By The Motivated MD, Guest Writer
A few weeks back, a tree impaled my home. It’s true. My wife, my daughter, and I were all at home when it happened. In what follows, I will tell the tale of my chaotic night, an emergency evacuation, and the culmination of our hard work creating an emergency fund. Here is my story of fear, anxiety, recovery, and the financial power of an appropriately sized emergency fund. Here is the story of my emergency fund in action.
It Was a Dark and Stormy Night . . .
The day my home was wrecked started like any other. I'm a pulmonary and critical care physician, and I was rounding in the hospital when my phone notified me of severe weather alerts. I reside in the southeastern US, near the coast. We frequently get intermittent thunderstorms. Unless a hurricane is coming, I tend to roll my eyes. Often, they are nothing more than an inconvenience during my walk from work to my truck.
I continued on with patient care. Later, in a patient room, I overheard some nurses talking in the hallway. They were saying individuals needed to leave to pick up their children because schools were closing early in anticipation of the storm. What? Really? Looking out the window, there was hardly a cloud in the sky. This seemed like another southeastern overreaction to me.
As the day marched onward, the dark and ominous clouds set in, but I remained unimpressed. Probably just another intermittent shower. I finished my clinical work and headed out at roughly 6pm. A few minutes later than I would have wished, but a decent day nonetheless.
The Calm Before the Storm
By the time I arrived home, I still could catch my favorite part of the night—baby bath time! My infant played and shortly after went to bed. My wife and I then proceeded with our normal nocturnal routine. We had dinner, made some tea, and settled down on the couch to do work. Well . . . she was probably doing work. I was likely writing for my blog, The Motivated M.D.
As we approached 8:30pm, I noticed the rain picking up. It started hammering our windows. Gale force winds made the house creak and moan. Maybe this would be a decent thunderstorm, after all? As we continued sipping our evening tea, I decided to get a better look from the window. I set my glass down and headed to the window beside our front door. This gave me the best perspective down our windy street.
It was impressive. The wind was howling, and the rain was coming down horizontally. Only moments after I gestured for my wife to take a peek, everything went dark.
Bang!
A heartbeat after the lights went out, we heard a head-splitting “BANG!” My wife’s motherly instincts took over, and she bolted up the steps toward our daughter’s bedroom as I started scouting out the house. Fear set in instantly. I was scurrying to grab my emergency “go-bag.” I pulled out my flashlight and gathered the family into our half-bathroom on the first floor. Once all my loved ones (dogs included) were in the bathroom and safe, I ventured out to further inspect the home. The wind was continuing to press on the house. A particular hue of neon blue kept radiating through our blinds—not the normal white flashes associated with lighting. This light was coming from the destruction of transformers.
I checked all the windows first. Seemed fine. Then, I checked upstairs. Still nothing that jumped out at me that could explain the noise. Finally, I peeked out into our sunroom.
A Winter Wonderland
There was insulation everywhere, feet deep in some places. It looked like a winter wonderland. As my eyes slowly gazed upward, I saw it. A massive tree had pierced through our roof. The sharp portion of the tree (clearly severed off from high winds) punctured our home like a toothpick through an olive. I shut the door immediately, unclear if the damage was evolving. I hunkered back down with my family in the bathroom for a little bit longer, waiting out the worst of it.
When the noise seemed to pass, we slowly exited our makeshift shelter to further assess the damage. With the power still out, it was hard to make heads or tails of most things. As we spilled out onto the street, we were joined by dozens of neighbors doing the same. Minutes later, the fire department joined us, already starting to assess the downed power lines and the trees that had fallen.
I returned to my home to get an external perspective. Oh yeah. It was real. My home . . . got impaled . . . by a tree. I don’t even have trees on my property! Where did this come from? Turns out my next-door neighbor must have read my mind. “Looks like it came from over here,” he said. Sure enough, a tall pine tree from the opposite end of his property had been severed from the high winds. Following its splintering, it appears it was lifted, tumbled over his home, and came down on ours.
Devastation.
Assessing the Damage
With the storm still coming down, intermittent hail, a power outage, and a hysterical baby, we made the decision to evacuate our home and stay with family elsewhere.
The following morning, we returned to assess the damage. It was bad. Portions of the roof sustained pretty heavy injury from hail. There were shingles all over the lawn. The tree had pierced down through a portion of the attic where our hot water heater and air handler were housed. It was tangled up with our gas line. It then exited through the ceiling of our sunroom.
Here is a photo from the exterior of our home . . . a picture is worth 1,000 words:
I took a deep breath. Why had I assumed that this storm would be like all the others? I reflected on the past 24 hours. It had been a whirlwind of emotion. I found solace in the fact that everyone was safe and this situation was out of my control. I exhaled all my frustration and anxiety and got to work.
The following days were a blur of insurance claims, phone calls, discussions, quotes, estimates, and a lot of clean-up. I am fortunately surrounded by some of the most incredible family on the planet. With the help of my loving family, some really good friends, and the most supportive wife, we got through it. And here is the kicker:
I never once worried about the cost. Let me tell you why.
The Emergency Fund in Action
I have written about the importance of an emergency fund before—many times, in fact. But this is different. This time it comes from a place of experience.
This entire process was stressful. When you look at your home with catastrophic damage, it hurts. I was worried about my home’s safety. Would my family be safe continuing to stay here? I was worried about unseen dangers. Was the gas line damaged? Or severed? Was there a rogue electrical line just waiting to start a fire? All of these thoughts swam through my mind. What never crossed my mind was, “How will I pay for this?”
Years ago, my wife and I had started our personal finance journey. In all of our readings, there was a common theme. This theme read something like this: “No matter what you do, build an emergency fund first.” As you journey toward financial independence, you need to make sure you have a safety net. You need to protect against the unpredictable. An emergency fund of 3-6 months of living expenses is just that. It is insurance against catastrophe.
In a post called Emergency Fund: Your First Financial Goal, I talk in great detail about the importance of this.
Our emergency fund is approximately three months of living expenses. We keep this in a regular savings account we have with an online bank. The bank offers average interest rates, but the benefit lies in rapid transactions of money between accounts. These transaction speeds are helpful in, well, situations like this. Our emergency fund equates to a little more than $30,000. It has remained safe and stagnant for years now. Annually, there will be a minor draw from this account (i.e. car trouble, unexpected AC issue, etc.) However, we always replace what we take. We continued this practice year after year, always replacing, always prioritizing true emergencies.
More information here:
The 8 Best Places to Keep Your Emergency Fund
It Is Not Always Easy
Leaving this money alone is not always easy. There were times when we would have liked to utilize this money to achieve other financial goals. My wife and I have discussed using a portion of it to take a bite out of what remains of our (initially) $670,000 student debt balance. Other times, we have stared at our empty dining room and thought how easy it would be to siphon from our emergency fund to purchase a dining room table. Yet, we stayed the course. We protected our emergency fund. And thank God.
On the fateful night that our home was damaged, I worried. I worried about a lot of things, but I never worried about money. Writing a financial plan is incredibly important when building a roadmap toward financial independence. There are a few mile markers that must be passed on this financial path. One of the earliest and (arguably) most important is building a sizable emergency fund—and using it for just that . . .emergencies! Making sure you, and anyone you share your finances with, are on the same page regarding what constitutes an emergency is also critical. Like I said, it’s not always easy.
What Happened to My Home?
So, what happened to my home? Honestly, it went much smoother than I ever anticipated. The morning after the damage occurred, we got an incredible tree service out to our home where the tree was extracted without causing any further damage. The service evacuated that pine with surgical precision. It was really impressive. Shortly after that, a roofing crew came out, assessed the damage, and tarped the hole for us to prevent further damage. Which was great, because a hail storm crept in that evening. What’s the saying about kicking you while you’re down?
Currently, we are in the process of dealing with insurance claims, and we’ll see what all gets covered as it applies to repairs for the home. At this time, we suspect it will cost us between $15,000-$20,000 between replacing the roof, fixing the sunroom ceiling, getting new furniture, and fixing the fence.
Life Lessons
There were a few important lessons I learned from this experience. Never, ever, underestimate the importance of close friends and family. When all of this transpired, we were able to get a few family members out to our home within the hour. They never hesitated to help clean up or care for our daughter while we gathered supplies to evacuate the home for the evening. There is a certain security that comes with trustworthy friends and family nearby. This is something I have found you cannot put a price on. This is the reason so many are comfortable taking pay deductions to return home.
Secondly, it shouldn’t take experiences like this for me to recognize what is important. There was an unexpected sense of calm as we lay down in our family's home on the evening of the storm. I had my wife with me, my daughter, and my dogs—all of them spooked, none of them harmed. Knowing that I had finances prepared for such an occasion and that my family was safe was all that really mattered. What else matters?
However, as we began to clean up our home and patch the damage, I felt a bit ashamed of myself. I spend many hours a week fixating on finances. I enjoy it, especially writing and building resourceful material for others. It’s not work for me. Sometimes I have to remind myself to stop so that I can maximize time with family. My work-life balance is a “work-in-progress.” More importantly, it shouldn’t take a tree piercing through my roof to remind me how truly lucky I am. I have my health. My family is safe. The house can be fixed. It’s all going to be OK.
More information here:
7 Ways to Increase Your Savings Rate
Take Home Points
This experience has educated me and humbled me in more ways than one. From a personal finance perspective, it has driven home the importance of an emergency fund. The comfort and relief that an emergency fund can offer are worth more than the dollar amount it houses. True, we have used a hefty portion of our emergency fund to repair our home, but insurance will likely pay a majority of that. We will use that money to refill the emergency fund. Whatever deficit remains in the fund, we will prioritize replacing it. We usually do this by picking up a few extra shifts or diverting some of our overage payments away from student loans for a month or two.
Secondly, always remember what is truly important. Financial independence is an incredibly important goal. I do not wish to minimize that. Financial freedom can afford you the time to prioritize these important things. It is these “important things” that will ultimately bring you fulfillment in life. Like spending more time with family, telling them how much you love them, catching up with an old friend, or even just relaxing while the sun dips behind a beautiful skyline. Remember what matters.
Have you had an actual emergency where you found your emergency fund was much needed? How many months worth of spending should be in an emergency fund? Comment below!
[Editor's Note: The Motivated M.D., is a pulmonary and critical care physician practicing in academic medicine in the southeastern United States. This article was submitted and approved according to our Guest Post Policy. We have no financial relationship.]
Before I retired I always wondered what would happen in a broad emergency. Especially as my employers usually had an emergency weather or disaster plan that involved me And most of my co-workers coming into work no matter what was going on with my home or my family. (Always laughed at the idea that I would sacrifice my family to come work in clinic, but your work would have seemed even more dangerous to neglect.) What was the situation at work when this happened and you apparently stayed home cleaning up for a few days? What would likely have happened if several more of your colleagues had had similar or worse damage? Evacuate the hospital since it might have been damaged as well?
Hey Jenn! Great questions and comments. I was very fortunate that many of my colleagues did not suffer family disruptions or home damage simultaneously. As such, I work with a great group and was able to make a phone call that evening and a peer was immediately willing to step up and cover for me the following day. The day that ensued was full of tree removal services and roofers pulling the tree out safely so it did not fall further inward to cause more damage, closely followed by roofers tarping up the hole appropriately. Then we waited until insurance could determine if they would cover a complete re-roof v. just local repair.
The emergency fund was critical because, despite insurance paying for a large portion of the damage, that process takes a long time. With our emergency fund we were able to get services mobilized immediately and worry about what insurance would cover at a later date. As fate would have it, it stormed again the following evening and if I would not have had the money on hand to incentivize and reimburse all these services to come out (same-day!) then I likely would have sustained much more damage/water damage that next evening.
Thank you for checking my article out!
Isn’t this what homeowners insurance is for? A similar thing happened to my neighbors and they only had to pay their $1000 deductible and their insurance covered the rest. That shouldn’t involve an emergency fund for any physician.
I was thinking the same thing. Unless you are under-insured, you should just pay your deductible and that’s it.
A $1000 deductible is very low for homeowners insurance, at least here in Texas. Here it is usually 1% or 2% of the insured value of your home, which in my area would be more like $5-14K. That seems like emergency fund type money.
Motivated M.D., can you speak to how long the lag was before submitting the claim to insurance and getting paid?
Regards,
Psy-FI MD
When all was said and done it was about a 2 month turn around time. After you file a claim (which I did within 24 hours) they assign someone to your case. This individual usually has between 7-14 days to come and inspect the property, assess the damages, and provide a quote for how much they think the repairs will cost. This assessor then gives this information back to the insurance company. From here you have the opportunity to request what was assessed and what the damages were quoted for. This is where you can often negotiate or ask your agent for help. This process takes weeks. Often they will provide you with a check to cover a portion of the damages…to get things going. However this will likely not cover the entire amount. For us, it was about 3 months until the entire roof was repaired as well as the ceiling of the patio, the attic, and re-installation of the insulation. Then we had to slap a new coat of paint on everything. Only after all this was done can you provide pictures to the insurance company and they will provide the remainder of the money owed to you from insurance costs. Here is a break down:
-Re-roof was about $14,500 (insurance assessed the cost at about $13,800 and that is what they paid)
-Fixing the ceiling of the patio ($2,000)
-Painting the patio and re-screening it ($640)
They ‘covered’ $13,800, but that is minus our deductible ($2,500). So it came out somewhat close to covering most things. But remember…this assessing then payout process took months. You generally don’t have months when there is a large hole into your home. You need liquid money to get things moving quick. THEN you can hope/anticipate to be reimbursed for a majority of those costs through insurance. I hope that answers your question. Thanks for checking the article out!
Thanks! I hope that explains to readers of this article the reason why they need an emergency fund. Insurances aren’t usually lightening fast with their disbursements.
Regards,
Psy-FI MD
A year ago this would have seemed like a no brainer. Now with a 9.1% inflation rate the prospect of keeping a lot of cash around is a whole lot less palatable.
Yeah that is a great point. With high inflation currently, the value of a dollar decreases and having that money ‘sitting around’ and not in an investment vehicle devalues it. It is a tough pill to swallow, especially during these financially difficult times. However, I stand by the importance of a liquid fund of a pre-determined amount that you have on hand for these occasions. Thank you so much for taking the time to read my article and provide comments! I appreciate it.
With an emergency fund it isn’t about the return on your investment. It’s about the return of your investment.
Well said.
Much of the advice given about emergency funds is to keep them in cash so you can have immediate access without risk of loss. I’ve always struggled to imagine what kind of emergency would require 3-6 months cash immediately. As noted, it seems like insurance would pay for this but even if it didn’t, you wouldn’t be handing over $10k stacks of bills up front to getting repairs done.
The only answer I come up with for an emergency that would fit that advice is loss of income.
Well, you don’t usually need it all immediately. So it’s probably best to keep it in chunks.
A few thousand in cash at home.
A few thousand more in your checking account.
A month’s worth in your savings account.
A few months more in something very safe and pretty liquid like I bonds that have been owned more than a year, a short term bond fund, a short term CD that can be broken etc.
But the point is that you don’t want it tied up in a real estate syndication or a rental property because that would not be liquid enough and you wouldn’t want it in stocks or cryptocurrency because that might be down significantly at the time you need the money.
Horse before the cart. Get debt free ( except mortgage) before saving 3-6 months expenses. Save $1K for emergencies while paying off debt. Do whatever it takes, 2-5 jobs, sell things, cut expenses to the bone temporarily while paying off debt. Get the debt paid off in 24 months or less. Then when there’s no more Debt payments save 3-6 months living expenses. This is the correct road to prosperity.
Dave? Is that you?
Not sure there is a “correct” road, but that is certainly one road that has worked for many.
Most of this is not about emergency funds. But it does raise the question of how you pay for urgent things while waiting for your check from the insurance company. Getting money from insurance can take a while and this is a great example of how one might need something done immediately.
One could use credit cards, assuming those who are providing the services take them. When we have work done around the house, even the larger companies do not take credit cards. They would take checks but you need money in the account to cover a check. For simple stuff luke clearing debris, often they want physical cash.
It also raises a question of how large a deductible to carry on homeowner’s insurance. We carry a large deductible and self-insure for things below catastrophic. We would not have received anything from insurance for the costs described. Which is part of the reason we have cash and short term bonds. No or little risk of declines in value and the bonds can be converted to cash and be ready to pay bills in a few days.
Wouldn’t the claim be made against the neighbor’s insurance (whose tree damaged your property)? And if so then they would have the burden of the deductible.