Monday, 13 January 2014

A bit of an emergency

I've been reading in a few places just lately, about emergency funds. Here's a discussion on MSE. And another one here on Frugal Blog. How much do you save to put in them, how much should you aim to have in them, and where do you keep them. Everyone has their own way of dealing with this, some squirrel the money away into a pot, or a separate bank account, some just don't have enough spare money lying around. My pension gets paid into the bank, I have never thought of it as savings because it doesn't stay in there long enough. It swishes round and round, and gets used for something eventually, sometimes in a matter of weeks, often within the year.

I don't consider it as an emergency fund either, it is just spare working cash that is available should the need arise for me to spend it. It's like a float, to keep me afloat. My float isn't a large amount, enough to dip into it if I have to for bits and bobs that need paying at certain times of the year, mainly for planned bills which always come at the same time every year. I have just paid my car insurance, I have saved enough cash for that. Last month was the road tax which was paid in full. The utility bills are always expected so I know approximately how much I will need for them.

I am wondering what people's definition of an emergency is. Unforeseen circumstances I would imagine. Something out of the ordinary, like something breaking down perhaps. The only real emergency I can think of is something which threatens life, for instance, my cats being run over, or taken ill, and needing veterinary treatment. If I was taken ill, or had an accident, and for whatever reason became immobile, that would be an emergency and extra funds would be needed to assist me.

So, what is an emergency, what do people need money for quickly? Perhaps living in a single person household may have something to do with why I can't think of any more emergencies. I can put up with things not working, whereas a family member might be up in arms if the tele breaks down, or the cooker  gives up the ghost. If my fridge broke I would need to find another way to keep my food fresh, so a new fridge might be on the cards. But I wouldn't have to rush out and get one immediately. It's the middle of winter, flippin cold outside, I could keep a few items in a sealed box in the garden, till I could organise another fridge.

Those who have been reading a long time will remember that my heating and hot water system stopped working. It wasn't an emergency. I couldn't afford to replace it, so I found another way of keeping myself clean and warm, I lived with it. Strip wash in the kitchen and wearing loads of clothes in the house. Eventually I got a grant to repair and replace it.

If my gas cooker breaks down I can use the microwave and the kettle, and the slow cooker. I even have a good sized camping stove which I could get out and put a new gas bottle on. If the kettle breaks I can heat water for a drink in the microwave or on the gas cooker. If the washing machine breaks I could hand wash in the sink. It wouldn't be very convenient in the winter, so I might have to visit a launderette until I got a replacement.

If the car breaks, I could get the bus into town to do the shopping, or go on my bike. It would be a bit inconvenient, but when push comes to shove, I could do it. It wouldn't be an emergency, because there would be an alternative.

The house is insured so any emergencies should be covered. Not sure about frozen pipes though, but I'm not too worried by that, they haven't frozen in the seventeen years I have been here.

If the computer broke, that wouldn't be an emergency, because I have two of them. Or, I could go to the library and use their computers free of charge. If the Dyson breaks, I have a brush and pan.

So, a multiple occupancy house would probably be more prone to emergencies than mine, because people have different views on what is an acceptable standard of living. I can live with just the basics. I am interested to know what other people think of as an emergency. Why do you have an emergency fund, and what would you spend it on? I can only give my perspective from a single persons point of view, and from someone who does not need frills in her life. Feel free to add your own perspective.
Toodle pip.  

30 comments:

  1. This is something I've been thinking about too. For some people not being to work after an accident is an emergency requiring funds. I'm a supply teacher so if I can't work there's not enough money coming in to pay the bills (although I have no mortgage)

    My son lives in Vienna so if he had an accident I would need to fly out there to see him. Similarly I have a sister, nephews and a niece who live 500 miles from me so again I would need to fund travel to get to them in an emergency.

    Otherwise, I'm like you and would find ways round stuff. I'd probably buy a fridge straight away to keep food fresh but could live without a freezer if it broke

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  2. There are many things I could live without if I needed to due to lack of money, I too have family that live at the other end of the uk, and a last minute train ticket is usually around £200, the car ferry is £90 at best of times and fuel in the car to get there is another £100 so If we had an emergency we would need a good couple of hundred there and then. We have a joint ISA and any money we have at the end of the year gets put into the savings, we are fortunate enough to have that money so that's a relief, however we would do our best not to draw out of it as we have not touched it in 4 years..and its our money for our forever home...AFM xx

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    1. Family living in other parts of the world, that's something I didn't think about. I can see my family after a two hour car drive. Thanks for mentioning it.

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  3. Illness, so we can't work would be a problem if we didn't have savings. There's money tied up in the smallholding but who knows how long it would take to sell.

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  4. Thesedays fridges, washers and tellys are quite reasonably priced so a replacement could be bought perhaps on a credit card and paid off in a month or two if need be.
    My central heating pump once packed in, so it was a trip to B&Q for a new pump and a large spanner, £40 and a couple of hours and we were warm again.
    My cars have been repaired by fitting new parts myself.
    I've never had an emergency fund, we either have the money or we don't so food and bills were always the priority. We're a bit better off now but like many people we're only a few months from disaster.
    Prioritising bills and doing without non-essentials is probably the best way to stay affloat.
    Dave.

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    1. I like your thinking Dave, we either have the money or don't. I consider things that need a couple of hundred pounds to replace are not emergencies, and can be saved up for quickly if you cut down on other things. On the other hand, things that cost £1,000 and have to be replaced or repaired are a bit more difficult to pay for, so lots of forward planning is essential to make sure there is enough available. Still not an emergency though.

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  5. I lived on my own for 10 years, had a mortgage which took a large chunk of my wages and I ran a car. I was working in an office and was not on a large salary. So I didn't have a washing machine for the first 6 months, did not have a comfy chair/sofa for years, just sat on my bed, all I could afford was a bedsit, or studio flat as they liked to call it. Even now I am married I can do without most 'mod cons' but my husband can't. If I was on my own again I would not need heating, hot water, TV, kettle, iron, cooker, shower, washing machine or car. In fact I would thrive and enjoy living on as little as possible, though I do like to have a computer, so perhaps an emergency fund for a replacement?
    These days people can't seem to live without so many things and stuff, and couldn't possibly live on the basics like you and me Ilona.

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    1. I have an iron but don't iron clothes with it :o) Yes, it's a lot easier when you live alone. I don't have to ask anyone if they are warm enough, or do they need some clothes washing.

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  6. I`m like you and could make do without fridge or freezer for a while, and also would find ways to tie me over through alternative sources. An emergency to me would be my old mum getting very ill out in Germany, and then I would need around £200 to fly out there. Another emergency to me would be my cat needing treatment that I have to shed out for straight away. Anything else comes down to priority for sorting a particular problem. Until last year when Rick was still in work we had always managed to have a small emergency fund in the bank. A few hundred £ was what we always had. Now that Rick has been redundant for 9 month his redundancy money has been whittled away by paying our household bills. Some of his money was invested in our next holiday to Marrakech, as we might as well be poor and
    sit in the sunshine for 14 days in October. At the moment we have no savings that we could call emergency fund, but we shall manage nevertheless. If the washing machine breaks down we have a second one stored at the end of the living room and could fall back on that. If my boiler breaks down the council is responsible for replacing it. I cycle to work, so if the bike breaks I`ll walk to work. Other than that I couldn`t think what else would constitute as emergency for us. Whatever happens, we`ll make do!

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  7. We actually have a fair amount squirreled away but that's for us to enjoy in our old age rather than for emergencies as neither of us expects much of a pension. I like to have a seperate account for 'everyday' savings like the road tax, car insurance etc. that I like to pay outright rather than by installments. I also keep a bit in there for the 'emergencies' you mention. And yes, you are quite right that other people have different ideas of what constitutes an emergency. I still have adult children at home and if the washing machine broke down that would be an emergency since I'd struggle doing laundry for 5 people without it. But if it was just my husband and I we could certainly do without a lot of the things our kids think of as essentials, the TV being one of them. We'd make do rather than rush out to replace things but for now I like to have some money in reserve 'just in case'.

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  8. A vacuum. Four dogs and a cat, and I need my dyson. Lol.

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    1. Ha ha, yes, I might have to get my dyson repaired if it breaks, but I would not rush out to do it. I would wait a while until I absolutely needed to use it.

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  9. Well two years ago by DS 's in laws both died within three weeks of each other. They don't have any family and my DDIL is an only child so we had to go to Scotland twice in a short space of time.
    At the moment my DH is really bad with his back( 3 weeks now) he has agreed under duress to go to the physio and appointment tomorrow. It will be £30 each time. Which I'm happy to have the money for if it helps time.

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    1. I don't think you can skimp on health matters. I like to think we can get help from the NHS, but sometimes they are not always forthcoming with treatment. If £30 helps relieve the pain then it's worth it.

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  10. My emergency fund seems to be echoed by many above. We live in the USA and have son, dil and grandchildren in the UK, so always have on hand emergency money in case we need to fly over quickly, plus I always have about £200 to get me going when we arrive....

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  11. Emergencies? The Cats needing vet care (we had that scenario last week),not being able to get water from the well (had that last month)...impossible to live without water! Anything else would be an inconvenience,but not an emergency.
    Jane x

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    1. Jane, that's how I think of it, an inconvenience when something breaks down. I weigh up all the options. Can I manage without it, can I do things differently, before I actually shell out some cash.

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  12. We can & have coped without heating & hot water, more than once, in winter, with 5 young people in the house. We did without a working cooker for several weeks recently too, until the new one was built; no half measures, here! Too many cheap cookers couldn't stand the pace… And at this time of year, a fridge breakdown wouldn't be a huge problem, and now a couple (of muddy boys) of have left home, we could live without our 10.5Kg washing machine for a bit too. But if something happened to the roof… 112 years old, original slates & timbers. That could work out quite expensive… probably beyond the range of our emergency funds, I'm afraid. We'd have to borrow to sort it out.

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  13. Well... the cat and the house are insured... my idea of an emergency is needing a new hot water bottle!

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  14. Emergency fund - what's that?? Wish we had some dosh to put away. All our income goes on the bills, feeding the kids, flipping taxes etc. Not much left at the end of the pay period, so nothing left for emergencies or even pension pots. We have had a separate pension now for twenty years, but haven't been able to pay into it for over 15 years.....Wouldn't life be grand if we didn't need money. . .

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  15. You may not think you need an emergency fund but it is a good idea to have a cushion against the unexpected Where I live you dont get given grants when your boiler breaks you go out with your own money and buy one. I can see you dont need an emergency fund if someone else (i.e. the taxpayer) is paying for this. I am not surprised that Britain is going through austerity and I dont know whether grants of this kind can continue much longer. I dont understand why your are getting free stuff that does nt benefit the community as a whole. Also you dont pay for your medical services at the time they are delivered so no need to have anything in reserve for that.

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  16. Let's see: Repair of main water line into house which broke because of severe drought. Major dental surgery for 16 year old kitty. Divorce lawyer for daughter who has no funds right now. Plumbers! 2013 drained $12,000 from my emergency fund. Most of that was for the lawyer. 2014 won't be much better as I have to cough up $470 a month in Obama care insurance premiums for my unemployed husband. And this is why I continue to work part-time. That and because I'm so lucky.

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    1. Oh dear, it's a different kettle of fish over the pond, sorry to hear about your woes. Do your best, that's all you can do.

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  17. We usually save enough to pay the motorbike insurance up front (cheaper than installments), the TV license, and at the moment I'm working on saving enough to cover little one's first month at nursery (at the moment I work full time and hubby looks after him but once he's 3 Matt will be looking to get a part time job and we'll probably need to cover at least a month's nursery fees up front). Apart from that anything we save is more of a luxury than anything.

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  18. When we were first married 24 years ago, we put down the deposit on a one bedroom flat. That was at the time the interest rates rocketed on a monthly basis and the mortgage kept increasing every month so we were really skint! We had been given two armchairs, a dining table and 4 dining chairs which someone was throwing out. I bought a second hand fridge from a friend who's parents were renovating a kitchen. We borrowed 2 single beds until we had the money to buy a double bed!! No cooker, no washing machine, no freezer, no TV, no phone, no car and we managed until we saved up for these things. I remember the simple pleasures of saving up to buy kitchen utensils one at a time. So when our washing machine broke down recently I went back to hand washing for a few weeks until we got a new one. The only 'emergency' we've really had was the garage door collapsing and breaking. The boiler is housed in the garage and with the severe gales/rain/blizzards we have up here, the boiler would have been damaged without a new garage door. So we used our holiday savings to replace it (it was the up and over door, so not cheap) and did without our summer holiday.

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  19. I'm not at risk of many of the financial emergencies that some people get - I don't need money to one side in case of unexpected emergency arising in connection with an Other Half, children, pets or running a car. I DO need money to one side in case of a repair needing doing to either my house on the one hand or my body (something not covered adequately by the NHS) on the other hand. I wouldn't be prepared to put up with a leaking roof or broken central heating in my house or any pain/discomfort in my body that some money spent (eg on an osteopath) could resolve on the other hand. So, the question is one that a lot of us have, ie where I can put my savings safely (somewhere where the Government couldn't steal them if they decide to do a Cyprus style "haircut" on the one hand or the drip/drip theft that inflation causes when interest isn't even enough for those savings to keep pace with inflation. I know, from experience, that I don't believe in getting into debt and certainly wouldn't do so for consumer goodies. However, if an emergency arose and I had to have money for a necessity (ie that leaking roof or aching back) then I would spend the money whether I had it or no and that would result in me getting into debt if I didn't have savings.

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  20. The other thought I have is that what constitutes an emergency will depend largely on peoples income. When I'm on my normal income, then lots of things wouldn't be an emergency at all. I could just buy a new washing machine/have a boiler repair/have some osteopathy if needed for instance from that months income. Its the bigger things then that would matter, eg a major roof repair is the only thing I can think of that would be an "emergency" to me then. It varies a lot, dependant on peoples income. If I were on the Dole, then even a pair of slippers needing replacing unexpectedly would be an emergency because the income would be so low.

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  21. Single and middle aged in the USA...I work constantly on increased my emergency fund account...if I was to become sick or injured I'd need money to cover everything...including paying for my health insurance through work...no buses here so would have to replace my older car if wrecked...cat emergencies...dental emergencies...unpaid time off work to care for elderly mother with dementia...it goes on and on...

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  22. Many electrical items are fairly cheap nowadays and it could be more cost effective to buy new rather than get an old one repaired.
    For vet treatment for pets you could try the PDSA if you are on a low income.
    I recently heard on Radio4 money box about a man who had 20 current accounts. At the moment you can get more interest than in a saving account. I think you need £1000 going in and 2DD's going out. So you just direct debit into your own accounts. A similar scheme can be done with regular savers accounts where you move cash between accounts. Theres just the small matter of having surplus cash and changing accounts to get the best deals.
    Dave.

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  23. I have made it to 2014!
    Today I got the $1800 bill for a leaking frozen pipe in the yard. It took the plumber days to figure out where the leak was coming from, as our water meter continued to turn and no faucets turned on anywhere. As it was in the yard our home insurance won't cover the cost of having it repaired. I'm glad I have the money in our emergency fund to pay this bill.

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