Six months after graduation, I got my first break at age 22 working for a non-profit. It was a dream job in many ways – I was a program coordinator for an arts education program working with underserved youth.
In the first couple of weeks, I found out that my boss was dealing with some medical issues and was unable to drive for a while. For him, the organization had set up a rideshare schedule where the staff would take turns picking him up.
I eagerly signed up so I could prove I was a team player. On the morning that I was to pick up my boss from his house, I was distracted. I had just moved to LA and was living in a new apartment and navigating my way through a new job. And there was a guy I was seeing who made me swoon. My mind was all over the place. So much so that I did not realize I ran through a stop sign… and got T-boned.
In a matter of seconds, I was propelled from one side of the street to the other. My heart was racing, but I was still breathing and could move. “What just happened?” I thought to myself.
The guy that hit me came up to me and yelled, “What were you thinking?! You went straight through the stop sign!”
Crap. It was my fault. Now I had an at-fault accident on my record (which later increased my car insurance rates), my car was severely damaged — oh, and I was late to pick up my boss for work — and wasn’t going to make it.
Before the cops arrived to assess the situation, I called my boss to let him know I was in an accident — two blocks away from his place — and wouldn’t be able to take him to work. I was absolutely mortified. I was so close to his house and I was still a new employee, with only three weeks of work under my belt.
I wasn’t able to make it to work until four hours later, after the cops came and a tow truck took my car away.
Aside from the embarrassment of it all, the salt on the wound was the nearly $2,000 bill that accompanied the accident. I had car insurance with a high deductible.
Since I had just started my new job, I hadn’t received my first paycheck yet. I wasn’t great with money when I was younger.
Even so, I had always saved something from my paychecks. A habit that also saved my butt.
I didn’t have a credit card at the time and would have no other way to pay for this unfortunate accident as my first paycheck was still two weeks away. But I had $3,000 in an emergency fund.
It hurt to put that much money down to get mobile again after a senseless accident (aren’t all car accidents senseless?), but I was grateful to have the money and be able to get by for a few more weeks until my first paycheck.
I had a bruised ego and a smaller savings account, but having a separate savings account only for emergencies helped this situation become an inconvenience, rather than a crisis. Since then, I’ve had a handful of other unexpected emergencies and I’ve learned that these things are inevitable — it’s not a matter of if they happen, but when.
Now I’m a die hard emergency fund advocate and suggest that everyone has a separate savings account that isn’t touched until those unpleasant moments surprise you. Consider saving at least three to six-month’s worth of expenses in a separate savings account. It might just save your butt, like it did mine, and help you avoid any additional debt.