I don’t know what your family calls the account used to fix a flat tire or replace a hot water heater, but ours is called the Emergency Account. I have a checking account for monthly bills, a money market account for short term savings, and an emergency account for those expenses that aren’t part of our normal budget. I really would like to utilize this blog to help organize our family finances and share financial/organizational ideas with one another. What do you call your Emergency account? I have some friends who just use the checking account for everything and other friends who use credit cards for emergencies. If you are diligent in paying off those credit cards each month, then that could work for you. But, most people cannot pay off large expenses such as a new water heater or a new air conditioner. I know, as I just replaced my air conditioning unit and furnace. How does your family budget for emergency expenses? Do you set aside money each month? Our family sets aside $400 a month for emergency repairs. This may seem like a lot of money, but it can go quickly when our new HVAC system was purchased this spring for $9,500.
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Our HVAC system was installed in 1975, for the last few winters I have been crossing my fingers hoping that the old girl will chug through another winter! I was afraid that the replacement cost would be around $10,000 as yours was, Ugh!! It’s gonna hurt when she does kick on for the last time!!
I don’t really have a name for our “emergence fund”, although, “emergency fund” seems appropriate! I also don’t put aside a set amount into the fund, we try not to spend any more than is necessary and put what is left over at the end of the month into savings. It would be easier for most people to have a set amount taken out of each pay check and deposited in a safe place before they can get their hands on it to spend it!
Hi Madison- The $10k will actually fluctuate based on the price of copper and other resources. As copper prices go up, so will the cost of the furnace and compressor parts. The HVAC guys told me that the same system could go up another $500-$1k next year. Yikes!
Maybe with that kind of inflation, I should just but the system now! ugh.
I hate to say it, but given my current situation there isn’t an emergency fund. It’s something that I fret about and hope to change in the near future knowing that having children and a home will eventually result in an emergency.