Emergency

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.

4 thoughts on “Emergency”

  1. Wow. Glad everyone was OK which is the most important thing.

    Your emergency fund definitely did what it was designed to do. Glad you were able to get a replacement that quickly which is remarkable given current inventory.

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  2. I love (love, love) having a cash emergency fund. I am glad to hear yours did its job as intended.

    Most importantly, very glad to hear all the humans involved in the accident are okay.

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  3. Whew! What a close call! So glad your family wasn’t seriously injured. Kids are awesome aren’t they? Any idea what the other driver was doing? Like texting or impaired somehow? You are right that having liquid funds available on short notice is important. We don’t really have an emergency fund, its much larger than that, its more of a cash bucket to pull from in down markets when we don’t want to sell. In our case we needed $180,000 to buy some land last week that was very hot and selling fast. I had the cash sitting there, but didn’t have to use it because closing is a slow process. So I took some stock profits instead, but it was there if I had needed it and it made the decision process very easy. We’ll do the same thing when we put a cabin on it and don’t have to worry about getting a loan.

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  4. Man, what a scare. Glad everyone is OK and that your 2-year-old quickly moved back on to matters at hand.

    Nobody needs an emergency fund… until they do. This is a great real world example of just that. Even still, your efficiency is incredible. I suppose deadlines spur action, and you needed a replacement ride. I suffer from analysis paralysis with big purchases.

    Similar to other posts you’ve read, I unloaded some of my emergency fund and tried living on the razor’s edge for a while. Not for me. Like you said, nothing beats that cold hard cash, even if it is losing value vs. inflation. I’m in the process of replenishing my coffers while enjoying the negative returns of most of the investments I funded with my emergency fund ha.

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