What’s an emergency?

As I mentioned last week, I decided it was time to say “Adios” to Sallie Mae and get rid of my stupid school loan. Two years ago my account balance was $28,000 and today it stands at $4,500. I made a $10,000 payment towards the loan last week, which was totally awesome, but my savings account took a huge hit as a result. My savings currently stands at $2,800 in a wedding fund and $10,000 in my E-fund. Now that I am cash ‘poor’ I’m left wondering, What qualifies as an emergency?

Even though I have $12,800 in my savings account right now, I have virtually no spending money. The $2,800 wedding fund is already earmarked for future expenses (second half of honeymoon deposit, groomsmen gifts, etc). The remaining $10K is my emergency fund.

I’m getting married in a little less than four months and don’t really know how to approach the expenses that come with the married life.

I’ve mentioned my goal is to be debt free by the time I get hitched. To accomplish this goal I would have to put every dollar of my discretionary income towards Sallie Mae from now through August. This poses a big problem. If I spend all my discretionary income on my debt, I will have ZERO money to pay for upcoming expenses.

I have one roommate and Girl Ninja has four. Unfortunately, neither of us own a microwave, television, couch, dining room table, end table, coffee table, etc. Most of this stuff is owned by our roommates so once we move away from them, and move in together, we will have NOTHING. There are some things we are going to have to buy as we get married, specifically a queen size bed and other furniture pieces. I’m not quite sure how we should go about paying for these anticipated expenses.

If I use all my discretionary income to pay down debt, I’d have to use my E-fund when buying these necessities. Although purchasing a bed is definitely important, I find it hard to justify as an “emergency”. I want to keep our E-fund at $10K in case a true emergency arises (job loss, vehicle maintenance, family emergency). I would hate to use my E-fund for something like a coffee table and couch, lose my job shortly after, and not be able to put food on the table.

The other option would be to reduce my debt payments to the minimum obligation ($236/month), so I could build up my savings account for a “furniture fund”. We’d then use this fund to purchase all the items we need. Thus preventing the need to tap in to our emergency fund. While this method would keep my E-fund fully supplied, I will pay for that convenience, to the tune of $105 in interest over the next four months. Definitely not an obscene amount, but it still would suck to part ways with that money.

This dilemma poses a pretty important questions.

What qualifies as an emergency?

Would you use the E-fund to purchase the furniture? Or would you reduce debt repayment for a few months to build a cash reserve?

48 thoughts on “What’s an emergency?

  1. Okay Ninja, I know you want to be debt free by the time you get married. But seriously, having a couch is pretty important.

    I would SAVE that $4,000 that you're putting onto your debt between now in August and use that to start up your life together.

    Also, you don't need a microwave. I've lived very happily for 5 years now without one. 😉

    Don't forget that you'll be getting lots of stuff like housewaves, ect as wedding presents. If you wanted you could even set up an "account" for people to drop money into at a furniture store for a couch, tv stand,bed, ect. So people who want to give you cash can do that instead.

    P.S. I intensely hate intensedebate – it doesn't work on Chrome AT ALL =( I had to open up Internet Explorer to make this comment.

  2. That's why you register for stuff… OTHER people buy it for you! Magic!

    I'd build up a cash reserve. It sounds like you have a lot of expenses coming up. While it is honorable to want to pay off your student loans before you get married, maybe you want to slow down a little bit to prepare for the unknown?

  3. I have to ask is Girl Ninja saving any money for any of these things or are you going to have to spend all your money? (yes I do know that when you get married "mine" becomes "ours"). If she is are factoring in how much she is bringing into the savings? Also I think you keep forgetting A) you don't have to buy every little thing right then and B) she will also have a income to contibute.

  4. Okay, so register for a toaster oven and sheets instead of fine china. I always thought it was a rip off to pay $100 for one place setting.

    Housewares are not emergencies. I'd budget some time/money to spend at tag sales and craigslist. You can upgrade (as needed) as you get the dough. Plus, I think you'll get more stuff at your wedding than you think. A $0.25 used pyrex pie plate is just as good at the $5.99 new one..same with my crockpot and countless other things. There are so many things you can get for $1 or less at tag sales. It's really been a godsend.

    On the other hand, I wouldn't skimp on the mattress and would tap into the $10K for that. You're going to be spending 1/3 of your life on it for at least 10 years. It's worth the $0.27/day for a $1000 mattress (actually my last one was closer to $2K but I was 8 months pregnant, so my back pain got the better of me). You can promise to pay yourself back in 1-2 months. I still don't have a headboard and I've been out of college for 14 years.

  5. You have paid off a good chunk of the student loan, which is fine. At this point you can make your loan payments minimal. I would start by inventorying all the things you'll need and then prioritizing them. You can live without end tables but not a bed. Do it little by little. Wedding gifts should certainly help. I wouldn't tap too deeply into savings at this point if you have reecntly made a huge dent in your loan. And while I know you've resisted my saying this in the past, I think GN can contribute more to the household. (E.g., if there is no work substitute teaching in the summers, she could look for a seasonal position.)

    • Good advice Larry. I definitely don't plan to go crazy and buy a ton of furniture. We will start with the important things, dining room table, couch, bed and as we build more in savings purchase some of the bonus furniture items (end tables, lamps, etc).

      It's not so much that I resist the idea of Girl Ninja working in the summer, actually I have told her if she can't teach summer school she needs to be looking for some other type of work. I just simply want us to be able to survive off my income ALWAYS so that when the day comes that she has baby ninja's and becomes a stay at home mom, we don't have to make an adjustment to our way of living since we will be use to "roughin" it in my dollar. In the meantime, we plan to save every dollar she makes and use it for a down payment on a house 🙂

      • Hi Ninja!

        I totally understand why you don't want to become dependent on GN's income, and it's a wise choice given the kind of household you want. However, using her income to buy furniture isn't really becoming reliant on her income, unless you guys become home decor junkies. Furnishing isn't really a reoccurring expense (even the cheapest Ikea furniture will last you a few years) so using GN's income to pay for furnitures isn't going to become a habit that you have to cut once you guys start a family.

        Slightly off topic:
        Proper home furnishing can go a long way towards saving you money in the long run. If cooking becomes difficult/hassle 'cause you don't have the needed tools then you'll be more likely to eat out or buy prepared food. If all you have is a lumpy futon and a 13" tv you'll be more likely to go out.

  6. I think you are trying to be too ideal and not leave any wiggle room. Its admirable that you are trying to stick to your original plans 100% but really there are always exceptions to the rule. Why not use a month or two of her income to buy the big necessary furniture items and stuff that isn't covered by wedding presents. And isn't cutting into your e-fund at all. Then you can return to your model of pretending she has no income after that. I think you are being a little too strict in this. Otherwise I imagine you might start fights during 1st year wedding bliss about there being fleas in your FREE sofa from CL because you didn't want to budge in your budget.

    • Maybe I am being too strict. Tomorrow's blog post will focus on Girl Ninja's income and why we are doing what we are doing. Should be interesting to see what people have to say once they see our reasoning in full detail. I expect input from your on it tomorrow!

  7. Put out feelers in your family. Why buy a new couch now that won't fit in your forever home in a couple of years? When I bought my place I was given a couch, side tables, kitchen table, pots, dishes, etc. Yes they were all used and no they were not what I would have chosen, but with some well placed accesories you would never know that my place is a hand-me-down. As you are able to save up the money, buy what you need based on priority.

    I would suggest setting aside the money for a bed though.

    • This is what I was going to suggest. People have all sorts of used furniture that is a duplicate or they want to buy new and are very willing to give it to people they know. A new sofa is only so much better than a 20 year old sofa that has been well maintained. And you can always buy slipcovers.

  8. Does the furniture have to be *new* or are you open to thrifty options while you continue to pay down debt. Yard sale season is coming – you can get a couch for as little as $25! I know because I once sold a couch for that little. It was a heartache since I knew the original price – I was *not* thrifty with that purchase. Boy have we come a long way.

    It's probably not the newlywed home of your dreams, but if being debt free is that important to you, hit the thrift stores, check craiglists and get up early for the best yard sale pickings all spring – you'll find plenty of passable items to get you through your first year. And, you can sell it all in your own yard sale when it's time to buy the good stuff.

  9. I think you should take a minute to enjoy the fact that your debt is so very close to paid off. Congratulations on both that and your upcoming wedding!

    Moving forward, I like Jeff's idea of compromising. Or, if you do choose to put off the debt payment, you could vow to put any cash wedding gifts (or cash you get from the many inevitable gift returns of duplicate or unneeded items) you receive toward your debt.

  10. I'm dealing with similar. My fiancee and I JUST bought our first home (yay) are planning a wedding (in the new backyard!) and do not have all the stuff we need for the house (more room for the party!). We've decided to build up our e-fund to a set amount (20,000) then take anything over that to pay for household items. Luckily, we have a bed and couch (his parents old one). We just plan on living in an empty house for a while.

    Don't forget that along with your registry items you will also get cash for your wedding. This dilemma might be null and void after your wedding. You'll likely find yourself with a good chunk of change, which you could put 100% into building your household.

    I would recommend paying slightly highter than the minimum on your student loans (punch that debt) and saving money in a furniture/household fund. Then any money you get from the wedding could be split up into the different funds…to pay off the loan once and for all, or to buy things for the house, or both.

  11. I forgot – we made a list of our top priority items and will be buying them one by one. We've also planned which time of year is historically cheaper for the different purposes.

    You don't have to get everything all at once. And don't forget about hand-me-downs! They may not be what you want, but they'll work great until you can get what you want.

  12. I agree with the other commenters – you will get some of these items as gifts if you register for them! That’s what weddings are for. Don’t register for a ton of frivilous items (ice cream maker! Fine china! Expensive glassware!) Plus, a lot more ppl than you expect will give you gift cards (or cash) so make sure you’re registered at places where you can buy a lot of what you need, ie Macys! 🙂

  13. Lots of great comments and help.

    We bought a couch set after getting married and I regret it to this day! They are uncomfortable and we did not really need the new couches. but my wifey loves them so- ta dah!

    Almost all the furniture in our house we were given as either hand me downs or from random friends. We dont even own a coffee table and we used a cooler for our entertainment center for 2 years. You can make do. Camping chairs are surprisingly comfortable! Where we leave, they have garbage days where folks toss out their big fancy stuff out to the curb for the garbage to pick up. So tons of people drive around and pick up hand me downs that are still newish. Rich folk tend to throw out some nice stuff! You never know what you can pick up.

    I would highly recommend saving that 10 grand! Just think if you get accidentally preggers (you are always nine months away) that 10 grand would be necessary to ensure you have what you need for the first year of baby land.

    I love the idea of living off your paycheck and saving the rest. That is what my wifey and I do and it has worked really well. (well- we got into huge debt but thats another story). That way, any extra funds that come in go back into my wife biz or go to paying down debt or a few small luxuries. Also, if I lose my job, my wife can pick up her work and cover it. Great idea.

  14. You guys aren't registering? Ok, I don't know anyone that registers couches and beds, but microwaves are permissible, I think.

    Anywho, I say do the minimum obligation on the loan (you must be pretty ahead right now with that huge kapow debt payment) and save up for furniture expenses. The furniture is a necessity which I think makes it more realistic than an emergency.

    WH had a link to a great article on when an emergency fund comes through. You should check it out. That was a grade A bona fide emergency!!!

    • We have registered, I actually blogged about it a while back. You are right, we wont be registering for a queen size bed or coffee table (although it would be awesome if we could). The only way to pay for those expenses is through our own money, and then hopefully be able to get reimbursed via generous wedding gifts 🙂

      Here's the registry post…
      http://www.punchdebtintheface.com/2010/02/wedding

  15. Furniture definitely is important, but how much do you really need? It's not worth getting into debt or getting 6-month financing for a ton of furniture. What I recommend is getting some stuff secondhand from eBay, craiglist, and garage sales. It's more cost-effective than getting it from a furniture store and you can always replace it later on when you have more cash. Also, you and GN will be able to have an apartment with what you need.

  16. I wouldn't dip into your savings to fill your house with furniture, only dip into it for a quality mattress. Just get some cheap stuff now and slowly buy real pieces of furniture as the years progress.

    Some good places to consider getting cheap furniture to fill your new place:
    Used hotel furniture stores

    Furniture rental places that sell previously rented furniture.

    Estate sales, they are especially good in rich neighborhoods. I've actually found that the better ones are the ones run by the owner who is looking to downsize or move as opposed to ones run by family for a recently deceased relative.

    Thrift/2nd hand stores

  17. Agree with all the mattress comments. That's one thing not to skimp on or buy used.

    As for the microwave, you can get a perfectly good one for $150, so knock yourself out.

  18. I'll definitely get as many items second hand as possible, but some things we will want to invest in, like mentioned, a mattress and probably a few other things, but we will definitely be utilizing Craigslist as much as possible!

  19. one of my favorite games is "when will i find it on craigslist?" if i love something that's acceptable to use second hand (ie not a mattress) i write down the item and watch for it on craigslist. it pretty much always comes on if i'm patient enough, and i get a killer deal!

  20. You definitely want to get a new mattress — bedbugs are making a comeback. Ew. But we got a nice, full-size bed for $220, including frame, boxspring and frame. We just shopped around and told them what we wanted to spend.

    And Craigslist is invaluable. Keep an eye on garage/yard sales for cheap furniture but also cheap microwaves. Here in Phoenix, at least, we couldn't find anyone who wanted to sell us a microwave for under $20. It was ridiculous. So we just went to Target and got one for $30 or $35.

    We got our coffee table and some side tables from thrift stores. I've also found some very comfy (if somewhat ugly) couches at thrift stores. Always for under $50. Unfortunately, you won't find many nice looking, comfy used couches. It's some cosmic law or something.

    But also put out feelers to friends and family. Let them know you're looking for a used couch for your first place as a married couple. Someone knows someone who is going to replace a couch. It's practically guaranteed.

  21. I know its not the same as starting your new life with your big new bed, for about $200 you can pick up a pretty high quality air mattress (we’ve got one, and its wrapped in memory foam, covered in regular mattress material, and sits on a frame so you’d literally NEVER know, except its adjustable like a sleep number bed) – not forever, of course, but for a few months while you replenish your spending fund – at which point you deflate it and are fully equipped to house guests. Even if you decide to go for the good bed right off the bat, I definitely recommend cheapy furniture to begin with, which you’ll be able to start replacing with the good stuff pretty quickly after all the wedding costs die down.

    what does GN think about your e-fund size and your being debt free by marriage? like is it more important to her that you have a couch and TV those first months than a fully-loaded emergency fund? or is she more comfortable with the security of being debt-free and sitting on a safety net instead of a sofa? I think if I were you I’d pay off the debt, and then do the 6 or 8 month math for emergencies rather than the flat 10k (though it is a beautiful number) and then take what’s left to put towards your move-in. Each month you’re not paying the loan is money you can put straight into making the new place home. It seems to me like it’d be REALLY easy to blow through they money you would’ve paid the loan down with before you even get half of what you want for your place, while if you’ve already paid the loan you’ll be forced to pace yourself a little with the spending.

  22. Dude, you are going to have two incomes in one house. I know you say that you are not going to use Girl Ninja's income at all, but why not consider using her income while your getting settled. Two or four months is not going to kill your retirement. You are trying to be the man and pay for everything, but girl ninja is going to be bringing in some extra cash flow. It might not be as steady as yours, but still significant. Dont you think?

  23. I agree with MattyIce, this should be a joint decision, i think its time to involve Girl Ninja in your purchasing decisions as this will affect her also. Maybe she has always dreamed of starting out her married life with new furniture? Maybe she thinks roughing it is romantic? Either way, you should ask her and let her contribute. Its one thing to save her income when you're married, its another thing altogether to disregard her savings when you're setting up house together.

  24. @ MattyIce and @Linda- Of course Girl Ninja's opinion is not only requested, but important. I am only one half of this marriage (the uglier half that is). We have talked about saving her income, as well as apartment shopping, and home furnishings. We both are new to this living together thing, and together we are trying to navigate it as best we can. Don't here me say "This is what I'm doing and Girl Ninja has no say" when I'm really saying "This is a dilemma, both Girl Ninja and I face"

    Thanks for your comments 🙂

  25. I have a home and I am now minimalizing. So, I would say buy only the bare minimum items you need. Then, decorate your home in a minimalistic fashion. This strategy, coupled with all of the other advise, should be the answer to your problem.

  26. I'm getting married in a month, but as we already co-habitate, we didn't have to register for microwaves and pots & pans. I mean, I did register for a few nicer ones, but only because I could; not because I had to. If we didn't own these things already, though, I would definitely register for them. Even for a coffee table! There's a site called Wishpot where you can register for anything on the Internet. Ikea doesn't have registries, I guess, but I registered for a few things from there via Wishpot. I registered for a table. I think Amazon lets you do this now, too. Oh, and you should check out Freecycle in addition to Craiglist if your city has one.

  27. I think i'd split it a bit. Perhaps 80% of your discretionary income into savings for purchases. Moving is expensive, and even more so when you've lived with roommates since college. I never really had to buy anything of my own until I lived by myself for the first time, and it was then that I realized how much stuff I didnt have.

    It was everything, from little to big that was missing. i was fortunate that my old roommates were lazy and didnt like to move belongings, so they gave lots of stuff to me — pots/pans, couches, coffee table, etc — it definitely helped when I was starting out.

    So, if I were you, i'd get as little of stuff as possible, then see if you can live without it (like a microwave). If you can live without it, there's money saved, if you cant, then you cant. (and you have to break down & buy it)

  28. uck. ninja you're tellin my life here. I'm getting married this summer and am shocked by the number of "non-wedding" expenses that are coming up for living together. For the first time ever, I needed to use the emergency fund for a non-emergency (but who knew where we are moving you need a 2 mo security deposit? add first month's rent on top of that and we're talking a lot of moolah).

    I am trying to console myself that we saved as best as we could ahead of time for the transition, these are one-time necessary expenses (not regularly blowing money on "emergency gadgets") we are making frugal choices, and sometimes you need to spend savings and add them back over time. Much better than debt.

  29. that's not an emergency in my books. cut back on the debt payments!

    Also, I know you want to rush out and furnish your new place beautifully. Hold back. You don't have to buy everything at once…a couch isn't actually a necessity (some might disagree with me) nor are coffee tables.

  30. Ouch Ninja! You really know how to spark a debate! I think that the two of you will be fine. You know what is and is not an emergency. And you also know what are and are not necessities. While it would be nice to have all brand new furniture, it is not realistic. You will have a better idea of what is needed after your wedding. While you may not be able to register for a couch I am sure that CL or a family or friend will have something in your price range.

    By the way, I think that it is wonderful that you and Girl Ninja are going to be saving her income in preparation of baby ninja's to come. Good planning! Living on one income is something that I hope my husband and I will do in the future. Way to go!

  31. I suppose I'm repeating what everyone said, but here's my advice:
    -register for things you need. A good gauge for what's okay to register for is to see what Macys/Crate&Barrel/Bed Bath & Beyond has available on their registry program. Microwave will probably be fine, as will sheets/bedding for your new bed. If you don't have a set of pots and pans/cooking utensils, register for those. In fact, you'll likely get cash gifts from some people (put that in your furniture fund), as well as items you didn't realize you needed! But also be prepared to get random things you have no need for…

    -invest in a bed…at least the mattress to start. Look for sales (I bought my mattress at Costco during "tax free weekend" a few years ago). Do your research on what you want, and wait for a sale, get "lasts year's model" if you can. That's the top furniture item I wouldn't get from craigslist. The fancy bed can come later, just get the boxspring and simple bedframe/mattress support to start.

    -Ask around for furniture your friends/family are looking to get rid of. That's bound to be cleaner/less infested than stuff you get from random craigslisters. We got a dining room table that my roommate's parents didn't have a need for anymore!

    -Then you can try craigslist/thrift stores/estate sales. Some thrift stores are better than others, so ask around! Wood/metal/glass items are preferred, mostly because bedbugs or other critters are less prone to living on those. Our kitchen table and coffee table both came from craigslist, as did a few of our couches (though in retrospect, that could have been a disaster). So, tables, chairs, bookshelves, bed frames, TV stands, TVs, lamps, dressers…those are all good to get from random places…even from the curb on trash day!

  32. I think you are being too 'planny Mcplannerson'. Allow for just a smidge of flexibility.

    As other commenters have suggested, you will be receiving many household needs as wedding gifts, as well as cash gifts. My husband and I didn't think we'd be getting much cash as gifts but in the end, it was over $1000!

    You don't have to buy everything right away, and I would certainly wait till after the wedding to buy things that aren't immediately necessary.

    • Rina, How did you know that was DN other name choice at birth planny Mcplannerson…..that is perfect!

  33. I agree with Rina. It seems like you are being very inflexible when it comes to money. Credit allows a great flexibility in any budget and E-fund. I know debt is EVIL, but in certain times it is a necessary evil. Buying a home, car, and/or financing an education are great examples of that. Since you know you don't have the cash to do everything you want, don't be so fearful in using credit as a tool to accomplish things that need to get done. I can say this because I know you will pay off any debt you incur as soon as possible. Eventually, you will be debt free, but unless you get some big windfall, being in a certain amount of debt is inevitable at this stage in your life. Or you can suffer a miserly lifestyle…

  34. Love the quote "'planny Mcplannerson'" ! It sums you up perfectly. I don't agree with going into debt over this, but outlaying for a good bed can come out of you emergency fund, and then you build that back up. That is what it is there for. And let Girl Ninja help, you want her to feel involved.

    Also someone else mentioned it, but Freecycle can be a godsend. We gave away our old couch on Freecycle, but I got a 300L freezer from there as well. And BBQ. Hard rubbish (as it is called in Australia) where people put there stuff out to be collected can be amazing. In our area it is gob-smakcingly amazing what people throw out – friends furnished their daughter 's bedroom from har rubbish and a lick of paint (except the bed) and my neighbour has a working TV and a sewing machine cabinet – among many other stuff (my son is doing well in teh bike department).

    I can speak as someone a bit older (44) and hope you don't take offense when I say I love how earnest you are about some things. It's so cute! But relax dude. Go buy a good bed.

  35. Me again. To answer your basic question: "What qualifies as an emergency?"

    I would say it's an impending financial obligation that you cannot satisfy by any other means.

  36. I think there's no problem with buying some very cheap furniture until you have the money saved to buy nicer stuff. So you can take, say $500-1,000 of your money and shop around as used furniture stores (or go to a college town in May…. haha). That way, you can have furniture, and considering how much money you make, it won't take too long for that money to be replaced. Or maybe you can take one month of your gf/wife's money and buy furniture, then start with your plan to save her entire salary.

  37. Put the word out. Mention to family & friends that you're going to be in the market for used stuff (or heck, sometimes they just volunteer). We got hooked up with 2 couches, 1 dining room table set, one desk, an entertainment center & tv. All used, some in less fantastic shape but nothing dirty, smelly or broken. Well, one of the couch cushions is tearing a bit, but if that's all I have to live with/fix to get free apartment furniture, I'm thrilled. This was all people who were moving, redecorating, or upgrading their lifestyles. The desk was from someone's grandfather dying & the person having a bunch of extra furniture.

    And register for the smaller stuff. What you don't get, you can figure out later on…some you'll need to buy right away, some you can wait on.

    (Also, my mom used to totally grab bookcases off the curb, a couple of ours were gotten that way years ago)

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