By Trent Hamm
Every once in a while, I’ll get an email from a reader that goes something like this…
This month, my annual insurance bill came due and I couldn’t make ends meet. I cleaned out my emergency fund. Then, at the end of the month, my car broke down. What’s the point of having an emergency fund? I’m in debt anyway.
The issue is this: an irregular bill that you know about ahead of time, such as your annual insurance bill, is not an emergency and shouldn’t tap out your emergency fund.
Emergencies are things that you did not know were coming, such as your car breaking down, a parent or a child or you getting sick, a tree falling on your house, and so on. An emergency fund is money you set aside for things you didn’t know were coming.
Irregular... More...
