Being Prepared

Apologies in advance for the long post!

A few days ago, I was doing the dishes after dinner. Outside, there was a heavy downpour, but according to the weather radar, nothing bad was around - a little bit of lightning and thunder off in the distance. Then, bright lightning and the thunder at the same time - it hit near the house. I stood there and waited for the inevitable power failure, but the power stayed on. I thought, "Wow, that's a relief." Then I realized...

The phones were dead and the ADSL that we get through the phone lines was down. We lost the telephone, the ADSL modem and the wireless network router, all through a surge that came in through the phone line. Amazingly everything else electrical in the house survived. I thought I was prepared - everything was plugged into surge protectors. I guess I wasn't prepared for the surge to come through the phone lines. Well, now I am - prepared with a surge protector that also has an input and output for the phone and ADSL lines.

Today, our well pump started dying. Apparently the well pump motor got a surge as well - it just took a few days to show up. It won't be until Monday when I find out the damage (physical and financial). If the cost is large enough, I'll turn it into insurance for reimbursement.

The lesson... you need to be prepared for emergencies. Aside from having homeowners (or renter's) insurance, you should set aside money for these types of issues. This can be called different things....reserves, a rainy day fund, an emergency fund. Financial planners all agree that you should set money aside ahead of time, but opinions differ as to how much. I've heard anywhere from three to twelve months of living expenses should be in this emergency fund.

Having an emergency fund can help you cope with unexpected situations without using credit cards or going into debt. Having an emergency fund can help you cope for a while if you lose your job. Having an emergency fund can help you pay the deductible on the insurance for major repairs or replacements. Having the insurance in place will limit your losses to whatever deductible you have.

We all know that we should have insurance and have funds set aside for emergencies - now is a good time to check to see that you have the right amounts! Be prepared.