Monday, December 17, 2007

A savings account: Because life likes to mock you

(Been a long day? Don't feel like reading? Want - the minus sign blues on the go? Click here to download and listen to an mp3 of this post, read by yours truly.)

Graphic and ominous image aside, I'd like you to take a journey with me. A tool I often like you use here on - the minus sign blues is the human imagination. It's such a powerful instrument to get ones point across if it is actively stimulated.

So, imagine something for me, will you? I can't possibly ask you to close your eyes, but you get the concept. Right?

You and your partner in debt have just put your heads together. You've finally joined forces to eliminate your money issues. You're getting tough on the issue at hand. There's budgeting in one direction, paying off credit card balances in another, and a whole mess of self satisfaction.

You think you're doing pretty good. Creditors have stopped calling for the most part, you don't worry yourself sick in the middle of the night and best of all, you feel a sense of self respect you haven't felt for a long time. You feel like you're a responsible adult now, not just like you should be one.

One frosty cold New England morning you wake up, flip the coffee machine into the "on" position and head on down to the bathroom for your shower. Groggy eyed you turn the water on to a pretty hot setting. It's very cold in the house.

You disrobe, shiver and step into the shower.

The next split second is one part sheer, eye wided shock, one part epic shrinkage and one part very loud vulgarities.

Your water heater is dead. You don't have the money for a new one.

Welcome to my world two weeks ago.

Every single financial help book details this extensively, but it bears repeating. It doesn't matter what it is, always contribute some sum to a savings account. Out of every single paycheck, whether it's $10 or $100 or $1,000.

Our problem was not one of total ignorance, but of bad timing. We've recently regained control of our finances and with it we've begun making semi-regular contributions to our savings account. The problem is, disaster stuck us when we were nearly as vulnerable as we could have been.

Consider it a kick to our gut as we were struggling to stand up.

It takes time, patience and discipline to maintain a savings account. This is especially true in the face of epic debt and some very large, angry minus signs. You're often tempted to dip into it to come to zero yourself out at the end of the work week. But if you absorb anything from this blog at all, let it be this.

But no matter how scared straight we've become with our finances, that hardly helps us now. And sure, we may have a couple hundred dollars in the account. But what does that pay for? Maybe a single rent payment, or two months groceries.

Certainly not $5,000+ for a new water heater and installation, and with our credit problems already as bad as they are, can we afford to make our big red number 40k instead of 35k? Absolutely not.

Planning for the future is an essential aspect of our survival. We would have had more in the account had we not dipped into it to meet a credit card payment or two. Suddenly a late charge doesn't seem terribly bad.

Fortunately we had relatives to come to the rescue. It's been a rough couple of weeks with frosty cold showers, but we should eventually get our new water heater.

But what if we didn't have anyone willing to foot the $5,000+ bill? What if it was something a bit more life threatening than a water heater melting down?

What if it was a car accident, or a sudden loss of employment? What about a house fire? We're going to call this a warning shot across our bow. The cold showers should serve to wake us up, both physically and metamorphically.

We were not prepared. Are you?

I hope so.

6 comments:

Peter said...

I could not agree with you more. I made the same mistake once or twice. Never again! Keep up the good work, you'll get there.

Patty said...

I had my water heater blow up all over my basement last year. Not only did I have to replace it but i had to totally redo my basement!

I know how you feel! stay warm!

Rachel said...

Blessed be that you had someone to help you out! My husband thinks that our emergency fund is too large, but I think it's not large enough!

And ouch at the price tag! We had our hot water heater blow a year ago (and literally blow water through the utility room, bathroom, and kitchen) but we were able to buy a new one for around $600 and installed it ourselves. The plumber would have wanted around $450 to install it if we provided the heater. Phew. Glad it wasn't $5,000!

Ed said...

Rachel: Yeah, it's been very difficult. Everyone we call either gives us a huge price quote, refuses to quote over the phone, or are just plain shady.

Was installing it difficult, or is one of you that sort of handy?

Rachel said...

Well, we had the advantage that the water heater is in a really easy location -- it's not stuck in a small closet (we installed one for a relative that actually required removing part of the wall) or a difficult corner. We bought a replacment (at Home Depot) that was almost identical in size to the old one, so no piping had to be redone. We simply turned off the water and gas, drained the heater (not that there was much left), and disconnected the gas and water lines. Man-handled the new one in place and reconnected it. We did have the issue that the first one leaked, though, and had to take it back (no fun installing one AGAIN). The water lines do require some pipe dope or tape, but that's about all you need other than the tools to disconnect and reconnect (wrench, etc.). But yes, The Husband is a pretty handy guy. I'm not sure I would have done it all by my lonesome (well, assuming I had some way to manhandle it into place -- don't try moving one by yourself!).

I'm sure there are probably some DIY tutorials on the internet, that'd give you a good idea if it was something you all could tackle?

Ed said...

Rachel: Well, I work in the real estate industry. My best client actually has a brother who does heating/plumbing for a living. So I may be able to get a good deal.

So my bill might not be as large as I thought!

I'm more of a techy guy versus a handy guy. But my fiance and I fixed out furnace, so maybe the water heater would be up our alley.

I've heard a lot of mention that it might just be sediment built up in the bottom of the tank and we may just need to drain it out.

But on the other hand, everyone I talk to seems to agree that our water heater being ten years old is crazy, that they usually die once every five years or so.

How old was yours before it croaked?

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