Evgren Says – Why You Need Savings Even When Paying Off Massive Debt

1. Vehicles need maintenance.  Not just routine maintenance, either.  If you keep them long enough, vehicles need tires, and brakes, and tune-ups, and replacement belts and valves you’ve never even heard of – lest your engine overheat and eventually blow – and it’s really only the oil changes that are affordable.  Not to mention that even the the safest, most cautious drivers can get into accidents which unexpectedly total their vehicles and require that they purchase a new one.
2. People get sick and/or injured.  Health insurance or no health insurance, people pick up viruses, and the right ones can turn into pneumonia, or strep throat, or chronic bronchitis, or staph.  Children, especially, tend to bring stuff home.  People can also turn out to have long-term illnesses or disabilities, which insurance may or may not cover.  People may need surgery – replete with deductibles and getting billed separately for every aspirin and toilet flush.  This tends to add up.
3. Appliances are not immortal.  Refrigerators, water heaters, sump pumps, dish washers, clothes washers and dryers, they all give out eventually, and not uncommonly all at once.  Sure, you can live without an ice maker, and you can line dry your clothes, but if your AC gives out in the south, or if you’re living without heat in New England, can you really forgo these repairs?
4. Clouds don’t care about you.  In Hartford, Hereford and Hampshire, hurricanes hardly ever happen, but otherwise, “acts of God’ (aka, weather), tend to strike without regard to debt, or savings, or even trying really hard to reach some financial goal.  You can’t count on the blizzard to push off to the east and hit Altoona, even if that would be easier for you.
5. As soon as you start to feel comfortable, something unexpected will happen.  Call it Murphy’s law, call it luck, call it the law of averages, or karma, or supercalfragilisticsachebealidocious, the label isn’t really relevant.  Life is made up of the unexpected as much, if not more so than, the expected.  If you have no savings, that unplanned for or unexpected event goes entirely on your credit card, or, at best, leaves you scrambling for a way to deal with it. 

Savings may not be able to absorb the sum total of either any one, or any combination, of adverse events, but it will certainly provide a cushion and help to ameliorate the damage.  If you have more debt than you can pay off in a month, even putting your $25 oil change on credit will hurt you – as I learned the hard way – forget about buying a new/used vehicle after an accident, or replacing a water heater, or “acts of God.”

In fact, I might even argue that you need liquid savings even more when you’re paying off debt, because otherwise all of those “unexpected” expenses, which we all know should be expected on some level, will just pour that much more acid on our all-too fleshly plans for repayment.

So, Evgren says* savings too.  Seriously.

*Evgren is not a guru, nor a financial planner, nor the Dalai Lama.  Evgren is not clairvoyant, nor even super-human.  Evgren Says because Evgren has an opinion and a free blog, and any reader is both free to, and should, perform his/her own due diligence.  Evgren is not responsible if the blizzard does indeed push off to the east and hit Altoona.  Or not.  Evgren does like tall trees.

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Must be Nice to be Flush, or My Bank Doesn’t Want my Money

I’ve had the same bank accounts, checking and savings, for years.  I opened them my senior year of high school.  I’ve paid $12.00 per month on that checking account for almost 20 years now.  This in spite of maintaining an average monthly balance of $1000+ for the last five years.

So I called them last week to see if they would waive the monthly service charge.  The customer service rep, who was really a nice guy, said no.  I’ve got an account with perks they don’t offer any more – free checks, free online banking, unlimited check writing, free debit card, free overdraft protection, 5 free stop payments per year, and some other things he didn’t even get into.  Never mind the fact that, in the last six years, I’ve requested one debit card (during that conversation), and made one stop payment.  I don’t avail myself of the other “perks.”  I don’t write checks for money I don’t have or don’t want to give away, I write, maybe, 6 checks a month, I pay my bills using the online services of my creditors (immediate withdrawal), rather than relying on my bank to process a piece of paper and make a deadline which doesn’t affect their credit.  And I’ve been a loyal customer for 20 years.  But Customer Service Guy can’t do anything for me.  WEV.  What’s my other choice right now, Wachovia?  Yeah, right.  So I suck it up and deal.

But then I call tonight to find out the APY on my savings account – it’s been so long since I set the darned thing up that I don’t even have the beginnings of a clue.

Imagine my shock when Other Customer Service Guy says “0.1%.”

Yep, that’s right, 0.1%.

Me:  Seriously?  <pause>  Do I have any better options?

Other Customer Service Guy:  Let me check. (<Insert Jeopardy Theme Here>)  Unfortunately, for a savings account that will keep your money liquid, the only other account we can offer pays 1%, but that requires a minimum balance of $5000.00 to avoid a $9 / month service charge.

Me:  You’re kidding, right?  I’ve got an offer from ING Direct for 3.0% APY, liquidity within 3-5 business days, with just a $250 minimum balance.  I’ve been with you all for 20 years; can’t you come close to that?

OCSG:  <no hesitation> Sorry, but no.  Is there anything else I can help you with?

Me:  Nope, you’ve given me my options; thanks.

OCSG:  Have a good evening!

So I immediately log on to ING Direct and transfer $250 from my checking.  I had planned to let my old savings account have my monthly savings deposits, but since they’re really not all that interested in my money, I’ll give it to someone who is.  Or who is, at least, willing to offer me better than 0.1-stupid-percent-APY.

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