How Big Is Your Emergency Fund

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Ignition Coil

The culprit

This month was one of those month where I spent a considerable amount of money. First off, almost US$400 went into car repairs. The car is almost 11 years old and so there were some annoying suspension noise. The $400 was budgeted for although I expected the repairs to cost less. Then approximately US$400 went for new tires which is due since they are worn. So all in, that’s about RM 2,400. For some, you may think why should we keep such an old car? The car is still in good condition. Car prices here are crazy with a large portion going for taxes and excise duties.

We also took a six day road trip and the total cost for the trip with budget hotel accommodation, food, fuel came to around US$300. The trip is just to get away for a few days to relax and visit some of the places we haven’t been. Armed with a Sat-Nav, we visited places we weren’t even aware of.

On our road trip, the car needed some repairs. After idling the car in the hot sun for almost 45 minutes waiting for the ferry to arrive, the heat killed one of the ignition coils. While there is no definite time frame for them to fail, at over 200,000 kms, the lifespan of the ignition coils lifespan is probably up. Fortunately, we were just a few kilometers from the manufacturer’s workshop. With the Sat-Nav or GPS as we called them here, we managed to drive to the workshop avoiding the need for a tow truck.

The repair took just over an hour and cost around US$80. Many thanks to Nissan in Penang, which meant our vacation wasn’t disrupted too much. We were also fortunate it wasn’t over the weekend or the coil fail when we were on the highway. That would mean being stuck in Penang without our own transport for 1 or 2 days, possibly incurring  towing charges.

Just before we went on our road trip, our washing machine died. The machine is over 15 years old so it is time to retire it for good. I figured a new washing machine will cost around US$220. All in this month, there was a significant amount of money spent both expectedly and unexpectedly.

Which brings me to the point of how big is your emergency fund?

Things break down and usually at the most inconvenient time. After driving for over 20 years, this is the time I encountered mechanical problems with the car on a vacation.

Many people think their credit card is the emergency fund. No, it is not. If you think that a credit card is, then you will be in trouble financially. Financing the washing machine and car repair for several months will cost significant amount of interest. Build up your emergency fund so that you have at least US$2 to 3,000 (depends on where you live and what you have) to give you some breathing room in case of unexpected spending. An easy formula to follow is 3 to 6 months of your monthly expenses.

So, what about you? Have you encountered times when you have to spend a large amount of money in a short time period?

Planning For Death Is Necessary

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familyfights2013 has been a challenging year thus far. It had been a hectic January to get things going business wise as well as to create plans for 2013. There were the usual year end celebrations plus a wedding but in the midst of all that, a close relative died.

The death caused sadness for a lot of family members and at the same time created some rift due to disagreements about handling certain things. I won’t bore you with the details. Suffice to say, that even with a Will, things can turn bad. Relationships can be strained and perhaps forever changed.

That is why, the title of this post. Planning for death is necessary.

In the past, I thought that writing a Will is a must due to legal issue and to prevent disagreements about how to handle the estate. Having seen what happened, I think that a Will, while crucial is not sufficient.

I searched on the internet to see if others experienced similar things and came across this website titled thefamilywar.org. Based on what I read, it seems death can bring out the worst in some people. While family fights are often due to the inheritance, it could be due to other issues as well that surfaces when a family member dies. The fact that some family members knew certain things while others were not informed can be the cause of fights as well. The Family War website sells a book written by Canadian lawyers. Even if you don’t plan on buying the book, the many articles there give you an idea why fights happens and how to prevent it.

And make sure your Will is updated. There is a website here that reviews online Will writing services, which is an option if you think that an attorney is too expensive. Living trusts are an option to reduce such fights as well however, the most important thing is still communication. All the legal and financial tools cannot prevent family feuds. If you want your children and family members to be on good terms, explain why you do certain things. Other wise, you can expect fights to break out.