Prepared for the Unexpected

I made my first appearance on television news last month, but not for a story that warms my heart. A house we own started having issues—doors stuck, large cracks appeared on walls, the chimney tipped away from the house, and popping sounds reverberated through the building in the mornings.

The drought we’ve experienced in the Midwest this summer received extensive coverage in the media. I learned that the soil in eastern Kansas has high clay content. If we get lots of rain, the clay swells. If we’re awash in sun, it shrinks. This oscillation puts stress on a house foundation as the soil on which it rests shimmies at the whim of the weather.

The engineer I called confirmed my suspicion—the house was moving—the north side went one direction; the south another. The forces pulled apart the house in the center. The gaps in the siding confirmed it. The best way to stabilize the house, the engineer told me, involved driving piers down to bedrock to support the foundation. My research already indicated that we’d pay $1,100 to $1,500 per pier. The engineer’s drawing called for twenty piers. You do the math.

We owned the house only seven months when it started falling apart. I went back to the seller’s disclosure statement and the inspector’s report. There were details we should have probed more fully, but skipped over as we hurried toward closing. I called our realtor to talk about the situation.

I reviewed our insurance policy. It excluded the type of earth movement we experienced. I talked to our agent to confirm we were on our own with this one.

Since we risked greater loss if we did not act quickly, I signed the contract to have the piers installed and paid the deposit. We stood face to face with a large expenditure and a time-consuming process.

It quickly got worse. The foundation crew uncovered sewage under the house within two hours of beginning its work. By the end of the first day of work we had a second crew running a new sewer line. Now we had four tractors buzzing around the backyard.

That’s when the TV news crew showed up.

Emergency Fund

The financial cost for these repairs was undesired and unexpected. The work had to be paid for when completed. We don’t have thousands of dollars in excess each month, so we could not manage the expenses out of cash flow. Fortunately, we have built an emergency fund over the years. We had the financial margin that could handle this problem.

I juggled credit cards to pay the bills. One bright spot in this dismal experience is that the credit card points will give me a free plane ticket to my destination of choice. I paid the credit card in full from the emergency fund so we will not pay interest on what amounts to a short-term loan. Going forward, however, we have lost opportunity for investment gains from the funds we pulled out to pay for these repairs.

I prepare a net worth statement at the end of each quarter. There will be a blip in my new graph, but we’ll eventually recover and keep moving toward our goals. We will keep pace with our retirement savings; no change there. We may need to work a year or two longer, but that’s not a major issue for us. We will need to tighten discretionary spending—maybe for several years—so we can replenish the emergency fund. The attention to our financial situation through the years prepared us to manage our finances effectively when faced with unexpected expenditures.

The summer season started for me when I watched waves spill across the sand on Oregon beaches. In the heat of the summer I gazed into trenches in Kansas clay that exposed an unstable foundation and broken sewer line. I’m ready for a trip back to the Oregon coast! That would form a great bookend for the summer, if I could afford it. Oh, wait; I have a free plane ticket.

Originally published by Pensions & Benefits USA.