Not Having an Emergency Fund is a Wreck Waiting to Happen

You will see it preached on every financial website and the vast majority of blogs: the importance and necessity of creating and maintaining an emergency fund.  Most people agree that a basic emergency fund of $1,000 is a good start.  A thousand dollars will get you through about 75% of the occurrences in life.  Once the 1k fund has been established, then begin building towards a $10,000 reserve fund.  Many people, my family included, have problems getting to the first grand.  My wife and I are living proof of the absolute need of having an emergency fund in place.

Case #1:  2002:  The emergency fund would have helped, but not saved us.  Three months previously we had purchased a 1998 Saturn Coupe.  I had recently left a job and had (very stupidly) cashed in my 401(k).  Cashing my retirement check has been one of the largest mistakes in my life; however, in this case it actually saved us.  The transmission literally fell out of the car.  Of course, we bought it from a clunker lot “As is-Where is”.  Cost of the transmission for a used one?  $4,200 or so.  With our immense foresight, we had not purchased the extended warranty for the vehicle.  Can we all say in unison:  Doh!  We were in debt, no emergency fund, no savings (other than the 401k), no clue, and now no car.  I do not know what we would have done had it not been for the 401(k) check.  We were definitely blessed in that situation.  Had we been debt free and working towards a reserve fund, we would have been ok.  This case shows the importance of a much larger reserve fund.

Case #2:  2004:  Coming home from work, I am involved in a 55 mph head-on collision.  The Saturn mentioned previously is now totaled.  This was my first (and hopefully only!) auto accident in my life and I came very close to dying.  I missed three weeks of work due to the severe concussion, soreness and broken bones.  Once again, we had no savings, no emergency fund, no short term disability, nada.  Three weeks of no pay really hurt.  To make matters worse, I was upside down in the car loan.  I had to make five additional payments towards a car that no longer existed.  If we had an emergency fund in place, we would have been ok.

Case #3:  2008:  I remember it as if it were yesterday……gee, it was yesterday.  My wife wakes up to find the hot water heater spewing water everywhere.  Our bathroom was flooded and everything was drenched.  Apparently, without sending a notice, our water company increased the main line pressure from 70 psi to @ 140 psi.  Most household fixtures and plumbing is rated to withstand up to 75 psi.  Unfortunately, our water heater could not stand the new pressure setting.  The plumber has to install a regulator valve…..there went $365 dollars we did not have.  We have been working towards building an emergency fund and for the second time this month, life popped up and used every penny of it.  So, we are back at square one; however, here is where the difference occurs.  In the past, we would be literally freaking right now.  $365 is 33% of my two weeks pay and now it is suddenly gone.  We know it will be ok.  This is just another bump in the road of life and the sun will still come up tomorrow, our parents will still love us, our dog will not run away, everything will be ok.  We will have to re-double our efforts to achieve a baseline emergency fund, but life happens.  The E-Fund is there to smooth out those little bumps that life causes.

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As outlined in my previous Kevin Trudeau post, I ordered the “Debt Cures” book on January 2^nd.  Remember, I could skip the 3-5 week shipping time by having the book ‘Rush Delivered’ directly to my door.  The “RUSH” was $9.95.  LOL, received the book on January 17^th.  Yep, without the rush shipping, the Debt Cures book arrived in 15 days.

The package I received was the same size as an Amazon.com book box.  You know the ones, spend $25 and receive free shipping.  That simply did not happen in this case.  Oh well, I knew going in that this book was most likely of no value and it did not disappoint me there. 

 Since I was not expecting much I felt no let down.  The box easily fit in my mailbox with the rest of my mail.  Inside the box were:

• 315 page book (larger than expected, but the font really pushes the book’s length out)
• 25 Secrets to Wealth Creation CD (Secret #1:  Create an infomercial)
• 10 Minute Guide to Instant Credit Improvement (8 pages; notice he dodged using the “repair” word)
• A certificate for a “free” one-on-one consultation with Enlightened Wealth Institute (Robert Allen, Tom Painter)
• A packing slip

 Of all of the included items, the most important item was the packing slip.  The packing slip has the 1-888 number to call to exercise your 30 Day Money Back Guarantee.  In order to return the book, you must call the number to receive a Return Authorization Number.  The purpose of making the consumer obtain an RA number is simple:  to make it difficult to return the book (they will try to out wait you) and to give them a chance to re-sell you the book.  Of course, even if you succeed in winning the waiting game, you are still out $14.50 for the Shipping and Handling fees.  The funny thing is 1/3 of the book is spent griping about the fees that the Credit Card Industry charges.  There will be a future article to track the amount of time it takes to receive your refund.

 The 10 Minute Guide to Instant Credit Improvement is incorrect.  Maybe, if you are eating lunch and talking on your cell phone it is a 10 minutes guide; otherwise, it is more like a 2 minute guide of useless info.  This guide is a hook freebie:  given to you as a bonus to make you feel as if you received a free gift.  Much like in the way a car salesman throws in the floor mats for free.  The entire synopsis of this free little gem is to:  pay your bills on time, get rid of incorrect info on your credit report (not ‘how to’, but rather, just do it), and keep your balances low.  That is all.

The book itself looks and feels like a PowerPoint Presentation.  There are right at three paragraphs per page with a clip art graphic every other page or so.  There are 24 chapters listed within the 315 pages; however, an honest overview of this book can be summed up in four words:  Old, Irrelevant, Fear and Scam.

 Old:  Most of the citations in the book are from 2004.  Either it took Trudeau 3 years to release the book, or without Googling it, 2004 is when he was in trouble with the Feds.  The information in the book also feels at least 5-10 years old.

Irrelevant:  There is simply NO real or new information in the book.  Trudeau never even attempts any type of debt elimination strategies other than:  expired debt and debt negotiation.  If you buy this book and are expecting ‘real’ debt help, let me know when you find it.

Fear:  2-3’s of the book is nothing short of Trudeau ranting about the evil credit card companies and the government.  He uses the emotion of fear to distract the book’s readers from realizing there is actually zero info in the book.

Scam:  Honestly, I don believe this requires an explanation.  The infomercial touts ways to HELP you with your debt.  The book delivers no real methods to help anyone that is not already out of debt or very close to it.

If you honestly and truly do not need $45, heck send it to me.  You will glean NO useable information from Kevin Trudeau’s Debt Cures book.  The only debt this book cures is Kevin Trudeaus.

 Let’s see how long it takes to get a refund…..LOL, until next time.

Thought this one was interesting. We received a collection notice for a doctor bill that we are 99.9% certain we paid this account in full. The account in question is a $46 bill…….and we believe we paid it early last year. So, the 30 day ‘protest’ clock has begun while we look for our record of the payment. Interesting enough is the first line of the notice:

“Your account has been purchased by InoVision-MedClr-Portofolio Group”

Uhhhhm, ok if it has been purchased, then the original client (the doctor) has written this debt off, right? If the doctor has written it off, why in the heck would we pay some company that obviously spent maybe $2 for the debt? LOL, to top it off, we received a refund check late last year from the same doctor’s group for overpayment…..LOL…… At any rate, this is yet another example of why it is so important to keep meticulous, hard copies of your “paid in full” bills. Sure, WE know that we have paid this debt over a year ago……now prove it, right? No. We do not have to prove anything, this debt #1 was paid and #2 SOLD because the first group has written it off (discharged it). We will not pay a vulture company that has very little to lose. Period. At the same time, we will dispute this item and we will prove payment. It will just take some digging through some old check books (which we keep religiously). If you still use paper checks to pay your bills, we will go over a cool system my wife and I use to help keep track of this type of occurence.

To top it off, we also received more bad news via the US Mail today. We used to eat at a national chain restaurant every weekend. I will not say the name of the chain, but it also carries the same name included in this acronym: TGIF. My wife contracted Salmonella poisoning by eating a Salmon dinner. According to the State of Tennessee’s Health Department, more people are sickened each year via fish rather than chicken as many assume. My wife ended up missing over a week of work and the Salmonella was proven via sample. This chain’s insurance company has denied our claim due to “lack of proof”. Ok, that’s fine, the lawyer is next. It really sucks though because we loved eating there. It isn’t like we were asking for anything more than what we were out of (week’s pay or so, doctor visits, etc). They could have gotten out very cheaply and we would have continued eating there……oh well, that is about all we can say at this point.  Needless to say, we are extremely disappointed.  Where should we take our “out to eat” business now?

Zenhabits has an excellent post detailing what to do when you begin to feel overwhelmed.  A keep point to always remember, no matter the situation, if at anytime you feel as if you are out of control, guess what?  You are.  When you get to this point, you have got to take a step back and take a look at what is going on.  We teach our workers the same principle in order to make them more aware of their surroundings and to put them back onto the path of  being able to perform their jobs properly.  These same principles can be applied to debt.  Sit down, write out your budget (get it on paper!)……when your spending overshoots your budget, guess what?  You are out of control.  Sure, this bill popped up out of the blue or Jimmy had to go to the doctor……excuses, trust me, I am the excuse King!  Your emergency fund is in place to get you through the rough spots; get out of control with spending, step back, breathe and analyze.

OK, I have waited (purposefully) until this week to purchase a new winter coat. We do not have very many good consignment shops in this area, so when I purchase clothes, the purchases are typically made when the store is attempting to free up space for the next quarter. We purchased a coat that had been originally retailed at $69 for $11.99 Yes, I will take that deal any day of the week, but especially now with the temps hovering in the low 20’s and a wind chill factor of zero. You can find many of the same deals, you just have to look for them + be willing to wait. Most stores are currently freeing up space for Spring clothing, the winter items are going to be marked down (which is still a profit for them, sadly enough), so now is the time to buy not only for the remainder of this winter, but for next year as well. Found any good deals lately?