Thanks to frugal living and setting aside a portion of our tax refund we have a small emergency fund. I say small because it’s slightly less than two months wages. However, I also realize that it is better than nothing. I know that common wisdom says to have six months to a year of expenses stored up in your savings account to protect against the effects of job loss or major illness. But I struggle with setting aside that money to earn less than 1% interest in our savings account when we could be paying down 6.8% student loan debt. But whenever a windfall comes I try to put a certain portion, however small, into the emergency fund.
The struggle comes with defining what constitutes an emergency. Some things are obvious. Major unexpected car repair. Hospitalization bills. Loss of a job. But other things are less well defined. Travel expenses to attend a funeral. Purchase of palatable foods (however strange or expensive) during first trimester morning sickness. Unplanned clothing purchases when my daughter has a sudden growth spurt. (I’ve learned you can only plan in pencil when it comes to toddler clothing sizes). None of these is a true emergency, but for families with lower income, dipping into an emergency fund, if there is one, may be the only choice.
Two major examples from our own family come to mind. Last year, my husband had a relapse into his clinical depression. This required several months of clinical counseling. Without the counseling his recovery could have been delayed significantly longer or even stalled indefinitely. Therefore I considered it money well spent. But it meant dipping into our emergency fund for a few months. This year we have been debating whether to visit my husband’s family at Christmas. Last year’s visit was very difficult and emotionally crippling to my husband, especially in his depressive state.
We used to visit several times a year, but in the last few years the visits have been reduced to a single trip in the month of the December for the extended family Christmas celebration held the weekend before Christmas. When we visit, we used to stay at his mother’s house. But that has become more cumbersome as the family expands. The house contains two smokers which isn’t ideal for a pregnant woman and a toddler. Two years ago their household was also expanded to include a large, unneutered, untrained, male pit bull. As a puppy he was tolerable, but as a two year old adult dog he is uncontrollable and aggressive, especially with our two year old. Last year we spent the entire visit with our daughter in our arms or on our shoulders.
We also discovered that the close quarters are very emotionally hard on my husband. As an introvert, he requires some alone time to recharge each day. But with the tiny bedroom the three of us share as his only refuge, the visits were exhausting both mentally and physically. (With four adults, one teenager and a toddler, it was pretty hard to get even the bathroom to yourself.) There was nowhere to go to escape and recharge when the family stressors became too much. By the time we returned home he was drained headed into the Christmas holiday and had a hard time enjoying himself. Once our son is born next year, we weren’t even sure we could fit all four of us in there anyway. Unfortunately there are no other relatives with the space to house our growing family so we were faced with a choice. Stop visiting or pay for a hotel room.
My husband’s first instinct was to say that we wouldn’t visit, since we can’t technically “afford” a hotel room. But I know that family is a priority so I argued that this year we dip into the emergency fund to pay for two nights in a hotel (reducing our three or four day visit to three days and two nights) and then next year, we would make saving for the end of year visit a priority. On one hand, it feels wasteful. But on the other, family is important. (Before you begin to wonder, no, his family hardly ever comes to visit us, but then again, soon we won’t have the space to house them either.)
So what non-emergency events have forced you to dip into your emergency fund? Was it worth it? Hopefully in the future we’ll have the allocated funds for this and we won’t have to resort to the emergency fund.