Shit happens…

We all have a mortifying story we’d rather keep under wraps, right? Please tell me I’m not the only one! Feel free to share yours in the comments (anonymously if you prefer) and make us all feel a little better about ourselves.

Where am I going with this? Well, it’s embarrassing storytime!

Last month I was in a minor car accident. That sucks, but what makes it even worse is that I ran into a parked car. Ugh. You might be thinking, how does that even happen, and that is a very valid question. Unfortunately, I don’t have a good answer. I’m not actually a horrible driver, but that doesn’t mean I wasn’t still (at least partially) to blame. Up here in freezing cold Edmonton, we often find ourselves dealing with some pretty treacherous winter driving conditions, and this was one of those days…

The Dirty Details

I am a five-minute drive from work, practically nothing, and that fine morning I woke up to a dump of snow and the roads were COMPLETE crap. There were something like 180+ accidents in Edmonton that day. I decided to avoid what I could of the main roads and drive through our neighbourhood, thinking it would be better with less traffic.

Oh, how wrong I was! Only a couple of blocks from my house, I was in a single lane going in between parked cars on either side. My car hit a patch of ice and went sideways right into one of those parked cars. I was shocked and felt completely helpless. I’ve never been in a car that has just lost control like that. Luckily I was going really slow (like 20km/h…seriously!) but it’s amazing how much damage can be caused even in a small accident like that. My front bumper had a chunk taken out of it, and the SUV that I hit had a cracked back bumper. It was also a Mercedes (of course) so that made the bill to fix it a lot pricier. My car looked way worse and yet cost less than half to fix.

I promise you, there is nothing worse than having to knock on someone’s door at 8:30 in the morning to tell them you just ran into their car. Thank goodness the lady was way more understanding than I likely would have been and didn’t make me feel any more horrible than I already did.

Confession Time

I didn’t have winter tires. I know, I know…who lives in Edmonton with our awful winters and doesn’t have winter tires. This girl. In all my fifteen years of driving, I have never had them and stubbornly refused to bite the bullet on the expense because I drive so little. The bf has a much better-equipped SUV, and when the weather is bad, we use that almost exclusively. The only exception is my short drive to work. You are right, though, no excuses.

I promise, I’ve learnt my lesson though and have already bought winter rims (yay for Kijiji deals) and will 100% have winter tires before the snow flies in the Fall. Any recommendations? Costco seems to be the way to go, but I’ve heard horror stories about trying to get in to get them put on or taken off. We are also in the early stages of becoming a one-vehicle family, and it would be the winter-hardy Jeep that got the boot. More on that in a later post 🙂

The Cost of the Accident

Once we got the quotes to fix the damage on both vehicles, I knew I didn’t want to cover it out of pocket. I previously had a clean accident history and my car insurance policy included accident forgiveness which meant my rates wouldn’t go up this time. I had made it this long without having to put in an insurance claim so here’s hoping I can make it another fifteen years with no issues!

There was a $1,000 deductible on my coverage, so I wasn’t completely off the hook money-wise. Here’s where my ‘Shit Happens’ (aka emergency fund) came into play. Not having to reach for my credit card (ok I did, but only for the points) to cover the cost of the accident was a huge relief and made a terrible situation a little less stressful. Going through insurance also made things easier from a logistical perspective. After just one quick phone call to them, they booked my car into a body shop to get repaired with and set me up with a rental car. Not being left carless in the middle of winter was a good perk. It took a couple of weeks to get my car back (that’s what 180+ accidents in a city will do) but I didn’t have to worry about not having wheels.

Importance of an Emergency Fund

I can’t even imagine how much more stressed out I would have been if I didn’t have easy access to that $1,000. Even having to run that balance on my credit card for a few months would have meant additional costs to cover the interest charges. It is shocking to me how many people are in this situation, though.

The Federal Reserve Bank of New York recently released the results of a study they completed in February. The most startling stat to me was that 32.8% of Americans couldn’t come up with $2,000 if an unexpected expense arose. I realize this is based on data from the US, but I doubt Canadians are doing that much better. Consumer debt is extremely high on both sides of the border, and this is a big reason why people aren’t able to save and prepare for the worst.

How Much Do You Need?

The size of your emergency fund will depend on the stability of your situation. You need to have enough to cover emergencies that may come up or to cover your living expenses in case of a job loss, but having too much means you’ll miss out on potential investment growth. I recommend having three to six months of expenses saved. If your job situation is precarious and the job market in your area is not great then you might want even more.

Also, think about what kind of emergency expenses may come up. If you own a house these will be more extensive than if you’re a renter. Maybe you own pets and don’t have pet insurance; those vet bills can climb fast. Health problems issues can be another factor. Us Canadians are lucky to have universal health care but there are still treatments that aren’t covered. Extensive dental work or prescription drugs may require dipping into your emergency fund if you don’t have extended health benefits. Consider what expenses you may need to cover and what you could afford on your current income.

Where to Keep Your Emergency Fund

Under your mattress is not the right answer, but neither is in the stock market.

You want the money in your emergency fund to be easily accessible. Look for a high-interest savings account that will give you a slightly better rate than your regular chequing account and keep the money separate from your other savings. You don’t want to lock the money into a long-term investment (like a GIC) and while growth may be tempting, you need to keep it safe. The last thing you want is to have to dip into your emergency fund when the markets have plummeted. Safe and accessible…those are the new guidelines.

I keep my emergency fund at my regular bank (Simplii Financial) in a high-interest savings account that is earmarked only for that purpose. I have separate savings accounts for vacations, Christmas, etc.

Do you have an emergency fund? If so what are your best tips for building it up and where do you keep it? Share that and your most embarrassing story in 

Why your emergency fund is so important and how mine save my butt!

This post was proofread by Grammarly.

Comments

  1. Oh no, I'm so sorry! Yay for that EF though. I remember I was spacing out while driving once and didn't realise that I was coming up to a stretch of road where my lane basically became full of cars all lined up and parked along the side of the road – luckily I wised up and quickly changed lanes before disaster struck.

  2. Just came to check you out from CBB. Interested to read an Edmonton perspective. I go to Costco for my tires and yes, it's a big pain, however, saving so much money is almost always worth it. I did get my winter tires on rims which also makes a huge difference cost-wise. Actually kind of glad I couldn't get in at Costco in the beginning of April with the weather we've been having. Maybe the snow's almost finished now?!?

  3. Thanks for stopping by and commenting! Looks like the forecast is looking up for this week so that better be it for the snow!

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