It’s never good when I get a call at work. Off the top of my head the last two times this happened were my dad suffering an accident that ultimately led to his death, and a shooting near my son’s daycare with the suspect still on the loose. So when my wife’s name popped up on my phone on Friday morning, I suspected it wasn’t to let me know we had won the lottery.
“Everyone is okay but…,” as an opener is reassuring (as intended) but also an indication that something pretty bad has happened. My wife and two kids had been hit at full speed by a sedan running a red light. Our car was totaled and they would need to be picked up. I was two patients into my morning with 15 more visits slated. I called my division chief and office manager and cleared my schedule.
When I arrived at the scene my family was sitting in the ambulance. Our 2yo was animatedly telling the EMT and paramedic about dinosaurs, and 5yo turned to me and said, “The car BLEW UP, Dada.” Mrs. PIB was bruised but otherwise uninjured. Everyone is okay but…
Our CR-V was not in great shape. Driver and side airbags had gone off, the front-right quarter of the car was smashed in and the bumper was 10 feet away. We bought this car in July 2017 and had been hoping to keep it for at least another 5 years. Best laid plans.
Other than the car seats needing to be replaced, we were fortunate that there was no other property damage. But between preschool, my job, and my wife’s business, we are not exactly in a position where we can easily handle being a one-car household. Everyone and their brother has heard about how inflated used and new car prices have been for the past year. And with a house purchase/mortgage hopefully on the horizon, I wasn’t overeager to take on a car loan. To compound the situation we had a winter storm bearing down on us, threatening to make transportation (and car-hunting) even more of an ordeal.
When it comes to large purchases I tend to front-load my research, long before the need ever arises. And when the time comes, I pull the trigger quickly. Within 3 hours I had narrowed the search of available replacements and had a test drive scheduled at our local CarMax. By 6pm that evening, there was a new, fully paid-off SUV sitting in our driveway. How was this possible?
For 99% of its existence, an emergency fund doesn’t do much except lose money to inflation (especially true in the current ultra-low rate environment). This can be frustrating, and it is tempting to chase yield and try to squeeze out even a few percentage points. Every day, I see folks post about putting their emergency fund in stocks or crypto lending (8% risk free!). But when the need strikes, nothing beats cold hard cash. With a standard savings account, I didn’t have to worry about selling stocks at a low or getting money out of a complicated platform. I also didn’t have to organize financing and take a hit to my credit score. I was able to flash my bank balance at the CarMax rep, write a personal check, and be on my way.
I am obviously in a privileged position here. Not everyone has the means to quickly save up an emergency fund, let alone one that will allow them to make something as large as an auto purchase on a dime. Still, creating space between income and spending, creating that breathing room, made a huge difference for us this week. We’ll get a payout from insurance at some point. But now instead of stressing about what this will do to our cash flow and credit score, wondering when we will find time to get out and car shop with potentially zero inventory, I’m going to go play outside in the snow.