Now I see how people end up in financial ruin in a short amount of time if you don’t follow the ‘best practices’ advisors talk about.
I do marketing and branding work for financial advisors. This means I have the pleasure of working closely with a variety of smart and caring professionals. I hear their saving, investing, and planning advice on a regular basis. I translate their visions of key steps to protecting a family’s income during an emergency into helpful charts and graphics. It’s a good thing I listened and followed their advice. Otherwise, a recent period of 7 weeks could have sent my finances down the toilet.
49 Days of Emergencies
My first hurdle was our discovery of water damage and mold in our kitchen. Thank goodness we have good insurance to cover the clean up and replacement of our kitchen. We would just have to pay a $1,000 deductible. We have a good amount of cash savings because our financial planner told us to do this years ago. (I am frequently annoyed about having six month’s worth of expenses sitting around and not being invested in something that could be earning more. But I keep it there.)
When we learned the insurance would only cover the damage, reconstruction and no upgrades, I thought, “Well, we have some cash so let’s upgrade the countertops, lights, etc.” We agreed to spend around $8,000 out of our savings on making the kitchen extra special and more functional. (Now we are at $9,000.) This upgrade was not an emergency, but was something we could afford to do. Anyone who has had home construction done knows all the additional, unexpected expenses that pile up during that period of time. There was close to another $2,000 of construction expenses that popped up. This is a low estimate considering all the food ordering we did while we didn’t have a kitchen. This was stressful, but not the end of the world. (Our grand total is $11,000 at this point.)
While this construction was being done, the rainy season started in South Florida. We discovered multiple roof leaks and had to have them repaired. This was not great timing, but this is why we have this emergency savings so we can cover these expenses. Again, I thought, “good thing I listened to our advisor and not my dumb instincts about how much cash to save.” We spent around $900 on roof repairs bringing us to $11,900 in a few weeks time. Then, I started having severe pain in my sinuses, head, and nose. I went to the doctor, then the ENT. I have health insurance but needed to get a CT scan which ran me $650 out of pocket. After another $150 from going on four medications and follow-up visits, we were now up to around $12,700. To top it off, my husband’s truck broke down during this time costing us another $400. I wish I was making this up. Our grand total of unexpected expenses in under two months was around $13,100.
Not the luckiest time of my life but an important lesson for me. If we didn’t have that lump sum of cash in saving as advised, all of this stress during this time would have been magnified. I also was very grateful that we had property and health insurance because it could have been much worse. Many families go through much more severe situations with much steeper costs.
Now it’s time to rebuild our savings and I hope to replace my former irritation with gratitude when I look at that account balance.
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