Jan 14, 2013

Financial Preparedness - Access to your Emergency Fund

Ice Storm January 2007
If I'd been more on top of my life, last week I would have shared with you about preparing for a winter storm, including power loss and limited travel.  The weather forecast kept increasing the amount of ice accumulation expected for our area and I was reminded of our experiences in 2007 (see picture above).  Although we did make some preparations, I wasn't on top of things enough to share with you so that became my plan for today.  Then Saturday night, my plans changed.

On Saturday evening, a friend of ours was a few hours away from home when they received word that his mother had been in a serious auto accident (she died later that evening).  They left from where they were to be with her.  When someone dies unexpectedly, sometimes we look for lessons that can be learned, to make sense of the loss.  In my case, I've learned a lesson that I'm passing along in hopes that you can also be better prepared.

For years, my husband and I have tried to become more financially prepared and stable.  We paid off our debts, except our mortgage.  We don't use credit cards and we've built up a small emergency fund.  Our emergency fund is NOT in our regular checking account.  In fact, it's in a savings account at a different bank.  In order to use it, I have to either drive to that bank and make a withdrawal, or log in online and transfer funds in to a checking account that we have at that bank for this purpose.  "But that makes it hard to access."  Yes, that's the whole point.  If it was easy to access, it would be spent without a lot of thought.  We have deliberately chosen to not have a debit card for this account.

We were out of town on Friday night and Saturday, arriving home just before the winter weather was to arrive.  Yesterday, I pondered our friend's loss and realized that because they had been away from home for a day trip, they had no clothes, no toiletries, etc.  All those things you normally take with you when you travel overnight.  And then I learned my lesson.  What if we'd had a similar call while we had been out of town and left immediately from there to be with our family?  Payday is Tuesday and we didn't have much of a cushion this past pay period as we catch up from Christmas and other unexpected expenses the past few weeks.  It would have been an appropriate use of our emergency fund; that's what it is there for.  But I had left the checkbook that I use to access those funds at home.  The bank for our emergency fund is local only so no out of town locations to make a withdrawal.

Many people reading this are probably thinking "that's what a credit card is for".  Sorry, I just don't like credit cards.  They are too easy to use and to not pay off the entire balance each month.  So my lesson, my solution is simple.  When we travel, I not only need an emergency kit in my vehicle (like this winter, we carry candles, blankets, water, food in case we get stranded) but I need to be sure that that emergency fund checkbook comes with me as well.

So the "moral of my story" is:

Make sure you have a way to access your emergency fund when traveling.

Maybe you DO have a debit card to access your funds, you just don't keep it in your wallet.  So add that to your out of town packing list.  As for our family, that checkbook will now travel with us but we won't be transferring funds into the account unless we are in the emergency.