I have been thinking lately about our expected upcoming expenses. As I have mentioned in the past, we live in an older home and several of our appliances are nearing the end of their expected life span. We also have two older cars, one is a 1996 Toyota Corolla and the other is a 2001 Saturn. I wouldn’t consider the Saturn older necessarily except that it has already proven itself less than reliable.
We have our $1000 beginning emergency fund sitting safely in our savings account, and I save an additional $25 a month in what I call the “long term” fund, which eventually will become the replacement fund for appliances or other home improvements and maintenance. We are still paying off debt so the beginning emergency fund of $1000 is all we have at this point labeled an emergency fund.
As our debt comes closer and closer to the point of being eliminated, I’ve thought about starting a few miscellaneous and specific savings funds, such as a new (to us) car fund and a new furnace fund. But the reality is, until we have a sufficient emergency fund that provides for an adequate cushion for the vast majority of potential emergencies, even if I am splitting up money into different “funds”, it is honestly all just an emergency fund. When we had our big unexpected car repair in January, every available resource (except the children’s college accounts and our retirement funds) were completely tapped, including the “long term” replacement fund and even my spouse’s birthday money. And if we had another emergency of the same magnitude, the same thing would happen.
At some point in the future, we will start to be more specific and selective about the money we are putting into savings and portion parts of our overall savings plans into funds for appliance replacement, car replacement, home improvements, and other savings goals. But until then, the money that I save beyond our retirement and college savings, no matter what I call it, are in reality is a backup emergency fund if the $1000 one is not sufficient. So into one single fund those savings continue to go.
This post is part of the MBN writing project on emergency funds.