Come Stitch With Me

Do you have a stash of cash squirreled away somewhere to help pay for unexpected expenses?

Even if you pull out the plastic to cover the expense, you still need to pull money from somewhere to pay the credit card bill when it comes due.

Life continues to happen in retirement. Murphy certainly visited our home recently.

Due to supply chain issues during COVID, we’d paid to have our nearly 10-year-old dishwasher repaired twice so we could continue to have a working dishwasher. Not this time. Dishwashers are available again without a 12 month wait. When the appliance repair technician presented me with a quote of $488.10 to repair the dishwasher door on Monday, it made more sense to replace the unit. I declined the repair, paid the diagnostic fee and proceeded to Home Depot purchase a new dishwasher. It’ll be installed on Saturday.

In mid-July, I received a notice the company who handles my health insurance premium billing would be transferred to a new servicer. Shouldn’t be a big deal, except we’d paid a few months ahead and had a credit balance. The letter stated that the credit balance would not transfer to the new provider. I would receive a refund within 30-90 days along with “their apologies for any inconvenience this may cause.” This suddenly meant I now had to come up with the funds to cover 2 – potentially 3 – premium payments while I wait on my refund.

My COBRA payments have to be made via ACH transfer or check – not credit card. And COBRA rates aren’t cheap either! Thank goodness for the emergency fund! Fortunately, we won’t have to pay COBRA rates once I’m eligible to be “officially retired” in a few months. The countdown is on to return to active employee/retiree rates.

My point for sharing this is an Emergency Fund is a necessity – even for retirees. Start with $1000, then work your way up to one month of after tax income. Continue until you have six months of expenses saved up. Do not spend this money on new clothes, vacations or other niceties. It is for unexpected car repairs, medical bills, home repairs and true emergencies like a job loss. If you are heading toward retirement, aim for THREE YEARS of living expenses in your Emergency Fund. You can use this money to live on while riding out craziness in the stock market. You won’t have to sell assets at a loss to raise funds for living expenses.