In late December I was presented with a trifecta of bad news which has meant I had to dip into my emergency fund. Although I’m a bit bummed for having to spend money unexpectedly, I’m also thrilled. Let me explain why…

The Trifecta of Bad News

It all started in mid-December whilst I was rushing around in the throngs of preparing for a rather subdued Christmas here in Singapore without my family.

Like most people, I tend to overspend at Christmas. I was hosting this year for a group of friends all trapped in Singapore our family away from home. I wanted to make it feel special to take our minds off the dreaded Covid-19 restrictions which meant I overspent. No excuses, I just did and I’m ok with that.

In addition to the Christmas overspend though, the other two unwelcome legs of the trifecta then presented themselves.

No heat, no hot water

I had an email from my tenants back in the UK to say there’s no hot water or heating. Now London doesn’t get too cold in the winter from a pure temperature perspective, but London cold FEELS really cold. The sort of cold that gets into your bones and makes you shiver uncontrollably. I had to act fast (which usually means its going to be expensive).

I quickly organised an emergency plumber to visit and assess the issue. After three visits and multiple test, it turns out I needed to install a new central heating boiler. Damn!

My throat is sore (again!)

I tend to get a little run down when work and personal life is busy. The run up to Christmas and year end is always a bit of a challenge – especially when you add in client entertainment responsibilities.

When I’m run down my tonsils flare up and I get tonsillitis. Its horrible and has a significant negative impact on my life. This happened for about the 6th time this year in December and my doctor recommended I finally have them removed.

I have medical insurance but it’s unclear if it will cover this procedure for one reason or another. Even if not, for my general wellbeing I felt I needed the operation and so I went ahead with it anyway. It was all a bit of a whirlwind (at the time of writing i’m 7 day days into the recovery and feeling really good!). Damn again!

What was the Damage to my Emergency Fund?

Ok, so general overspending at Christmas time is certainly not reason to dip into your emergency fund, however the other two legs of the trifecta certainly are. They are also pretty giant costs:

Boom! Thats a S$10,000 depletion in one month. My net worth statement in January 2021 will not be pretty.

So why am I thrilled to use my Emergency Fund?

Although its never fun to be hit with a large unexpected bill (let alone two giant ones), when you have a system in place to manage your financial health and it works as planned, then life is good.

I’ve posted before in detail what an an Emergency Fund is, how much should be in it and what it should be used for. Also check out JD Roth’s great post about this too. In a nutshell it’s a pot of money you keep aside to deal with unexpected emergencies in life, something in the region of 3 – 6 months of spending is a good goal. But this depends on your own needs and circumstances.

Because of my Emergency Fund, there was no need to:

• go into debt to pay for these bills
• sell anything in my investment accounts
• lose any sleep by spending the money

Not because the value is insignificant (its not, its a lot of money to me), but because my system worked.

I’ve dipped into my fund to pay for the unexpected bills and now will work to replenish it back to the level of 6 months expenses. Luckily I get paid a bonus in January which should plug the gap. Hopefully

Lessons learned?

1. Crap happens, and you’ve got to be prepared.
2. Having an emergency fund of money available on demand for life’s hiccups is essential. Set yours up by following the advice in my post here.
3. Set your system up well and then you can have faith that it works.

So now, I have a brand new boiler in my rental which should last another ten years and no more tonsils! Another week of recovery to go and then I’ll be ready to smash 2021!

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