Tuesday, September 9, 2014

Are You Prepared for These Unexpected Financial Emergencies?

Aside from being a very busy summer, I also ran into quite a few unexpected situations where my emergency fund did/may in the future come in handy.  Many of these things are situations that I hadn't even considered or planned for:
  • My brother, after years of hard living, ended up in the hospital multiple times this summer.  While I am glad that he appears to be on the mend now, a thought that hadn't previously crossed my mind is “what would happen if he were to die?”  Obviously an unpleasant thought which I hope doesn't happen for quite a while but it dawned on me that he never has two nickels to rub together (ditto for all of my siblings and relatives on that side of the family) so it would probably fall to me to pay for his funeral/burial/cremation/etc.  If your immediate family member (parent, sibling, child, etc) were to suddenly die would they be able to afford the cost of a funeral/burial or would this responsibility fall on you and your emergency fund?
  • If you or your spouse were to die suddenly, do you have enough money in your emergency fund to cover the cost of funeral/burial expenses?  This though quickly went through my mind as I was sliding over a boulder at Blood Mountain on the AT wondering if I was going to careen over the edge and die or just break some important part of my anatomy.  Fortunately neither happened.
  • If you were suddenly to become injured, could your emergency fund support you through recuperation and rehab in case you couldn't work?  I am hoping you have disability insurance but many people don’t and with more and more people working hourly jobs that don’t even pay sick leave or annual leave, one broken limb or extended illness could sink one into destitution.  This thought crossed my mind as my hiking buddy was covering a particularly treacherous stretch of trail and I realized he would be starting a new contract job the following week and wasn't covered by any sort of sick leave.  No work would equal no pay which is when a person would be mighty glad to have an emergency fund to fall back on.  Fortunately this possible tragedy didn't happen either.
  • What happens if travel plans change?  Whether you travel for work or pleasure, on a family vacation or for a family emergency, it is always possible that travel plans can change and with many tickets (air/train/hotel/bus) being non-refundable these days, do you have the extra cash in your emergency fund to cover such contingencies?  This thought came to mind when I had the great idea to take a Greyhound bus thorough the South in order to see the sights (bad idea on a number of levels) and was looking at spending the night in the downtown Atlanta bus station due to a delayed bus (again, a bad idea on a number of levels).  Fortunately I had left padding in my budget for this trip that would have allowed me to take a cab to the airport and fly to my final destination and even if I hadn't done this I would still have had an emergency fund to fall back on which many other stranded passengers apparently didn't have.  Again, things worked out in the end but it was nice to have the reassurance that money could have bought me out of a tight situation.
  • When a weather disaster happens, do you have the emergency funds to see you through the crisis?  There have been all kinds of weather challenges this summer from storms to flooding (lots of flooding) to heatwaves that knock out power—and thus cooling—for days.  Many people simply suffer in silence when these things happen and depend on the Red Cross for particularly serious situations.  However, with a fat and fluffy emergency fund, you can, again, buy your way into, if not a full recovery, at least a more comfortable existence while you wait to get back on track (like a hotel stay instead of camping in your yard, a nice restaurant meal instead of what you can scrounge at the local 7-11, a portable air conditioner while yours is shut down, etc).
  • What happens if your exquisitely planned and tightly budgeted epic adventure of a lifetime doesn't work out as expected?  When you hike by Neels Gap on the Appalachian Trail you will see boots and more boots hanging from trees in front of the hostel/store.  The reason?  According to the guys who work at the store, this is about the point in the trail when thru hikers (who usually start their 2000+ mile walk in April) start tossing gear and rebuying stuff to replace everything they had carried since the start of the trail that didn't work.  So the folks who barely have enough funds to cover the entire trip are left to suffer with heavy , useless gear while those with emergency funds can easily (but not cheaply—have you seen the price of new gear these days???) replace what doesn't work with items that do and be on their way again.
  • And then there is Mexico.  I spent a bit of the summer in Mexico and didn't even need to bribe anyone this time which was nice.  Of course, as an American, you are going to end up paying more than the locals for many things but that’s just how it is.  More importantly (and not only pertaining to Mexico) is the fact that an emergency fund is almost a necessity in countries where bribery, corruption, and serious legal problems are the rule instead of the exception.  Money talks and penniless tourists usually get the short end of the stick when things get complicated.
  • How’s your food stockpile?  I haven’t shopped for regular groceries in months but as soon as we got back home it was time to hit the stores.  And the prices on everything from dairy products to meat and even dry goods has indeed increased in only a few months, some exponentially so.  While I am hoping your usual food budget will stretch to cover the increase in food prices, having an emergency fund can come in handy when a food item that you usually eat comes up as a loss leader or at a great sale price at which time it just makes sense to spend the extra money and stockpile as much as you can reasonably store and eat in the foreseeable future.

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