Using My Emergency Fund — Car Repairs

by Vinaya HS on August 26, 2010

in Finance

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I guess emergencies come in bunches. First it was the rainwater harvesting project and soon after that the rear left tire on my Swift shredded — I had parked at a friend’s place and while reversing, construction debris in the form of a sharp iron rod tore right through the tire wall . I had to replace the damaged tire with a new one since the repair shop said that while the damage could be repaired, there was no guarantee of it holding at high speed.

Cost Rs 4,000.

Ouch!




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{ 4 comments… read them below or add one }

prasanna August 26, 2010 at 5:42 PM

Talking of rain water harvesting, it would be nice to know whether it is really useful, if stored OR useful if it charges soil/tube well? Many may be disturbed to find that with one good rain, their water sump got filled up and overflowing??

Vinaya H S August 26, 2010 at 5:50 PM

@prasanna: Good question and one that I had while embarking on the project. In my case, my home neither has a bore-well nor a sump. Only option was to dig a pit, place few rings, and install a door-mechanism on top. I’ve been monitoring the situation since we’ve had heavy rains of late and the soil seems to be doing a great job of absorbing the rainwater.

My neighbor, however, being paranoid, has a T-junction with a valve in place. This way, he can let the water out in case the soil doesn’t do the trick. But it’s not approved by the municipal authorities.

Saumya ranjan August 27, 2010 at 7:07 AM

Is there any relation between emergency fund and monthly income or expenses ? For your case how do you decide the amount in emergency fund?

Vinaya H S August 27, 2010 at 9:14 AM

In my case there is.

Here’s what I have done:

a. A general emergency fund equal to 3-month’s worth of current expenses. My recent emergency expenses for the rainwater harvesting project and for replacing the blown tire on my Swift came from this fund. The “3-month” figure is a rule of thumb that I follow. I keep this fund as cash in my savings account.

b. A job-loss emergency fund equal to 12-month’s worth of current expenses. I know that 12-months isn’t really required for most people, but it suits my situation and plans. I keep this fund in the form of a 12-month CD Ladder. You can say that the interest earned takes care of increase in expenses (due to inflation) to an extent.

Here’s another post on this topic.

Let me know if you have any questions.

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