Financially Independent, Retired Early(ish) at 57.

Why an Emergency Fund is a very good thing to have.

I guess I’ve always been a bit of a saver. When I was in my teens and twenties I’d willingly save whenever I had a goal in mind, but if I didn’t, I’d tend to drift along the path of life, buying what made me happy in the moment. Heck, in my 20’s I had a VERY expensive dog breeding and showing hobby, which sucked up thousands of dollars over the time I did it. Poppy and Jeff are the descendants of that breeding program, so I’m very glad I did it!

Back in those days, I had no thought for an emergency fund, as I was living with my boyfriend/fiance who had his own small business. In those early days, money wasn’t a problem. It was predominately a cash business. When his accountant asked if he wanted to pay tax on his earnings and A said no, the accountant told him to “Piss it all up against the wall then!”

Dimly, this worried me. It seemed like such a waste. But I told myself it wasn’t my business and it was A’s money, not mine. However, things change. By the time we were married some stiff competition had moved into the town we were living in and the financial good times began to slip away.

Ten years later, by the time I walked out, our finances were dire. By that stage, we had 4 boys under 5, a house with a mortgage just under 100K, two very old and worthless cars and $60 cash each.

Obviously it was easier for my ex to move out of the family home and for the boys and me to stay put while we tried to work out what was going to come next. I allowed him to stay for 6 weeks to get some money together while I slept on the couch. I’m short, but even so, it wasn’t the comfiest of beds! After 6 weeks I asked him when he was moving out and he said, “I haven’t arranged anything. I thought you’d change your mind by now. ” After being informed in a fairly direct way that no, I needed time apart to see if there was anything left of the marriage to save, he borrowed some money from his sister and moved out a couple of days later.

My ex had no money and very little cash-flow from his business, so in lieu of any child support, he agreed to keep paying the mortgage. Meanwhile, I went on what was then called the “Sole Parents’ Pension’, which gave me around $300/week to support the boys.

I felt extremely vulnerable. Every time I looked at the boys I grew more and more determined that they wouldn’t suffer for the mistakes that I’d made in some of my life choices.

I knew I needed some cash to stand between us and a cruel, hard world. I hadn’t heard of an ‘Emergency Fund’ then, so in my head I called it a “Buffer Zone” I decided a thousand dollars would make me feel safer. It seemed like an insurmountable sum to find, but I knew I had to try.

So I started saving. The next 3 months were TIGHT. Every bill was paid as soon as it entered the house and I scrimped and scraped on everything else. If we had a meat meal, the boys had all the meat and I lived on eggs and veggies. Sometimes, if I was really desperate, I’d cut the end off a sausage and devour it. I felt guilty, but sometimes smelling those snags cooking was more than flesh and blood could stand!

The boys’ protein came from mince, sausages, tins of tuna and eggs. We didn’t waste an ounce of food. Funny thing is, some of the meals I made over this time have morphed into our family’s comfort foods. Scotch oatcakes, tuna mornay, cauliflower + macaroni cheese… funny how desperation can turn into fond dinner requests!

At around the 3 month mark I’d saved the one thousand dollars. I breathed a sigh of relief and felt a glimmer of pride. I’d done it! We were safe! But then a little niggle of something made me decide to call the bank to check on how the mortgage was going…

“I’m sorry Mrs ******, but your mortgage is $968 in arrears,” said the nice bank man on the end of the phone. I nearly dropped the receiver. How could this be possible? A said he’d pay the mortgage. It was supposed to be his way of supporting his own children, for God’s sake!!!

My first reaction was disbelief. Then it was blinding anger. How could he recklessly put the boys’ security at stake like that?

My third reaction was a mix of resignation and relief when I thought of the Buffer Zone money. It’d cover the arrears. I loaded the boys up into the double stroller and took a walk down to the bank. Within half an hour of that phone call, our account was back where it should be and I now had around $30 to my name. Half what I walked away with 3 months ago when I left my husband. But the house was safe, which meant so were the boys.

If that doesn’t bring home to a person how important it is to have an emergency fund, then I guess nothing will. If I didn’t have that money put aside and the bill for the mortgage got worse and worse, the trajectory of how our lives turned out would have been vastly different.

That little house was the place we lived in for the next 20-odd years, after I bought my ex out in the property settlement a year later. It was in one of the best public school zones in Melbourne and so my boys got a great education. As an unexpected bonus, I’ve been working at the same school for the last 16 years and so my little family ended up having a stable income, no matter what A decided to do with child support. And in 2018, the sale of that little house enabled me to utilise Geoarbitrage in the same city and release a tonne of equity which has probably saved me from a decade of having to work.

As soon as the boys and I walked back from the bank all those years ago, I started building up that Emergency Fund again. When I was at home with them, before Evan, my youngest, started school, my Buffer Zone was 1K. We had to use it a lot as things cropped up, sometimes the Emergency Fund would be depleted and I’d be reminded yet again about how essential it was to have money put away. You just have to read my ‘About‘ page to see that!

However as the years rolled on and I was in a secure job, as the level of cash in the Emergency Find rose, so did the likelihood of me having to tap it. It’s strange how that works.

A few months ago I had to tap it for the first time in years. Our hot water service blew up and I wanted to replace it with a gas continuous hot water service. What could have been a financial drama was just a minor inconvenience, because I had the money on hand to pay for it. I’m in the process of building it back up now.

Sometimes I see posts stating that the need for an emergency fund is overstated and that people would be better off putting that money into the share market and letting it ride. That’s pure stupidity in my opinion. Having a few grand put aside in an online high-interest account that you don’t touch unless something totally unexpected comes up – this won’t slow you down towards your march towards financial independence! Think about it. We’re looking to amass hundreds of thousands of dollars. Ten grand or so in a savings account is a drop in the bucket compared with that.

But by gum! It’ll help you sleep at night.


  1. gofi

    3-6 months of expenses. I wonder what your views are on paying extra on your mortgage? Did you? Would you?

    • FrogdancerJones

      I did.
      It was the absolute saving of us. I couldn’t have swung the deal I did with my original house when I sold it if it had a mortgage on it.

  2. Girt

    I love this post and have taken on board the importance of the emergency fund.

    In terms of housing security, I really wonder now with property prices so high, how there is not stronger public consciousness of how vulnerable you are if you are in debt. Why does it feel like avoiding debt means you are missing out?

    • Chris

      Might well get a good case study from Canada in the near future… their average house prices are around $1.5m and according to the Garth Turner blog the country’s 8.5 million families have accrued $2.24 trillion in debt. He keeps asking how it will end well. Fair question!

  3. freddy smidlap

    cash is king, as they say. we had to replace a car this year and just went out and paid for one with no loan. this concepts was completely foreign to me when i was younger. liquid savings helps us sleep well at night.

    • FrogdancerJones

      I paid cash for my last 2 cars too!

  4. Latestarterfire

    Some people also prefer to use their credit cards as an emergency fund. And pay if off the following month. Which really isn’t an emergency in my mind. Yeah, I like sleeping soundly at night too – I now have 6 months’ living expenses in cash. With interest rates so low these days, I am tempted to reduce the fund but I really really like the security of having 6 months’ buffer so … most likely will leave as is

    • FrogdancerJones

      Maybe just wait until you need to tap into it for an emergency and then not fully replenish it if you feel that you might have been a bit too generous with the amount you had put away? Just a thought…

  5. Sam

    Thoughtful post, some people thin a credit card is an emergency fund, it is not.

    • FrogdancerJones

      I agree. A big emergency where you can’t pay the card off in one month just adds to the cost with all of the extra interest you’re paying. I’d rather ‘pre-pay’ by saving up the cash up front.

  6. Kelly

    Whenever I’ve had to tap into my savings for an emergency, I am always so thankful it’s there! It makes the bad situations more of an annoyance. I remember being so proud of saving my first $1k savings fund and was ‘rich’ when I managed to save $5k. I felt so safe having that money. Today, I would probably cry if you told me I ‘only’ had that for an emergency. Funny how the bar continues to raise!

    • FrogdancerJones

      So true. I look back at the 1K I started with and shudder at the thought of that being our only security.
      I love my emergency fund.

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