Remember a couple months ago when Maria and I gushed about how great it was to have sinking funds when we were buying our new minivan? We've been following along with Dave Ramsey's financial plan and slowly working our way through the Baby Steps, using the tools Dave lays out to help us with anticipated expenses along the way. Sometimes, though, life just throws you a financial curveball you never see coming and it's always at the worse possible time. We recently had a massive unexpected home expense in the midst of a very expensive holiday season, which left us thankful once again for following Dave's Baby Steps. This time around, our 3-6 month emergency fund came to the rescue and we are thanking our lucky stars for Baby Step #3.
A few weeks back, we were enjoying a typical Thursday night at home: I was sitting in the living room working on a blog post, Dessa was in bed, Maria had just taken her nightly shower and we were getting ready to relax and watch a little TV before calling it a night. Maria made a quick trip to the basement to change the laundry, and discovered an inch of water on the basement floor.
I ran downstairs to see what was going on and, sure enough, the hot water heater had leaked everything in its tank. To make things even more interesting, the nearby floor drain was backed up and completely useless. Luckily, that problem was easily solved. I lifted the cover, cleared a little dirt out of the way, and watched the water quickly drain away. Thank God we didn't have much damage. A few things got wet, but nothing that was valuable or couldn't hold up to a little water. We cleaned things up as best we could right then, closed the valve to the water heater, and went to bed. I called a plumber first thing the following morning to come out and replace the hot water heater.
Here's where things got truly expensive. Not only did we have to pay for a new water heater, but there were several added costs. The previous water heater was electric, but we switched to an energy-efficient gas heater, which meant that we had to pay for a new gas line to the heater. There was no vent to the outside for the heater, which was another expense. And because we moved the new water heater to a new location in the basement, we also had to pay for a new electrical line and new plumbing.
In the end, we shelled out over $4,000 for a new water heater. It was a worthwhile investment because we intend to stay in this house for a very long time, but it was a $4,000 financial hit that we simply did not see coming. We've faced our share of unexpected expenses over the past few years, as well as big purchases that we planned and budgeted for, but this was the first time we had to actually dip into our emergency savings.
There truly is no good time for a sudden, major home expense. We had just paid to have a large tree removed from our property the day before the water heater broke. The plumber came to replace the water heater on Maria's birthday, and all of this was in the midst of our holiday shopping. Talk about an expensive month!
Despite the hefty price tag (and the terrible timing), the financial bottom line was the last thing on our minds throughout the ordeal. We knew we had the money available to invest in a new water heater since we had a fully-funded emergency savings from Baby Step 3: Saving 3-6 Months of Expenses. The most stressful part of the ordeal was dealing with the inconvenience of limited running water and juggling naps for Dessa in our very noisy house while the plumbers worked to replace the water heater. The financial impact wasn't anything to sweat about. We've been making our way through the advice laid out in Dave Ramsey's Financial Peace University and didn't blink when a true financial emergency cropped up, even in the midst of the holiday season. When you learn how little most people have saved, it's hard for me to imagine how truly stressful this situation would have been if we didn't have the funds available.
The thing I can't get over is how much my life and finances have changed in five short years. Before I met Maria, I owned a different house, was sinking in student loan debt, and my water heater needed to be replaced. I remember how stressful and overwhelming the situation was back then. Our new water heater tribulation from a few weeks ago was a heck of a lot easier and less stressful even though we spent a lot more money and had a toddler running around our very noisy, chaotic, mostly waterless house that day.
Home ownership was not a choice we entered into lightly. Renting was really nice – especially when the unexpected household repairs and expenses were someone else's financial burden. Now that we own our house, this will undoubtedly be the first in an endless cycle of unexpected home emergencies and repairs. Maria and I comment every day about how much we adore our home, but even more than the house, we are incredibly thankful and relieved that we delayed home ownership so that we could save our pennies and place ourselves on solid financial footing before making such a huge investment. In the coming months, we will work to replenish the money we withdrew from our emergency fund and get back to work at cranking through Baby Steps #4-6.