 a month charge (as small as that seems). It busted our budget and required us to take on a second job. That was the moment I vowed to get rid of all our debt and we never looked back. 🙂
– Derek from Life And My Finances
Over the course of my life, I’ve moved many times, typically saving up large sums of money to cover periods where I’m job hunting. In 2008, as I was following my ex around the country, jobs were harder to come by. My networking efforts saved me as I found employment while literally spending my last dollar. Since then, I’ve always made sure that I have more than one source of income; it came in handy this fall when a work shortage all but stopped my day job, but I was able to ramp up my online endeavors to make up the difference.
– Femme Frugality
We experienced a life emergency just after we bought our first home together. Since we weren’t using an actual budget back in 2009 it was difficult for us as we were left scrambling when my wife lost her job. We were frugal with our money and used coupons but it wasn’t until we started using a budget that the actual numbers made sense to us.
Most of my money was tied up in the UK as we used her money to purchase our home. It was less that 2 months after we purchased our home and although we bought the house on one income we were still left with little money leftover at the end of the month. I was still new in my career so I wasn’t earning top level income. Since then we have bumped up our emergency savings and I’ve more than tripled my income. Although we had savings in the bank the experience of job loss after just purchasing a home was enough to kick our savings into high gear.
Mr. CBB from Canadian Budget Binder
To deal with this emergency I luckily had a bit of cash saved up, but I did have to temporarily get employment insurance money from the government. To make ends meet I moved to a cheaper apartment, cut way back on expenses and eventually faced the reality of getting a regular daytime job again.
I definitely learned from that and I keep more money readily available as well as money in easily liquidated investments. Also I didn’t jump back into self employment again until I was much more confident and had a lot more savings available.
– Jeremy from Modest Money
I had put off seeing the dentist for months because I didn’t have dental coverage, but the pain was getting to the point that I could barely eat. I finally broke down and made an appointment. It turned out my root canal had failed and I needed an extraction and a dental implant, the cost of which was more than $2,000. I started crying right there in the dentist’s chair.
After getting myself together, I started researching alternatives.I found a dental program at a local university that would perform my procedure for about half the cost. I also volunteered to be a research subject for some university studies to make extra money. Thankfully, I had some emergency savings to cover the rest of the cost.
After that, I realized just how valuable my emergency savings were and became far more aggressive with setting that money aside.
– Stefanie from Stefanie O’Connell
Last year, our emergency fund ran low due to a tenant moving out and a big property tax bill. We had an outlay of about $20,000 and our cash ran a bit low. This year we will plan better and build our emergency fund to $25,000 before the next property tax bills arrive.
– Joe from Retire by 40
Owning a home comes with a new set of responsibilities…and expenses. From semi-annual gutter cleanings and pest control to unexpected expenses like HVAC repair and drainage issues, I had to significantly beef up my emergency fund once I became a homeowner. I found extra money to build up my savings by ramping up my freelance writing side hustle and consistently auditing my utility bills annually to find savings.
– Lauren from L Bee and the Money Tree
Insurance premium hikes
Last October, I noticed my health insurance premium crept up to $900 per month! After picking myself up off the floor, I went to investigate how to get this unexpected expense down to earth. After hours of investigation, I found an option for $642 per month. The catch? I have a $6,000 out of pocket before many of the insurance financial benefits kicks in. This is an ’emergency fund’ nightmare, especially for the self-employed.
How do I cope? For decades, I’ve prioritized building up a cash cushion in a bank or money market account. As the money is spent, I redirect more money to cash. There is no substitute for sacrificing extravagances and luxuries for the peace of mind of a strong cash cushion.
– Barbara A. Friedberg, MBA, MS author of How to Get Rich Without Winning the Lottery.
DIY gone wrong
Back before I became handy, I tried to change the hose spigot myself. I just threw a wrench on it and started turning. To my surprise, it just twisted right off… along with a 3-inch piece of copper piping from the inside of the wall. Water started gushing out. The plumber charged $400 to come out on a Sunday night for that one. Thank goodness my emergency fund easily covered it.
– Will from Growing the Green
My job requires me to move every 2-3 years. Every time I move, it always seems to cost more than I budgeted. Even though I have savings set aside, it always seems like the security deposit is larger than anticipated or we need to restock the kitchen and that costs a few hundred. Not only is moving more expensive than anticipated, but it always taken almost 6 weeks to get reimbursed. We always keep $10,000 in our emergency fund to cover unexpected expenses. It was nice to fall back on that during my last move and not have to take on any debt.
– Spencer from Military Money Manual
Last year, I began investing in property however I only set aside a small emergency fund and naively assumed everything would go to plan (and I’d build up my emergency fund with the rental income).
However within the first few months life had a different idea and I had to replace a boiler, new roof, new door and a tenant stopped paying…ouch! Talk about jumping in headfirst!
To pay for this I had to liquidate all my shares (which thankfully I had!) and am now in the process of building up a proper emergency fund (should be done by May time!) to cover these kind of emergencies in the future. Only once this is complete will I begin investing again.
I really can’t tell you how important having this fund in place is!
– Sam from Moneynest.co.uk