Emergency Fund vs Credit Card

Jumping off of buildings or throwing yourself out of a plane or diving off a 400 foot bridge is a crazy adrenalin rush that’s addicting. But without a safety net or parachute or harness… you can only do it once. My emergency fund is the safety net that allows me to jump off of life’s buildings — to take Life-Changing risks —  as often as I want.

So with a fully loaded emergency fund (3-6 months of my living expenses, sheltered quietly from my sticky, greedy, materialistic hands in a tidy money market account), I can take risks. I can “step out in faith” ALL THE TIME as churchy people love to say. For example, if we decide at age 35 that my husband wants to quit his job and become a full time freelance basket weaver in Uganda, or if we want to quit working and volunteer full time at a non-profit, or if I want to start a nonprofit and not get paid ever — or whatever the crazy dream might be — we can actually do those things.

We don’t want to.

Yet.

But we could if we wanted to.

Because we have money to tide us over while we figure out our next steps, we don’t have to claw our way through every pay period, just waiting for the next one. If we dream of doing something crazy, we can. And if we have an emergency, like my house burns down and I need a hotel, or my car explodes, we can just write a check to pay for it. And still do the crazy thing we want to do.

I’m starting to realize there’s a “secret levels” situation when it comes to finances. (Yes, that’s a Mario reference). And that is, when you’re walking with Jesus and you’ve “won with money” and you’re living at peace with your finances and He starts telling you to do some pretty cool stuff, sometimes that stuff blows protocol out of the water. Sometimes — rarely but occasionally — that crazy stuff just doesn’t fit on a spreadsheet.

Jesus supersedes our spreadsheet.

When we want to help someone else with groceries, or throw a giant BBQ, or write a check to a nonprof that’s ending slavery, or buy new shoes for a basketball team, WE CAN because we aren’t spending our paychecks on bills anymore, AND we aren’t trying to save to cover emergencies. We already did that. So now we get to play.

Also, as a rule, first and foremost we make sure our family is taken care of. We make sure we typically are paying into our retirement funds and hacking away at Mort. And we are saving for emergencies. But sometimes, we go off course. We have to keep it exciting.

When we feel like giving over our ENTIRE PAYCHECK to a cause we are passionate about, we can. And we rarely just write a check to some non profit. Usually we buy groceries or pinatas or bicycles or college tuition or Nikes for some kid… Because we have money in the bank to live on.

Or last summer, we woke up one morning in August and decided to go to Disneyland. So the next day when his paycheck came, we just bought our Disney trip. With cash. Because we felt like it. That money was ALL OURS. It didn’t have to go out the door to creditors to pay for some emergency that had happened long ago. Because the emergencies that had happened long ago, had been paid for long ago. They didn’t haunt my mail box every month with bills and memories of the horror we experienced in our emergencies. We also had an emergency safety net so that we could use our paycheck for fun, knowing the safety net had our backs.

Now an emergency fund itself is not for buying Disney vacations. But it enables me to use my paycheck for anything I want. Because it is a safety net for my life. Knowing I have money to cover my risks makes me able to do crazy things. I can use my paycheck to go to Disneyland because I don’t have to always be thinking “well what if my car breaks down… what if this, what if that.”

When our gold 2006 minivan gives up the ghost, we can either (a) pay to have it fixed right that minute, or (b) buy a new one right that minute.

And when that happens, we will look at each other and say “what do you know? The car is broken….do you want to grab a couple lattes? Play some golf? Spend the night in a swanky hotel? Go car shopping leisurely? Or otherwise chill out while we handle this minor situation with grace and dignity?” Instead of “OH MY GOODNESS! Let’s run around like crazy people screaming into the universe about how only horrible things ever happen to us and this house of cards we’ve built is crumbling right before our eyes!”

When half of husband’s department got a pink slip and so many of the families we knew from work were FREAKING OUT and taking second jobs and downsizing etc… we took a vacation. We had a safety net. We could enjoy our freefall instead of wondering when we were going to crash. We sipped French press coffee on our backporch and listened to Train Radio on Pandora. We were, in essence, unfazed. Because with an emergency fund, you can weather the storms of life. We were dreaming together instead of having a nightmare together.

A fully funded emergency fund is like having a fully stocked underground concrete shelter, or whatever those people have on Discovery Channel. It means no matter what happens, you’re going to mostly be okay. Your life might change, but it’s not going to end. You might be annoyed, but you won’t be totally crushed. Struck down, but not destroyed.

Conversely, using credit cards to cover emergencies can result in an number of situations. Lots of my friends very proudly use credit cards to pay for emergencies and they swear it works for them. But we have noticed in those emergency times, those friends are still pressured. Still stressed. Still worried when the card is maxed out with a huge emergency and they have to use a different card. Still recuperating for months after an emergency. Still strapped with car payments when their car breaks down beyond repair and they’re “forced” to buy a brand new one on credit.

Those payments, at the end of the day, are money that they don’t have in hand and they are essentially strapped to for the rest of the payment cycle. These are the people who don’t understand how we can just pay cash for a trip to Disneyland. (But you’ll miss out on airline miles that you’ll never use!) Sending 20 bucks or 500 bucks out the door every month to pay for “emergencies” on a credit card is that much more money that’s not being invested. That’s money that’s not even allowed to be given away.

It’s out of play.

Being free looks like DOING WHATEVER I WANT with my money every day. That’s worth the really really hard work it takes to build an emergency fund. An Emergency fund means I get to do whatever God calls me to do at any minute of my life. Or anything I personally want to do at any moment of my life.

I get to take all the risks I want. Wahoo! That’s freedom.

 

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