From age 0 to 21, my parents were my emergency plan. I had no job, no income, and no assets. I was dependent. Upon graduation, I got my current job and started putting money in the bank. While it took a few years to completely cut the proverbial umbilical cord from my parents, I am now
completely mostly self-sufficient. This means I’m now responsible for all emergency planning.
Girl Ninja and I have $10,000 sitting in a savings account specifically marked for emergencies. If the car breaks down, we tap this fund to fix it. If someone is in the hospital, we have the ability to buy a plane ticket to visit. Our emergency fund provides peace of mind.
But what if Girl Ninja and I were faced with a $20,000 emergency? Or a $50,000 emergency? Or a $200,000 emergency? What would we do then? I’d never thought about it before, so I figured I’d make a list as to exactly how Girl Ninja and I would handle expensive emergencies. Hopefully it makes sense…
$0 – $10,000: Use up all of our emergency fund.
$10,000 – $50,000: Above, plus use up all our liquid cash.
$50,000 – $55,000: All of the above, plus a loan from a bank (guesstimating we would qualify for a $5k unsecured loan).
$55,000 – $65,000: All of the above, plus selling one of our vehicles (we like having two cars, but we could definitely survive with just one).
$65,000 – $85,000: All of the above, plus ask family for help. Depending on the type/urgency of the emergency, I’m guessing we could get up to $20,000 from relatives (likely more if it was life/death issues).
$85,000 – $105,000: All of the above, plus liquidating my Roth IRA.
$105,000 – $120,000: All of the above, plus use of credit cards up to $15K.
$120,000 – $140,000: All of the above plus taking out a 401K loan (keeping in mind it might end up a withdrawal if I can’t pay it back due to whatever said emergency was).
$140,000 or more: Beg people (even you readers) for money, sell my blog, all of our possessions, and anything else that has monetary value that we don’t need.
And that’s as far as I could get. Don’t know what I’d do if we were faced with a $200,000 imminent emergency. Where does one get cash when all resources have been exhausted?
Never really thought about an emergency exceeding our $10,000 e-fund account, but that could obviously happen so it’s worth thinking about. We like to pretend life is going to go according to plan, but unfortunately that’s not always the case. I live by the mantra you should hope for the best and plan for the worst. Can’t go wrong there, right?
My list is probably way different than yours. Maybe you would use credit cards before tapping your parents? Maybe you wouldn’t ask your parents at all?
If you don’t want to be lame, you should probably share in the comments below how exactly you would handle an emergency. Try and list amounts and ways you’d get the money like I did above so things stay simple. If you want, you can comment anonymously and provide a fake email address so you don’t have to worry about your personal information being out there.
So reader, how much of an emergency could you handle, and how exactly would you handle it?