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What If Your Emergency Fund Can't Cover Your Emergency?

4 Minute Read

Emergencies can happen out of the blue. And if you don’t have a buffer of cash between you and the twists and turns of life, things can get tricky pretty quickly. That’s where Baby Step 1 comes in: Saving $1,000 in a starter emergency fund. It’s your financial safety net for when things go haywire.

And it works like a dream if your emergency is less than $1,000—but what if it’s more? What if your car breaks down, your daughter needs her appendix taken out, or your air conditioner goes berserk in the middle of July?

What Is an Emergency?

Okay, let’s be clear about what qualifies as an emergency here. Your kitchen renovation is not an emergency. Neither is your summer vacation. Or a new TV.

True emergencies are unexpected, urgent and necessary. The brakes in your car going out, cutting yourself while chopping veggies, or suddenly losing your job are actual emergencies. Be sure you have a bona fide emergency on your hands before you decide to dip into your emergency savings.

5 Steps to Take When an Emergency Is Bigger Than Your Emergency Fund:

1. Call and negotiate.

If your son broke his arm and you’re struggling to pay the hospital bill, call the good folks in billing. Ask about discounts and get on a payment plan for medical expenses that you can cash-flow over the next several months. Be persistent, patient and kind. And pay something up front to show you’re serious about repaying your debt! They’ll usually work with you.

Ready to start saving? Download our free budgeting tool today!

2. Shop around.

If your car is on the fritz, it pays to shop around. Ask friends for reliable mechanic recommendations, and then call about deals, coupons and specials. Be sure the mechanic you pick gives you a quote before you authorize any work.

If their price is more than you can afford, ask for the bare-minimum fix that will get you back on the road safely until you can save for a bigger repair or a replacement car. If your vehicle is absolutely not drivable, consider carpooling or taking public transportation.

3. Make extra money—fast!

Sometimes, you just need more cash. New HVAC units aren’t cheap, after all. If you need more money, sell everything you don’t use anymore. Get online and list your old bikes, iPads, DVDs, furniture, clothing, and third TV to get some quick cash.

If you still need more cash and have a little time, consider making budget cuts. Say goodbye to cable, Netflix, your expensive cell phone plan, monthly shopping money, and the restaurant budget. Those temporary cuts will add up to some big savings.

And then there’s just plain work! Look for ways to earn cash by freelancing, delivering groceries, driving for Uber or Lyft, babysitting, dog sitting, house sitting, selling your iPhone photos, or picking up some overtime at work. There are plenty of ways to boost your income and your financial safety net if you’re willing to make some sacrifices.

“A crisis becomes an inconvenience when you have an emergency fund.” —Dave Ramsey

4. Stop paying on your debt snowball.

There could be a rare emergency instance where you need to stop your debt snowball altogether and focus on the here-and-now. We’re talking about really big stuff like losing a job or getting ready for a baby. Go back to making minimum payments on all your debts for a while and focus on covering your Four Walls: food, basic clothing, shelter and utilities, and transportation. When life gets back to normal, you can get back to paying off your debts with gazelle intensity.

5. Build up your emergency savings fund again.

Once the dust settles and the storm has passed, replenish your emergency fund as soon as you can. If there’s one thing you can count on, it’s that there will be another emergency coming down the pike. And when that happens, you’ll be thankful you had your emergency fund there to make it a little easier.

Complete Your Financial Safety Net

Remember, your starter emergency fund is a buffer, not insurance. It exists to help you get through a mini-crisis until you can afford a bigger fix. It’s not supposed to cover every emergency that crops up. That’s what your fully funded emergency fund (three to six months of expenses) will do down the road.

Until then, continue to follow the Baby Steps in order, pay cash for everything, and stick to your goals as best you can—no matter how hard it gets.

The best way to see how much money you can throw at your emergency fund and debt snowball is with a budget. Download EveryDollar today for and create your first budget in minutes! 

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Get a FREE Customized Plan for Your Money! 

Answer a few questions, and we'll create a plan tailored just for you. It only takes three minutes!
Take the Free Assessment