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?