Here is a real example of something that happened to me and my emergency fund saved me.
I had just came back home from visiting family in California and I was getting ready to go back to work. I get dressed, eat breakfast and hop in the car and drive to work. I get to work, lock up my car and head inside. I go about my day and when it’s time to clock out, I clock out and head up to my car to go work on a side project I was working on. I get to where I parked my car and someone else was parked in my spot.
My first thought was, maybe I parked somewhere else. Then a more dreadful thought came to mind.
Someone stole my car.
My first car that I’ve had since I was 16 and cherished so much was gone. I panicked and rushed back to my work. Luckily where I work has surveillance cameras in the parking lot. They confirmed my car had been stolen but could not id the thieves.
This is a prime example of something that is completely out of your control can happen.
Most people told me to tell my insurance. So after I calmed down a bit, I filed a claim that my car was stolen. A week later I get a letter in the mail saying my claim was closed because I didn’t have comprehensive on my policy. (one of my bill cost cutting methods)
I got nothing from insurance for my car getting stolen.
Life didn’t freeze, it kept going. That means I had to go to work still. How am I going to be able to do that? It’s a long bike ride and even longer walk and I refused to make that trip in the rain. So I had to dip into my emergency fund and buy a new car.
I was able to use my knowledge of cars and mechanics to buy a car for a fair price that still ran great. If I didn’t have an emergency fund I’m not sure what I would have done but this could have all ended much worse.
Some emergencies can be life threatening and others can be huge inconveniences like mine. The ability to handle them is a sign of an excellent financial situation.
In the end, the police did find my car and they did arrest the guy who stole it and I will be filing for restitution for the financial loss that occurred to me. That was the good news. The bad news, the car is back in my possession but it is not in driveable condition. It needs a new battery and the ignition lock and door locks need to be replaced. I’m happy I got my car back but the fear of it getting stolen again are too much for me to get it back on the road in a hurry.