Surprise Expenses and Protecting Your Credit

It’s always hard when you think you’re getting ahead and something major sort of explodes into a big bill that you totally weren’t expecting, nor did you fiscally plan for. In other words, you didn’t have one of those cool “emergency funds” that everyone seems to talk about having that’s so important and yet no one I know seems to be able to actually afford to build up since they pretty much live paycheck to paycheck. Heck, I consider myself to be very responsible when it comes to finances, but even I don’t have an “emergency fund” per se, instead I just try to make sure I budget so I have enough “cushion” in the account that I use to pay all my bills, and living expenses from.

Financial gurus like Suze Orman will tell you how important it is that you have an emergency fund set aside at all times that consists of about six months of mortgage, living expenses etc. But how many people can realistically do this when they can barely pay their bills as it is? Or, should I say, how can most Americans discipline themselves enough to save that kind of money without having to dip into it before it reaches that six month cushion? It’s a feat much easier said than done, that’s for sure. And like I said, I don’t consider myself a slouch when it comes to self discipline and finances, but even I have had a really tough time coming up with a whole six months in an account that is set aside specifically for emergencies.

What constitutes a financial emergency, exactly? Well, it can be things like something that goes wrong with your house or your car. It can even be a huge unexpected Dr. bill that you weren’t exactly banking on paying. Even with insurance these days, you still have to pay a lot out of pocket if a major health issue comes up. This is why hospitals and doctors are required to offer payment plans, because they realize that not everyone can pay off astronomical medical bills because they are usually considered an extra emergency expense.

A great example of an emergency expense for me is that our septic tank recently needed to be drained, and although I had planned on paying $250 to get the tank drained, it ended up being another $250 to replace the pump that had broken and then another $175 to do a finding fee because the plumbers couldn’t find where the septic lids were when they dug around in the ground, making that part of it an unforseen and unplanned for expense. We also happened to have our income taxes due since we pay them quarterly, so it is an example of an unplanned expense that had to be dealt with.