This Spring sub pump died, our basement flooded, and our air conditioner died. Did I mention this happened in ONE DAY? It was crazy.
Our insurance DID cover some of the cost, but we did end up paying 1,000's of dollars in repairs out of pocket. I was reminded how quickly things can change and how costly home ownership really is.
The truth is, we had the cash to cover all the repairs. We are grateful, but we haven't always had our act together when it comes to personal finance.
In our early years, we used credit cards regularly and prayed we had enough credit to cover whatever financial storm we were in. We lived for years on only a limited and variable ministry income. We used credit cards and debit to survive. We had very little cash saved. At the time, we assumed it was the only choice we had.
It was after a difficult and painful experience, we made the commitment to pay off our debt, work to increase our income, and save cash for a "rainy day." Now that we have adopted a cash only budget, I am convinced now more than ever that a emergency fund is really is the best way to get through any unexpected home repairs.
In fact, I would say is the SECRET to really enjoying homeownership is a solid emergency fund. I know it sounds crazy, but here is what we've learned.
Pay for things and MOVE on.....
When you are able to use cash to cover unexpected and costly home repairs, you don't carry it the experience with you. You pay for things and move on. Emergencies are stressful enough already. Your emotions are high and your mental energy is zapped. You are physically exhausted.
When the crisis is over, I want to put the crisis behind me. Forever. We find that using credit to get through an emergency is like dragging that experience with you for months (or even years). It is really hard to put a difficult experience behind you emotionally when you are worrying about making payments and dogging looming late fees. When we used credit cards for emergencies, I would find myself waking up in the middle of the night panicked about what disaster would happen next and do we have enough credit to cover it?
And the truth is, life is unexpected. One bad day can be followed up with another bad day. Expenses can pile up really quickly. Having cash saved up in an emergency fund allows us to mentally (and emotionally) say to one another "that experience is over. Let's move on."
Cash = Negotiating Power
Did you know that using cash gives you negotiating power? It's true. My Dad used cash to pay for numerous home repairs growing up. I can still picture him outside our home negotiating a cash price for repairs. He'd often say "So if I paid you cash up front, what would this cost me?"
When we purchase our cars, we often buy from sellers who value cash deals. We don't mess around with dealerships who sell payment plans. You would be surprised to know that there are small businesses who value your cash purchases and are happy to negotiate fair prices for customers who don't want debt. All you have to do is ask.
We have found that you don't have to be sleazy to negotiate a cash price. Simply politely ask if there is a discount for paying up front. You will be surprised how often you can negotiate a cheaper cost!
Rational and Calm
The truth is that when you have an emergency fund you think clearly in the unexpected. Your emotions are more controlled. The stress level is lower. You can think rationally about what steps we need to take to get through this disaster and move on.
When our basement flooded, Brad had called our insurance, arranged for a plumber, bought a new shop vac, and called in child care for our kids within one hour. We quickly went to work getting all the water out of our finished basement.
During those years when our income was low and we used credit to get by, I would find myself panicked about the smallest unexpected expenses. I'd snap at my family and freak out over the smallest of things. The stress level in our home was high and my health suffered because of it. It is simply not worth it.
When we have cash saved up, I find myself at peace with whatever comes our way. I am able to stay calm and rational. I am able to choose gratefulness instead of worry. In my opinion, having an emergency fund takes the drama out of a home disaster.
The truth is, it took us years to pay off our debt and save up for emergencies. To this day, my husband and I work hard and watch every penny we spend. In the end, all the hard work was worth it and has made home ownership so much more enjoyable.
What about you, what is your ONE secret to surviving a home emergency?