Emergency Fund Pain

We recently learned the value of having an emergency fund! In mid-January our sixty-eight-year-old floor heater died. Kaput! The Bay Area has a very mild climate but January and February tend to be cold months. Luckily, most of February this year was unseasonably warm. Still, we had some overnight lows and early mornings in the thirties and several days at the end of the month in the forties and we even had rain, sleet, and snow on some of the local mountains.  

Winter is the wrong time of year to be searching for a new HVAC system. The companies are swamped because it is a common time for folks to need service. They are booked! With one company we were number 106 for a service call. The short of it is, getting estimates took weeks, no one would replace our old system due to liability, and just the age of the unit (no parts availability). We needed a completely new HVAC system so we opted for air conditioning as well. Historically, homes in this area did not have AC but for the past several years, summers have been getting hotter and we have had heat spikes in the 109F range.

 The "new" cold air return register. I painted it champagne mist. 

The "new" cold air return register. I painted it champagne mist. 

Given that our home was built in the 1940s we had zero infrastructure in place for a modern HVAC system. No ducts, no register cuts in the floor, no electric to the unit under the house, no breaker for the unit, no vents, no nothing really. We needed everything! All of the estimates ranged between $18,000 to nearly $20,000 for complete system installation. So, we bit the bullet and selected a company we thought would best suit our needs.

 Previously, the new cold air return was the old heat vent. It looked awful from years of heat exposure. 

Previously, the new cold air return was the old heat vent. It looked awful from years of heat exposure. 

Here’s the upshot of the whole calamity. Had we not had an emergency fund that total would have to have been financed, or we would have had to secure a loan. Luckily, we didn’t need to pay more for financing, we did have to dip deep into the emergency reserves, but we got a tiny reward! For paying cash in full, the company we contracted offered a 3% discount on the total. That was a nice savings of nearly $600 off the final bill. I would much rather have a small discount than have to pay interest over time. Although it was painful to see that money go, we now have a comfy, modern system and are all set for decades to come.

Do you have an emergency fund? If not, start one today! Even if you can only put away a small amount at least get started. If I can guide you and help you determine how much to save give me a call. As an independent Certified Financial Planner™, I can help you with an emergency savings goal, debt reduction, and setting a timeline. #talktometuesday #education #Hireaplanner #savings #savemore #payyourselffirst #emergencyfund