Emergency Funds: “Oh Sh!t” vs. “D@mmit”

Image is from a 3M security glass ad campaign but it makes you wonder: If you had to do something dramatic to access your emergency fund- would you do it so often?

You know those pet peeves that are so trivial, you really have a hard time justifying devoting a lot of thought, much less an entire post to, but you just can’t stop thinking about it and you rant anyways?

This is one of those. And if you just go on and run away from this blog today, I totally get it just come back in the future because I’ve never really done this and I don’t think it’ll be much of a habit for me but today, it’s on.

I am going to make this post even more ridiculous by talking about a trivial pet peeve that is related to something I hardly even talk about anymore– personal finance. Why I don’t talk about it much anymore is another post entirely and we’ll get there one day, just not today.

Today I’m going to focus on the supposedly sacred and magnificent “emergency fund.”

Everyone who knows anything about personal finance knows about the emergency fund even if they don’t call it that but I’m not talking about those people today so don’t think about them right now. For the uninitiated (and it’s a good thing, I’m starting to think), an emergency fund is a bunch of money stashed away strictly for the use of EMERGENCIES.

From Merriam-Webster,

Definition of EMERGENCY

1: an unforeseen combination of circumstances or the resulting state that calls for immediate action
2: an urgent need for assistance or relief

When it comes to personal finance and the “emergency fund”, it’s referring to definition #2. In other words, your life just got a kick in the ass of varying size because something went wrong and it is having a direct impact on your needs being.

Did I lose you?

Ok, emergencies in the personal finance world should be things like:

a) Loss of income due to job loss, severe reduction in hours, medical leave, abandonment by partner, etc.
b) Loss of something/many things critical to daily life such as a main source of transportation, a refrigerator (stores food which is kind of a need), heating or cooling (in extreme weather conditions), a home, etc.

It is these epic “Oh Sh!t” moments that are supposed to be when an emergency comes into play. But if you read some personal finance blogs, you would not know this. And that annoys me.

Why people tap into “emergency funds” for things outside of true emergencies is beyond my scope of understanding. You can have an emergency fund AND savings you know. As a matter of fact, you should definitely have both and they should be built up at the same time in my honest opinion because otherwise you know what’s going to keep happening– tap, tap, tap into the emergency fund. And if, god forbid, a true emergency strikes?

Having a real “emergency fund” is a pretty scary thing because it is a solid acknowledgment of the fact that the world we live in is, at its core, entirely unpredictable and out of our control. And this spans every single aspect of our lives– even the things we cherish most most dearly. It’s terrifying. And having the emergency fund as a real emergency fund is a conscious acceptance of that fact.

You know, we really can’t budget for every single curve ball life throws our way. Some are real gentle and easy to nail but others can be some sharper ones that are much harder to nail. But just because the sharper curve balls cause some sort of unpleasantness in our lives doesn’t qualify it as a real emergency.

A lot of people have a lot of different savings methods. Some people have targeted savings accounts. Some people have a myriad of savings tools in place for a myriad of different methods (like CD ladders plus mattresses plus whatever else it is that lets them sleep at night). And they’re all really cool and I think you should definitely think about something that works for you. Just leave the emergency fund alone.

Here’s an idea– leave the emergency fund for the true “Oh sh!t” moments in your life but have another fund in place for the “D@mmit” moments too, because hopefully those happen way more often in your life than the other ones do. In a perfect world neither would happen, I could eat a plate of slutty brownies without ill effect, and all three of my children would be perfect little angels who make no messes at all, ever. But that’s not the reality of the world and we just need to move on.

If you can’t decide whether or not something is worthy of an “Oh sh!t” or a “D@mmit” ask yourself this– how far are you willing to go to access the money needed to cover the expense of said “Oh sh!t”/”D@mmit” item? The ones that you would do even the thing that would make you cry? That’s an “Oh sh!t” thing and a perfectly good reason to access your emergency fund.

Do you use and abuse the term “emergency fund”? Do you think I’m being sort of insane about this? I know it’s probably a semantics thing at play but god bless my English-loving heart, I can’t let it go! Am I sort of justified? Do you do the thing where you have an emergency fund and you absolutely refuse to let it go below such and such a threshold because that’s too risky? WHY DO YOU DO THAT? Why not just take some of it out and save it elsewhere and then bulk all your savings up together? Is it because saying you have an emergency fund of such and such amount makes you feel better even though you and everyone else know it’s not just for emergencies? Is it a peace of mind thing? But wouldn’t it be better to have another fund and a TRUE emergency fund or would that be too much money in savings for you to be comfortable with? Do I need a brownie?

Mmmm slutty brownies... What was I mad about again?

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24 thoughts on “Emergency Funds: “Oh Sh!t” vs. “D@mmit”

  1. Completely agree, but I have a question: Why do you call it a โ€D@mmitโ€ item? For me it would be more like [insert sound of desiring sigh] item.

    By the way, I answer your comment on my blog. I think we mostly agree.

    Reply
    • Because the desiring thing is different too. The dammit stuff is the stupid stuff that goes wrong all of the time but isn’t a HUGE deal and can usually wait a bit to be attended to. For instance, if your refrigerator busts that’s a huge problem because food spoils and so that, to me, merits a trip to the emergency fund. However, your dishwasher busting isn’t SUCH a big deal. Yes you have to replace it but it’s not something worth going to the emergency fund for. The TV breaks? Dammit! The car breaks? Oh shit! Like I said, it gets personal but it comes down to how drastically would you act to get to that money? Because there are various degrees to which things are “emergencies”.

      Reply
  2. I like the idea of an emergency fund, but I would never leave a bunch of money in a savings account earning no interest (actually losing money every year to inflation) if I also had a credit card balance. I would rather pay off my credit card so I am not paying interest on it and use my credit card for emergencies.

    Reply
    • I agree and disagree. While I wouldn’t want a fully-funded emergency fund while carrying a credit card balance, I’d rather have an emergency fund equal to the available balance on those credit cards so I don’t rack up interest if and when there’s an emergency and I am forced to use the credit cards. And really, this sort of ratio comes down to personal circumstance as well. If you have very high credit card balances and it would take a very very long time to pay them off, I’d strongly suggest a good emergency fund in place because the chance of something really bad happening is much higher the longer you have to pay on the cards. Why open yourself up to the risk of being right back where you started? Those people who can eliminate the credit card balance in something like six months? Screw it go for it. You’re not in a very bad place and can afford the risk.

      Reply
  3. LOL! I understand completely. I have a fund set up at a completely separate bank that is my “Oh sh!t I just lost my job!” fund. At my normal banking establishment (where my checking/bill pay account is) I have a “Big Ticket expense” fund where I save for replacing major appliances, re-roofing the house, buying a car, etc. By your definition, maybe I should rename it the “D@mmit” fund. Just so all is clear to me, I also have a “vacation fund” savings account so I’m not tempted to dip into either of the big funds if I want to take a weekend trip or a cruise to Alaska or whatever; it all has to come out of that fund, and that fund only.

    Reply
  4. Hahaha… I’ve done the same thing theres an emergency/savings fund then there’s the “Im not too sure what to call this” fund (no really thats what I called it, and thats how it appears on my bank statement) the trouble is i was drawing so much on the second I had to start drawing on the actual emergency fund for a couple of months. So yes I’m guilty of mixing up the oh shit and damnit moments. But that was last year! This year will be completely different! ๐Ÿ˜€

    Reply
  5. I call it a slush fund and we use it for everything. It has at least one month’s expenses in it at all times (though recently we’ve built it up to two months since we’re putting away more $ for retirement this year so our extra cash each month is halved). We can do that because we spend so much less than our income that it only takes a month (now two months) to get one month’s expenses back in it. (In the summer when we don’t get paid, the fund is bigger.)

    But even when we didn’t have much extra money, I would think of something like a reimbursement coming back late as an emergency and would use our slush to keep from paying fees to the credit card company or bank.

    Our emergencies and “oops” and opportunities seem to balance out to about the same amount each month, so categorizing them differently would just be more effort without any benefit. (Though obviously when there’s an emergency or an oops, we’re less likely to spend on an opportunity.)

    Reply
    • Re: Dishwasher and clotheswasher… we actually went without both for quite a while (at separate times) until our slush fund got built up enough that we felt comfortable getting a new dishwasher (to replace the broken one) and actually getting a w/d (we used the laundromat until we got something like our third grown-up paychecks). Also we didn’t get extra furniture for an embarrassingly long time after buying the house (3 years, koff koff) because we couldn’t afford it and then had been without so long we didn’t get around to it. We just had some completely empty rooms.

      Reply
      • Yeah I could do without a clothes washer if it was just me and my partner and maybe one kid but with the three kids I don’t think I could do it anymore. I don’t think I’d have the time to use the laundromat. Now obviously necessity IS the mother of invention so it might occur to me that my grandmother lives next door and I could use her laundry as my laundromat to tide things over. It’s amazing what you get used to when you’re forced without it that’s for sure.

  6. This is a worthwhile rant – my emergency/savings account is way too easy to get to – so it ends up just being a place where I go after overspending or forgetting about something that had to be done. I like the idea of two different accounts – I should probably take that advice!

    Reply
  7. Funny how one’s concept of “emergency” changes, especially when you have multiple “emergencies” one right after another, or simultaneously.

    To be frank, the washer / dryer – even with kids – isn’t an emergency compared to no money for heat (when it’s freezing), no money for rent / mortgage, no money for a doctor (when you’re injured or sick), no money for food.

    We seem to have forgotten so many basics, and what we take as “basic” (a cell phone? cable? a dishwasher? a car – if you have the option of walking or taking a bus?) – let’s just say – it’s changed. And not for the better.

    Now pass me a plate of slutty brownies, please.

    Good post.

    Reply
    • Also how one’s concept of emergency is different from the next. We really do forget what basics are and it’s amazing what we can get used to when we’re forced to go without it. Oh god those slutty brownies. I’m going to cave in and make them I just KNOW it. When I have the money for ingredients of course!

      Thanks. ๐Ÿ™‚

      Reply
  8. Well, I do have my TFSA (that’s a Canadian thing) that’s the OMFG!!! TERRIBLE shit just happened! fund. We’re allowed to put $5,000/year into one of these babies and they can be withdrawn and replaced in the next year. But if I’m honest with myself, I have to admit I have no intention of ever touching that little stash for quite a few years. The gains are non-taxable, so that’s the first place I’d draw from but drawing down is just so weird.

    I think I’ve reached the point where I’d look at it as a personal budgeting failure to even have to dip into it. And I think that’s kind of a good thing. Plus it would be a PITA to draw from it anyway I think. At this point, I’d dip into my LOC that’s only at 4% interest and leave the savings intact I think. Having to pay interest would seriously mobilize me into another job STAT. I dunno, my income fluctuates so wildly month to month and year to year (and whim to whim), it’s all kind of hard to pin down.

    My oldest son has a TFSA as well and is putting $600/month into it. I think he has around $7k accumulated in his. It’s money he’s saving for his next year of university but I have this feeling he’s like his mama and will half kill himself with work to not have to touch it.

    Reply
    • Oh tell me about it. If it wasn’t for the stomach virus that slammed into me I know I would’ve caved in and made them. Maybe next weekend will be virus free at my house and the slutty brownies will appear.

      Reply
  9. I had this problem myself..tapping into my “emergency” fund for non emergencies. I’d build it up to about $5K, then drain it and then do it all over again. I did this 3 or 4 times before I realized my methods weren’t working. My flaw was that I saved too much for emergencies and I was running my budget too lean. It worked much better when I saved up for it slowly and put it in bonds which I couldn’t cash for a year. After a couple of years of this, it built up and I never was feeling pinched because I was saving too much too fast.

    I also agree that most people have warped definitions of necessities such as most electronics.

    Reply

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