Monday, January 14, 2008

Emergency Cash...Different From Emergency Fund

There's a fascinating discussion going on in the comments over at Five Cent Nickel regarding whether you do/should keep cash in the house in case of emergencies. Not long term emergencies such as losing your job, but short-term emergencies like natural disasters, terrorist attacks, or other situations in which relying on a debit card or bank to access your emergency fund (or credit cards) wouldn't be possible.

The topic of what I'd do in the event of something happening here in New York has come up rather frequently for some reason lately, but this was something I hadn't really thought about. I promised my grandparents that if I was given an evacuation order that I didn't particularly think was necessary (think Katrina and the people who waited too long), I would still pay attention and I would leave the area, and if it turned out to be a false alarm, my grandfather would repay me what I'd spent (which is not necessary, but he clearly wanted my promise that I'd hightail it, so I agreed). I figured I'd be fine since I have access to emergency funds through debit and credit--but what if something happened where I couldn't access that money for days or even weeks?

This isn't something I've given a lot of thought to. I've been robbed before, so I don't like to keep valuables or cash lying around. But I do use an envelope system for most daily expenses, so end up having cash on hand (in an unexpected place, but which would probably be found if someone went looking for it) for most of the month. This did me good when I locked myself out of my apartment about a year ago and had to pay a locksmith $50 when he let me back in the place. I guess I could have run down to the corner bodega and withdrawn money from the ATM but frankly, I was so happy that I could just hand him the cash, and close and lock the door to stew in my a) embarrassment at locking myself out (with my laundry, no less) and b) apprehension at how easy it was for him to pop the lock into my place.

So, for now, if the emergency happens soon after payday, I'd probably be fine. I'd have cash on hand for food, a night at a hotel or hostel, change of clothing/necessities if I needed to buy them, perhaps transportation out of the city. If it happened in the days before payday, though, I'd be pretty well screwed.

Is this worth taking out some of my emergency fund and keeping it at home? I'm starting to think it well might be. However, I need to carefully consider the amount and the hiding place for it, since I can't afford to lose an unreimbursable sum to possible fire or theft.

1. I'm thinking $200-300 would be about right. It's just me, and I'm inexpensive to feed and clothe. That sum would also cover a couple nights at several hostels/YMCAs that I know (or more likely I'd head to a friend's place). At the worst, it would cover a last minute plane ticket to one of several places where I have family. And if I lost all of it to theft or fire, I'd be irritated...but it's not an amount that would break me. Truthfully, I'm fairly thrifty but I've still managed to blow that much in one outing on clothing or fun stuff from birthday or gift money, so I know I can stand to lose it.
2. The hiding place is tricky. All the places I'm coming up with are likely places that someone accustomed to ransacking an apartment would look. Plus, I'd keep the money in small bills for ease of use, but that does make the stack a little more difficult to hide. Probably I'd split it up into two or three locations. Some ideas: between pages of a book (which I'd have to be careful to never lend out!), in a jar of rice in the cupboard (my grandmother swears by this), bottom of a box of feminine hygiene products, filed into a random file in the filing cabinet, in the pocket of a pair of jeans I never wear, etc.

Hmm. I think I'll add this to my list of things to do AFTER I move.

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