A testimony from Teresa
My husband and I have long struggled with debt (a struggle we continue to this day). But recently, we decided to try not to put anything on credit cards. This was a big step, as our “emergency fund” had always been a credit card. Now, we are carrying a $1,000 emergency fund.
A couple months ago, our car was in the shop, and we rented a vehicle. While the rental was in our possession, the bumper got scratched. We had declined all the “additional insurance coverage” offered by the rental company, as it was extremely expensive, and our regular car insurance covers rentals.
When we returned the vehicle, we were required to pay a $500 down-payment toward the repair. We decided to wait until we got the estimate to decide whether to pay for the damage out of pocket or submit it to our insurance company. We did not want a small claim driving our insurance prices up.
Boy, am I glad we waited as the repair cost less than $300! We actually got $200 of our down-payment back — and it went right back into our emergency fund. Because of our emergency fund, we had the luxury of paying for the repair without having to pay higher insurance premiums or high interest in the long run.
We built our emergency fund slowly, over several months. We did not have the “wiggle room” in our budget to set aside any money for savings.
When we committed to building the emergency fund, however, we began to reevaluate. Here are my tips:
1. Call your service providers.
My husband was not willing to cut out our cell phone service or cable completely, but he was willing to negotiate lower prices. He got our cable cost cut in half and our cell phone bill cut by one-third, all without losing any of the channels or services we use. Save first.
2. Save first.
Even if there is no money in the budget for savings, do it anyway. It is more difficult to avoid paying a creditor than to avoid putting money in the savings account.
The savings account does not make collections calls! Basically, if there’s more month than money, I will find a way to pay the power bill, even if I have to sell something on Craigslist to make it happen. Likely, I would not be so vigilant about my savings.
3. Be proactive.
Use sites like MoneySavingMom.com to find ways to save on everyday things.
4. Most importantly, find a way to save.
It’s terribly difficult for most of us, but even if you can only save your change in a coffee can, it’s worth the effort. The savings will eventually stack up, and even if you only have $60 in savings when your next emergency arises, that will be $60 that doesn’t have to go on credit!
Teresa is a Christ follower, a wife to Steve, and a mom to Elijah, Grace, and two dogs. She has a full-time job outside the home. She is a Florida girl with a love for the beach, chocolate, and a good book.
Have you saved up and paid cash for something — large or small? Submit your story for possible publication here.
Once we got out of debt one thing I did was raise all of our deductibles to much higher amounts because we had an emergency fund to pay higher deductibles if something happened. It saves us hundreds upon hundreds of dollars each year.
My husband is a rental car company employee and we are required to take the coverages when we rent their cars, but we would ALWAYS take the coverage anyway. I don’t want to pay my deductible on a car that isn’t mine (particularly because we keep it high), and I don’t want to be responsible for a $30k car that isn’t mine.
For my husband’s company, the damage waiver fee is about $15/day. Even having the car for a week, that’s $105 to not have to worry about anything. Don’t have to worry if we back into something. Don’t have to worry if the airport parking garage gate comes down on our hood. Don’t have to worry about other drivers and their crappy driving or their crappy insurance. When on vacation in Puerto Rico, we were sideswiped on the highway by a driver who didn’t even stop. When our vacation ended, we simply dropped the car off, told them that we got sideswiped, and hopped on the plane. Totally worth it. My time spent on the phone dealing with the rental car company, the insurance company, Visa (if applicable), etc is worth way more than $105.
But everyone does what works for them. For us, being out of debt and having an emergency fund means that we pay up front for peace of mind with rental cars. I understand that when you’re getting out of debt you sometimes have to take chances and hope for the best in order to get to your higher goals. I remember those days.
Do your homework, and don’t just believe what the comments say (including mine!). Make sure you’re really covered: http://www.creditcards.com/credit-card-news/rental-car-credit-card-protections-vary-1273.php
A handy chart (good for seeing whether you have primary or secondary coverage–Visa is secondary): http://www.creditcards.com/credit-card-news/compare-credit-cards-rental-car-insurance-policies-1273.php
I like what you said about “save first” being so important! The first thing we do is pay our local tithes/offerings to our church. Then we give to our 3 favorite organizations. Then we put money into a couple of different savings accounts. Then I pay bills. Some months we have more leeway than others but I always pay GOD and then our savings accounts first!
I’m with Sue above, What in the world did you say to the cable and cell phone companies? Mine were not interested in negotiating.
Tithing first always has multiplied benefits!! It’s incredible how our money will grow if we give to the Lord Jesus first. Things last longer, people bless us with what we need, abundant gardens, savings mysteriously grow, money is found, you understand what I am getting at!!
Oh, yes, we definitely give tithe first. It’s so automatic that it didn’t even cross my mind to say it out loud! Oops.
I know! I write the tithe check so regularly I don’t really think about it anymore really! Though last week I totally forgot to write it until the offering plates were coming to this week I did two weeks worth! Ug life was too crazy last week!
Ann Richardson says
I’m not sure why you paid cash for the repair. When you rent a car with your VISA most financial institutions cover accidents. The last time I rented a car, while it was parked on my sister’s front lawn, another driver jumped the curb and knocked the rental about 40 feet. My insurance went right to bat for me and convinced the other insurance carrier to pay for the car. (It was totaled.) I guess what I’m trying to say, is why pay cash for something you are already covered for? Now, if it’s because you didn’t want to submit it to your insurance or your deductible was higher than the repair cost, I understand. But other wise, I don’t.
Erica W. says
Yes! We always rent vehicles with our credit card, because then there is no deductible to pay. VISA covered the entire cost of the repair when a deer hit our rental car.
My husband drove a rental car for 2 days- and in that time he managed to hit a small animal on the highway that ran out in front of him and he couldn’t avoid. It was so frustrating because it was an unavoidable situation, and if it had been our car we would have just dealt with the damage. However, we ended up having to pay our insurance deductible since the damage came out to a higher cost because we turned down the daily insurance too. I think next time, we’ll opt to pay the daily fee! 🙂
I used to be an insurance adjuster. If she had made a claim with her insurance and it came out lower than her deductible, then it would not have had any effect on her rates.
Oh! Good to know!
Great job! Love this series as it is so encouraging!
Good for you for funding an emergency fund and for staying open minded about the car repair bill. You just never know how things are going to turn out. And thanks for sharing your story. Doing the right thing with money is a continual struggle for me. It encourages me to hear other people’s stories. Thanks!
Are you working Dave Ramsey’s baby steps? Check out his book, The Total Money Makeover, it changed our lives! Things we did to save: drop cable and get Netflicks and got Trac phones for the kids. Can’t recommend his book enough!
“He got our cable cost cut in half and our cell phone bill cut by one-third, all without losing any of the channels or services we use. ” HOW DID YOU DO THIS? What did you say; what did you ask for etc.
when we called our cell phone provider and told them that we were trying to save money and needed to cut our services with them , they evaluated our usage of the last few months and found that they had an unadvertised “loyalty” plan, and it cost about 20 dollars less than what we are paying without sacrificing any of the minutes or anything that we were using. they also told us that we could get a percentage of our bill just for going paperless. as for cable I had looked around at other providers and found someone cheaper. when my husband told our satellite provider that we planned to switch, they magically reduced our prices.
Nora@The Dollar Hollering Homemaker says
It’s so hard to break out from the chains of debt. It’s great that you were able to pay off the damage with cash:)