Make Sure It's Really an Emergency

Nicole and her husband have recently had several large home repair bills, and Nicole wants to know how to continue funding the emergency fund while cash flowing the home repairs.

QUESTION: Nicole in New York City and her husband are about a third finished with their emergency fund. They’ve recently had several large home repair bills, and Nicole wants to know how to continue funding the emergency fund while cash flowing the home repairs. Dave says as long as it’s a real emergency, they can slow down the emergency fund to take care of it.

ANSWER: I don’t want to go too far into a home remodel. I want to minimize and stop damage and make it functional. Those qualify as emergencies. A home remodel or fixing up something, like redoing your kitchen or bath, are not emergencies. You want to get the emergency fund built, but in the meantime, you’re covering some emergencies, so it’s going to take a little while. There’s not an easy fix for this. Yeah, you’ve got to fix the garage door. You’ve got to fix the window. Then we get back to finishing up the emergency fund.

They either are an emergency or they aren’t, and you get to define that. But a grownup doesn’t call paint color in the master bedroom an emergency. There are a lot of people who would like it to be because they’ve wanted to redo the bath for five years and now it’s an emergency. No, that’s not it. That’s not what I’m talking about. If the water’s running into the house, then that’s an emergency. If you can’t get in and out of your garage door and you park in there, that’s an emergency. But if it’s been that way for five years, you can’t just suddenly declare it an emergency. Because you start to get your feet under you as far as money goes, you can’t just suddenly start declaring things you’ve always wanted to fix an emergency. But if your heating and air is out, you’ve got to fix it. That’s how you break it down. It’s an unexpected event—something that caught you off guard—that needs to be repaired for the home to be functional or for the home to not be damaged further or something like that.

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