Murphy’s Law and Debt

Mr. Murphy always seems to rear his ugly head when he’s least wanted. I’m not so sure that is a matter of coincidence as much as it’s more the outright desire that he just never show up, but alas, he does. In that sense, his appearance should never really surprise us, right?

One of the advantages to having and maintaining 3 to 6 months of expenses on hand is that you find ourself with the ability to handle Murphy. Dave Ramsey often states that having an emergency fund is Murphy Repellant, and while I disagree that an emergency fund repels Murphy, I do believe that it makes handling him much simpler.

Most Americans actually experience two crises when Murphy shows up on their doorstep: the original crisis and a financial crisis. The first crisis appears in the car break down or the leaking roof or, in our most recent case, the failing water heater and furnace. Those crises are enough to ruin the best of days, but what happens when you can’t pay cash for that crisis? You have added a financial crisis that, in the long-run is far more ruinous and stressful than a simple leaky roof or failing water heater.

To quote Dave Ramsey again, the last thing you need in a crisis is to take on the added crisis of debt, and the emergency fund provides that buffer between you and life because let’s face it, life happens.

My wife and I have maintained some semblance of an emergency fund since we were first married. Over the years we have seen it reach astounding highs and astonishing lows, but it has always been there for us. Dave Ramsey quotes a study were he states that 8 out of 10 of all Americans will face a financial crisis of $5,000 to $10,000 every 10 years. In our case, we seem to face one every year or, taking only the last 12 months, every three months on average. But we have yet to borrow a single penny to pay for these crises.

This latest emergency we discovered just last night when our CO detector went off. A quick look by a friend in the business confirmed that the water heater is dead and discharging CO and that the furnace, which is older than I am, is also on its last leg. We’ll find out what the final damages are today, but no matter what they are, you can be sure that the majority, if not all, of the expense will come from our emergency fund.

And that’ll be the last gasp out of that emergency fund. It’s hard to believe, but looking back, that emergency fund has, through regular contributions on our part, covered us through at least $30,000 of crises over the last five years, including a damaged roof, job loss, car repairs, water heater and furnace replacements, unexpected medical costs, and countless other things.

It hasn’t protected us from Murphy, but it has saved us from debt and life. And as soon as this crisis is over, you can be sure that we’ll do everything we can to restore that fund.

Life is already hard enough with just the normal every day events; don’t make the mistake of  compounding each crisis with a financial crisis. Get your emergency fund.

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2 Responses to Murphy’s Law and Debt

  1. Sarah says:

    I miss our savings account.

  2. Jon says:

    Great entry. Thanks for the words of wisdom and experience.

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