As anyone who knows me will tell you, I have a few issues when it comes to control. Namely, I want to be in it. All the time. There is nothing more stressful to me than feeling like I’ve lost it. From a financial standpoint, that means that it’s very important to me to be independent, have little or no debt, and most of all have an emergency fund for those times when something unexpected comes up.
Because something always does come up. No matter how many preventative measures you take, you can’t anticipate every emergency situation that might arise. And every new experience or venture that you undertake seems to ratchet up the chance of something happening, and thus requires giving up a little bit more control. But hey, what’s life without a little risk? (Very peaceful, my inner control freak assures me.)
As I mentioned in last week’s post about my ‘Not-So-Frugal Vacation,’ we came home from a month of rather lax spending to some very unexpected expenses, one which nearly kept us from getting back home. Because we had failed to acquire French passports for our children (mistakenly believing they could travel back and forth with their U.S. ones), we were required to purchase three additional, full-fare tickets before we could leave the States. The airlines wanted us to have proof that we would come back to the U.S. with the children, despite the fact that we are all four legal French citizens and have lived here for six years.
Sound complicated? It was, and the result on our bank account even more so, to the tune of almost $5000. One of the more frustrating aspects of the lengthy conversation/tear-filled pleading argument with several British Airlines representatives was that they seemed to assume that we could just stick the charge on our credit card and be done with it. We’d be filing for a refund as soon as we returned home, so no big deal, right? Except that of our own free choice, we don’t own a credit card. Not something I would consider to be that abnormal, but the airlines couldn’t seem to get a handle on the fact that $5000 would have to come straight out of our somewhat less well-endowed bank account.
In the end, desperate to make our flight, we bought the tickets. We were lucky that my husband’s pay check was serendipitously deposited on the same day, meaning we had enough in the account to keep our cards from being blocked and enough time to get home and move money from one of our savings accounts to hold us over until we got our refund. Which we’re still waiting on, over two weeks later.
But if we hadn’t had money coming in at that time, or hadn’t had some available emergency money to make up the difference for the month, we would have been in real trouble. As one friend put it, if it had been her who needed that kind of money in her bank account, she would still be in the States with the kids.
So, what did I learn from this experience? Of course, it only reinforced my belief that you have to be prepared for anything. Having money saved is so important to my peace of mind, way more important and satisfying for me than anything I could buy with that money. But at the same time, if I wanted perfect financial peace of mind, I would have stayed at home, which would have meant missing out on a great vacation and visit with family and friends. It was worth the risk, and it could have turned out a lot worse if we hadn’t been prepared.
How do you prepare for unexpected financial emergencies? Do you think having a credit card is a necessity, even if only for those “just in case” scenarios? How do you balance financial risk vs. financial security?