Last week I wrote an article outlining my 3-Rs of Saving.
Of the three categories of savings we account for, the highest priority is the rainy days category.
Having this money set aside in what amounts to an emergency fund has been hugely important for us since we became parents.
As I said last week, FM’s maternity leaves have been a perfect example of why we keep this account in place and funded to that level. With her being off for 12-months at a time, the income she earns from employment insurance is a fraction of what she earns when collecting a regular paycheque. Couple that with the increased expenses of having another human in the house to pay for and it’s no wonder new parents can find themselves financially strained.
The rainy days account is important beyond just comfortably seeing us through a year of reduced income. And after the surprise expenses we encountered this past summer, the need for this account to exist and be well-funded was reinforced all that much more.
Between April and November, we experienced a trifecta of expensive issues that we weren’t planning on (or at least were hoping we could avoid during a maternity leave).
The first issue we encountered was our garage door opener crapping out on us a few weeks before baby #2 was due to arrive. We initially thought that this was going to be a few-hundred-dollar replacement of the opener. It turned into a multi-thousands-of-dollars, months-long, full-fledged renovation of our garage.
Things started going wrong almost immediately after we booked the installation of the opener.
As soon as the installer arrived to put in our new opener, he informed me that he wouldn’t be able to complete the work. It turned out that the amatuer installation of the previous opener had damaged the top panel of the door so badly that the new opener couldn’t be attached after the old opener was removed.
After getting a number of quotes, we discovered that replacing the panel on the 35ish-year-old, original to the house, door was going to cost nearly as much as buying an entirely new one. A few hundred dollars climbed to a couple thousand in an instant.
Not one for financial surprises, I felt a little sick to my stomach after learning this bad news. That feeling passed rather quickly though, since I quickly recognized that we had built our rainy days fund for exactly such an occurrence.
That bit of sticker shock was coupled with a dilemma of practicality.
Getting a new door put in was going to require that we empty nearly all of the contents of the garage in order for the door to be installed.
The previous owner of the house had used the space as his “man cave”, complete with ugly wall paneling, a homemade ramshackle closet, carpet in some truly bizarre places, and a massive gas shop heater hanging from the ceiling. There was also some pretty substantial issues with the drywall as a result of the mediocre DYI construction.
Needless to say, the space was ugly as sin and was in need of a total gut job to return it to some semblance of its intended use. This was something FM and I had been wanting to do since the day we moved into the house, but until the garage door issue reared its head, this project was simply never at the top of the priority list.
With a healthy rainy days fund in place, we got some more quotes, ran the numbers, and decided to go ahead with the full-on overhaul.
Did we need to do a full scale renovation of the garage? Probably not. But we had the motivation of only wanting to empty out the garage once in our lifetime at the house, and we had the means with our rainy days fund well-prepared for surprise situations such as this.
We were fortunate to work with an outstanding, very personable contractor who did a fantastic job for us. The end result was a new garage door, new opener, new (fire-rated) drywall throughout the space, a fresh new coat of paint, better storage, and no hideous hanging heater.
Almost as soon as we wrapped up the garage reno project by moving all of our stuff back from our parents’ places (they were a huge help in storing things we didn’t want to leave exposed to the elements), we were hit with a double-whammy of problems: both our refrigerator and dishwasher decided to bite the dust within days of each other.
Both appliances had been showing signs of being on their last legs for a while, so it wasn’t entirely unexpected for them to reach their inevitable end. It was surprising for them to reach that stage in such close proximity to one another.
My dismay at the prospect of doling out another large sum of money to get new appliances was again offset by the fact that I knew we had prepared ourselves for this financially.
Aside from doing the groceries, I have a genuine distaste for shopping in general. Shopping for appliances quickly became one of the more annoying processes I’ve encountered in recent memory, particularly when it came to the fridge.
Apparently our modest bungalow wasn’t built to accommodate the massive size of modern-day refrigerators. I’d wager that about 90% of the fridges on the showroom floors at the retailers we visited were so far beyond what our cabinet space was built to fit that we had to strike them from the list of considerations immediately.
With our options limited, it actually made the process of doing online research and shopping for a fridge a breeze compared to the in-store frustrations, since we were able to narrow our options to just a handful from each store that we could consider.
With a short list of options in hand, we then used the dual deaths of the two appliances to our advantage by finding a dishwasher from the same manufacturer as our fridge of choice through Costco’s website. Bundling the two appliances in the same order shaved a cool $100 off the final bill!
We hired a plumber to install the dishwasher and clean up some truly bizarre plumbing under the kitchen sink and we were back to normal kitchen operations in no time.
While not as an expensive of an endeavour as the garage renovation, replacing the appliances was another significant expense that came at a less than ideal time.
So what lessons did I learn from last summer’s surprise expenses that I’d like to pass along to you?
1. You can’t predict when these surprises will occur.
I mentioned at the beginning of this article that we had been hoping to avoid dealing with the issues I talked about in this article while FM was going to be on maternity leave. As this article indicates, you can’t time these sorts of surprises – they’ll happen when they happen and you need to be prepared.
2. You NEED to have a rainy days account.
Being a homeowner comes with all sorts of issues to consider. The furnace could blow. The shingles on the roof will eventually need replacing. You could encounter water damage from floods or broken pipes. Or you could deal with the types of things we did.
To help deal with those kinds of things, it is hugely important to have some money set aside. If you don’t have a rain days account set up, I would implore you to set one up and start putting whatever money you can aside.
Financial “experts” have all sorts of suggestions as to how much that fund should have in it. Personally, I don’t think there’s a one-size-fits-all approach. So we do what makes sense for us and aim to have 25% of our net income as the balance at any given time.
Right now we’re a fair bit below that because of FM’s maternity leave and the major expenses that I outlined above. When she heads back to work in a few months, our first priority with a regular paycheque coming in will be to replenish that account to get ourselves back to a situation we’re more comfortable with.
3. Shop around when the unexpected happens and don’t get taken advantage of.
With each of the issues we encountered, we were sure not to have any knee-jerk reactions to solving our problems. We took the time to do a lot of research, get multiple quotes, and look out for the best deal available in each scenario.
It would be very easy to panic and commit to the first thing you come across that suits your needs. But we live in an age where there is more than enough information at our fingertips to help make well-informed, financially responsible decisions in a fairly short amount of time.
How do you handle emergency expenses? Do you have a rainy day fund set up or are your forced to finance these issues on credit, whether it be a Home Equity Line of Credit, loan, or credit card? Share your experiences by leaving a comment, sending an email to email@example.com, or by connecting on Twitter, Facebook, and Instagram.
Until next Saturday, thanks for reading and look below for the latest installment in our Random Pile o’ Recipes Reduction Project!
Last week’s recipe: Steak with Crispy Potatoes and Pistachio Pesto
Unlike last week’s disappointment, this was a big hit. I ended up skipping the pistachio pesto after FM reminded me that she has something of a mild allergic reaction to pistachios anytime she eats them. This made the recipe incredibly simple to prepare, with very few ingredients making for very little work. This one will get added to the keeper binder and added to the Recipes page.
This week’s selection: Slow-Cooker Chicken Tikka Masala