Why you need a rainy day fund

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills.
Topic Author
gavinsiu
Posts: 4544
Joined: Sun Nov 14, 2021 11:42 am

Why you need a rainy day fund

Post by gavinsiu »

So in the span of a year, I had to:

1. Redo the patio since the stairs collapsed and it became a safety issue.
2. Replaced AC central air unit, which suddenly gave out.
3. Replaced the dish washer that suddenly died.
4. Replaced the batteries on the sump pro (batteries are not cheap at $1k).
5. Replace my computer that suddenly died.
6. Fixed a leak that was dumping toilet water into my office.
7. Fixed a leak coming from the outside into the house, which turned out to be on the roof.

In the case of #1, I have been saving up to replace, but all of the others were totally unexpected. The rainy day fund took a hit but is being replenished. This is the importance of having a rainy day fund since when it rains, it sometimes pours.
ruanddu
Posts: 593
Joined: Tue Jun 22, 2010 8:28 pm

Re: Why you need a rainy day fund

Post by ruanddu »

Good advice. Appreciate you posting.
User avatar
arcticpineapplecorp.
Posts: 15081
Joined: Tue Mar 06, 2012 8:22 pm

Re: Why you need a rainy day fund

Post by arcticpineapplecorp. »

when it rains it pours.
It's hard to accept the truth when the lies were exactly what you wanted to hear. Investing is simple, but not easy. Buy, hold & rebalance low cost index funds & manage taxable events. Asking Portfolio Questions | Wiki
User avatar
MrMadoff
Posts: 15
Joined: Tue Aug 03, 2021 7:09 pm

Re: Why you need a rainy day fund

Post by MrMadoff »

This is why renters don't need as big of a rainy day fund.
IowaFarmWife
Posts: 564
Joined: Thu Nov 02, 2017 9:42 pm

Re: Why you need a rainy day fund

Post by IowaFarmWife »

So sorry you had to deal with all of these issues, but I'm happy you had the means to deal with them! :happy
"A nickel ain't worth a dime anymore." Yogi Berra's financial wisdom.
livesoft
Posts: 86080
Joined: Thu Mar 01, 2007 7:00 pm

Re: Why you need a rainy day fund

Post by livesoft »

Last month we replaced one of our HVAC systems, but just sold shares of an equity ETF to pay for it. So one just needs access to money. I could call 1000 shares of VEA my "rainy day fund" I suppose.
Wiki This signature message sponsored by sscritic: Learn to fish.
LittleMaggieMae
Posts: 2569
Joined: Mon Aug 12, 2019 9:06 pm

Re: Why you need a rainy day fund

Post by LittleMaggieMae »

1. Redo the patio since the stairs collapsed and it became a safety issue.
2. Replaced AC central air unit, which suddenly gave out.
3. Replaced the dish washer that suddenly died.
4. Replaced the batteries on the sump pro (batteries are not cheap at $1k).
5. Replace my computer that suddenly died.
6. Fixed a leak that was dumping toilet water into my office.
7. Fixed a leak coming from the outside into the house, which turned out to be on the roof.

All examples of why being a homeowner is a continuous expense (even without a mortgage)/
And some are examples of expenses that could be part of a monthly spending plan budget (as while the timing might be an emergency - the fact that these thing will someday need to be replaced is not. AKA a sort of "sinking fund" - money being built up with the intent to spend it... which is different from an EF.)

This is the only not homeowner "emergency expense":
5. Replace my computer that suddenly died.


I am glad the OP weathered the storm! by having access to EF money (and even though not mentioned having income that allows them to rebuild their EF quickly - or had access to inexpensive money they could buy (used a low interest loan).
LittleMaggieMae
Posts: 2569
Joined: Mon Aug 12, 2019 9:06 pm

Re: Why you need a rainy day fund

Post by LittleMaggieMae »

MrMadoff wrote: Tue Jun 28, 2022 11:33 am This is why renters don't need as big of a rainy day fund.
And I might add - may have more 'disposable' income because they do not need to PLAN to eventually replace appliances, etc... which they save up for a little at a time out of their monthly income...
User avatar
MrMadoff
Posts: 15
Joined: Tue Aug 03, 2021 7:09 pm

Re: Why you need a rainy day fund

Post by MrMadoff »

LittleMaggieMae wrote: Tue Jun 28, 2022 11:52 am
MrMadoff wrote: Tue Jun 28, 2022 11:33 am This is why renters don't need as big of a rainy day fund.
And I might add - may have more 'disposable' income because they do not need to PLAN to eventually replace appliances, etc... which they save up for a little at a time out of their monthly income...
Yep. Of course, I suppose that most homeowners can easily establish a HELOC, so that there is a ready source of funds when "homeownership" happens. :P

I've owned many more years than I've rented, but strongly prefer renting. It costs more in the long term, but it's worth it! :sharebeer

OP: sorry you had all this happen. As I'm sure you're aware, when it comes to owning a home, it's just the nature of the beast. :annoyed
User avatar
tennisplyr
Posts: 3703
Joined: Tue Jan 28, 2014 12:53 pm
Location: Sarasota, FL

Re: Why you need a rainy day fund

Post by tennisplyr »

MrMadoff wrote: Tue Jun 28, 2022 12:29 pm
LittleMaggieMae wrote: Tue Jun 28, 2022 11:52 am
MrMadoff wrote: Tue Jun 28, 2022 11:33 am This is why renters don't need as big of a rainy day fund.
And I might add - may have more 'disposable' income because they do not need to PLAN to eventually replace appliances, etc... which they save up for a little at a time out of their monthly income...
Yep. Of course, I suppose that most homeowners can easily establish a HELOC, so that there is a ready source of funds when "homeownership" happens. :P

I've owned many more years than I've rented, but strongly prefer renting. It costs more in the long term, but it's worth it! :sharebeer

OP: sorry you had all this happen. As I'm sure you're aware, when it comes to owning a home, it's just the nature of the beast. :annoyed
I need to get a HELOC, fully own our home. Had them in the past.
“Those who move forward with a happy spirit will find that things always work out.” -Retired 13 years 😀
homebuyer6426
Posts: 1833
Joined: Tue Feb 07, 2017 8:08 am

Re: Why you need a rainy day fund

Post by homebuyer6426 »

You can sometimes arrange payment plans at zero interest which would mitigate this need, if you were in the accumulating phase. I did that the last couple times I needed a big cash flow. And don't forget credit cards which give you some buffer even when you pay them off every month.
43% Total Stock Market | 53% Consumer Staples | 4% Short Term Reserves
User avatar
Lee_WSP
Posts: 10404
Joined: Fri Apr 19, 2019 5:15 pm
Location: Arizona

Re: Why you need a rainy day fund

Post by Lee_WSP »

It’s been medical expenses, vet bills, and now an hvac for me.
Apathizer
Posts: 2507
Joined: Sun Sep 26, 2021 2:56 pm

Re: Why you need a rainy day fund

Post by Apathizer »

Good points. My RDF is pretty small right now, but I'm in the process of selling my house. Afterwards I'll return to renting will have significantly more liquid investments. :D
ROTH: 50% AVGE, 10% DFAX, 40% BNDW. Taxable: 50% BNDW, 40% AVGE, 10% DFAX.
Topic Author
gavinsiu
Posts: 4544
Joined: Sun Nov 14, 2021 11:42 am

Re: Why you need a rainy day fund

Post by gavinsiu »

Yes, renters probably need to carry less rainy day funds since they do not deal with this. However, you have to be careful about your landlords. Some landlords are rather unresponsive with fixing stuff. However, I also know people who always rent even though they are well off because they don't want to deal with maintenance. In addition, in some area, you have a HOA fee which can be as high as rent.

Speaking of HOA, this can be a source of unexpected fee. My late sister had to have her roof replaced, but the HOA apparently forgot to include code improvement so when the roof had to be replaced, they had to do a special sccessment of $5K. However, dispute errupted during the roof replacement. As a result, several lawsuits were filed between the HOA and several contractors. The HOA lost and ended up with a total special accessment of another $15K. The board to no one's surprise was voted out completely.
User avatar
celia
Posts: 16774
Joined: Sun Mar 09, 2008 6:32 am
Location: SoCal

Re: Why you need a rainy day fund

Post by celia »

gavinsiu wrote: Tue Jun 28, 2022 11:06 am So in the span of a year, I had to:
OP, How old is your house? I used to hear that at about 20 years out, lots of things in your house start to wear out.
UpperNwGuy
Posts: 9479
Joined: Sun Oct 08, 2017 7:16 pm

Re: Why you need a rainy day fund

Post by UpperNwGuy »

gavinsiu wrote: Tue Jun 28, 2022 11:06 am 1. Redo the patio since the stairs collapsed and it became a safety issue.
2. Replaced AC central air unit, which suddenly gave out.
3. Replaced the dish washer that suddenly died.
4. Replaced the batteries on the sump pro (batteries are not cheap at $1k).
5. Replace my computer that suddenly died.
6. Fixed a leak that was dumping toilet water into my office.
7. Fixed a leak coming from the outside into the house, which turned out to be on the roof.
My landlord takes care of items 1, 2, 3, 4, 6, and 7. I have funds set aside for periodic replacement of my electronics, so that would take care of item 5.

I have funds set aside not only for electronics replacement but also for auto replacement/repair and for vacations. I consider these to all be expected expenses, so I'm able to put aside the money before it is needed.
Topic Author
gavinsiu
Posts: 4544
Joined: Sun Nov 14, 2021 11:42 am

Re: Why you need a rainy day fund

Post by gavinsiu »

celia wrote: Tue Jun 28, 2022 2:04 pm OP, How old is your house? I used to hear that at about 20 years out, lots of things in your house start to wear out.
It's 25 years old. so I should not be surprise that the AC unit needed to be replace. The roof related leak appears to be somethings were missed when the roof was replaced and the roof was replaced. However the stairs and patio were more recent. The contractor replacing the stair and patio explained that previous contractors cut a lot of corners. There were no gravel underneath the pavers, just sand. One problem with buying a house is that you may not know what sort of shortcut the previous owner or the builder had. I will probably need to replace the retention wall in a few years because frankly, it doesn't look like it was constructed properly either. The sprinkler system is also poorly designed.

One issue is that my appliances keep dying. I am on my 2nd washer and 3nd dishwasher in 10 years.
Caliscotsman
Posts: 410
Joined: Tue Mar 22, 2022 7:18 pm

Re: Why you need a rainy day fund

Post by Caliscotsman »

I don't have a 'rainy day' fund per se just access to lots of dosh.
One of the benefits of being older is being able to access retirement accounts and otherwise they are still growing.
bmelikia
Posts: 842
Joined: Mon Jun 15, 2009 9:23 pm

Re: Why you need a rainy day fund

Post by bmelikia »

LittleMaggieMae wrote: Tue Jun 28, 2022 11:52 am
MrMadoff wrote: Tue Jun 28, 2022 11:33 am This is why renters don't need as big of a rainy day fund.
And I might add - may have more 'disposable' income because they do not need to PLAN to eventually replace appliances, etc... which they save up for a little at a time out of their monthly income...
Wouldn't your landlord be making sure to charge you rent based on these anticipated replacement costs?
"I would rather die with money, than live without it...." - Bogleheads member Ron | | A time to EVALUATE your jitters https://www.bogleheads.org/forum/viewtopic.php?p=1139732#p1139732
Californiastate
Posts: 1516
Joined: Thu Feb 04, 2021 10:52 am

Re: Why you need a rainy day fund

Post by Californiastate »

There aren't any free lunches. Renters are covering the costs over time also. They're just paying for it in installments.
friar1610
Posts: 2331
Joined: Sat Nov 29, 2008 8:52 pm
Location: MA South Shore

Re: Why you need a rainy day fund

Post by friar1610 »

Boy - ain’t the initial post the truth? Just found out I have a big-time problem with the house that’s going to need a 5 figure solution. Thankfully we’ve got the bucks to cover it in easily accessible cash.
Friar1610 | 50-ish/50-ish - a satisficer, not a maximizer
UpperNwGuy
Posts: 9479
Joined: Sun Oct 08, 2017 7:16 pm

Re: Why you need a rainy day fund

Post by UpperNwGuy »

Californiastate wrote: Tue Jun 28, 2022 3:17 pm There aren't any free lunches. Renters are covering the costs over time also. They're just paying for it in installments.
Whoaaaa.... But we're probably paying a lesser amount in installments. I live in a building with 300 apartments. The failure rate of appliances, electrical, plumbing, and HVAC is averaged out across those 300 units, so the rent covers a statistical average. When you own a house, your failure rate on those items can be much higher than the average... or it can be less. I have owned a home, and I have rented in an apartment, and I believe the rental apartment saves me a lot of money on fixes.
Californiastate
Posts: 1516
Joined: Thu Feb 04, 2021 10:52 am

Re: Why you need a rainy day fund

Post by Californiastate »

UpperNwGuy wrote: Tue Jun 28, 2022 3:27 pm
Californiastate wrote: Tue Jun 28, 2022 3:17 pm There aren't any free lunches. Renters are covering the costs over time also. They're just paying for it in installments.
Whoaaaa.... But we're probably paying a lesser amount in installments. I live in a building with 300 apartments. The failure rate of appliances, electrical, plumbing, and HVAC is averaged out across those 300 units, so the rent covers a statistical average. When you own a house, your failure rate on those items can be much higher than the average... or it can be less. I have owned a home, and I have rented in an apartment, and I believe the rental apartment saves me a lot of money on fixes.
Your cost would be lower if you owned that apartment unit also. Somebody is paying for the maintenance and repairs. The landlord isn't eating the costs because it feels good.
dboeger1
Posts: 1411
Joined: Fri Jan 13, 2017 6:32 pm

Re: Why you need a rainy day fund

Post by dboeger1 »

Californiastate wrote: Tue Jun 28, 2022 3:34 pm
UpperNwGuy wrote: Tue Jun 28, 2022 3:27 pm
Californiastate wrote: Tue Jun 28, 2022 3:17 pm There aren't any free lunches. Renters are covering the costs over time also. They're just paying for it in installments.
Whoaaaa.... But we're probably paying a lesser amount in installments. I live in a building with 300 apartments. The failure rate of appliances, electrical, plumbing, and HVAC is averaged out across those 300 units, so the rent covers a statistical average. When you own a house, your failure rate on those items can be much higher than the average... or it can be less. I have owned a home, and I have rented in an apartment, and I believe the rental apartment saves me a lot of money on fixes.
Your cost would be lower if you owned that apartment unit also. Somebody is paying for the maintenance and repairs. The landlord isn't eating the costs because it feels good.
Also, the "statistical average" argument is a bit of wishful thinking. They're not running a charity. They build the statistical average into the rent, but they can also charge for excessive damages, often by withholding security deposits, or simply by eviction. I imagine the likelihood of one-upping most landlords by getting new appliances and such well above rent costs is exceedingly low. You either pay more, or your pay more more, or the owner takes a loss. That's why I used to just accept with things like worn carpets and dying HVAC while renting even though my wife would beg me to call maintenance, because I always wanted to stay on the landlord's good side to avoid getting charged for things and having to fight for my security deposit back.

Regardless of whether renting or buying is ultimately optimal, one thing that's nice about owning your home is that you know exactly how much cost is attributable to your specific usage, as opposed to trying to figure out things like statistical averages and amortization and opportunity cost and so on. A home (including general upkeep but also the occupant's usage-based expenses) costs what it costs when it costs. After the initial purchase, there's really no need to wonder if I'm getting a good deal anymore (unless some weird market distortion suddenly made renting extremely cheap while home values stayed up, and that's assuming I would even be willing to go back to the renter lifestyle now that a child is in the picture).
bi0hazard
Posts: 251
Joined: Mon Mar 14, 2016 10:36 pm

Re: Why you need a rainy day fund

Post by bi0hazard »

Vet bills, bigger vet bills, and even bigger vet bills (12k+ AND animals didn't make it).

Right there with you OP.

PS: I'm patiently waiting for one of my AC units to fail this summer, since that's what they do every year.
Disclaimer: I'm not very smart, and this is just my hypothesis.
UpperNwGuy
Posts: 9479
Joined: Sun Oct 08, 2017 7:16 pm

Re: Why you need a rainy day fund

Post by UpperNwGuy »

Californiastate wrote: Tue Jun 28, 2022 3:34 pm
UpperNwGuy wrote: Tue Jun 28, 2022 3:27 pm
Californiastate wrote: Tue Jun 28, 2022 3:17 pm There aren't any free lunches. Renters are covering the costs over time also. They're just paying for it in installments.
Whoaaaa.... But we're probably paying a lesser amount in installments. I live in a building with 300 apartments. The failure rate of appliances, electrical, plumbing, and HVAC is averaged out across those 300 units, so the rent covers a statistical average. When you own a house, your failure rate on those items can be much higher than the average... or it can be less. I have owned a home, and I have rented in an apartment, and I believe the rental apartment saves me a lot of money on fixes.
Your cost would be lower if you owned that apartment unit also. Somebody is paying for the maintenance and repairs. The landlord isn't eating the costs because it feels good.
You are entitled to your opinion.
UpperNwGuy
Posts: 9479
Joined: Sun Oct 08, 2017 7:16 pm

Re: Why you need a rainy day fund

Post by UpperNwGuy »

dboeger1 wrote: Tue Jun 28, 2022 3:45 pm
Californiastate wrote: Tue Jun 28, 2022 3:34 pm
UpperNwGuy wrote: Tue Jun 28, 2022 3:27 pm
Californiastate wrote: Tue Jun 28, 2022 3:17 pm There aren't any free lunches. Renters are covering the costs over time also. They're just paying for it in installments.
Whoaaaa.... But we're probably paying a lesser amount in installments. I live in a building with 300 apartments. The failure rate of appliances, electrical, plumbing, and HVAC is averaged out across those 300 units, so the rent covers a statistical average. When you own a house, your failure rate on those items can be much higher than the average... or it can be less. I have owned a home, and I have rented in an apartment, and I believe the rental apartment saves me a lot of money on fixes.
Your cost would be lower if you owned that apartment unit also. Somebody is paying for the maintenance and repairs. The landlord isn't eating the costs because it feels good.
Also, the "statistical average" argument is a bit of wishful thinking. They're not running a charity. They build the statistical average into the rent, but they can also charge for excessive damages, often by withholding security deposits, or simply by eviction. I imagine the likelihood of one-upping most landlords by getting new appliances and such well above rent costs is exceedingly low. You either pay more, or your pay more more, or the owner takes a loss. That's why I used to just accept with things like worn carpets and dying HVAC while renting even though my wife would beg me to call maintenance, because I always wanted to stay on the landlord's good side to avoid getting charged for things and having to fight for my security deposit back.

Regardless of whether renting or buying is ultimately optimal, one thing that's nice about owning your home is that you know exactly how much cost is attributable to your specific usage, as opposed to trying to figure out things like statistical averages and amortization and opportunity cost and so on. A home (including general upkeep but also the occupant's usage-based expenses) costs what it costs when it costs. After the initial purchase, there's really no need to wonder if I'm getting a good deal anymore (unless some weird market distortion suddenly made renting extremely cheap while home values stayed up, and that's assuming I would even be willing to go back to the renter lifestyle now that a child is in the picture).
You sound like a homeowner who knows little about my rental situation.
User avatar
8foot7
Posts: 4427
Joined: Mon Jan 05, 2015 6:29 pm

Re: Why you need a rainy day fund

Post by 8foot7 »

Man, I need to rent in order to get all of these free lunches!
sandan
Posts: 629
Joined: Wed Apr 03, 2013 12:48 pm

Re: Why you need a rainy day fund

Post by sandan »

8foot7 wrote: Tue Jun 28, 2022 5:25 pm Man, I need to rent in order to get all of these free lunches!
There are some hassles related to renting, but economies of scale in terms of security and maintenance are nice too. Probably a non issue for people living in areas without transient populations and where service/maintenance workers are easy to find.
jharkin
Posts: 3469
Joined: Mon Mar 28, 2016 7:14 am
Location: Boston suburbs

Re: Why you need a rainy day fund

Post by jharkin »

gavinsiu wrote: Tue Jun 28, 2022 11:06 am 1. Redo the patio since the stairs collapsed and it became a safety issue.
2. Replaced AC central air unit, which suddenly gave out.
3. Replaced the dish washer that suddenly died.
4. Replaced the batteries on the sump pro (batteries are not cheap at $1k).
5. Replace my computer that suddenly died.
6. Fixed a leak that was dumping toilet water into my office.
7. Fixed a leak coming from the outside into the house, which turned out to be on the roof.
No argument that a rainy day fund is necessary, but I am curious:

#1 - could you have saved some $ by rebuilding just the stairs and not the entire patio

#2,3 - Was it not something repairable?

#4 - What kind of battery is it using that costs $1000? In my last house I had a Basement Watchdog big dog backup. It used a 60lb truck sized group 31 deep cycle battery that costs about $150. I cant imagine how big a $1000 battery is!
heywhoathere
Posts: 186
Joined: Mon Mar 14, 2022 7:18 pm

Re: Why you need a rainy day fund

Post by heywhoathere »

gavinsiu wrote: Tue Jun 28, 2022 2:19 pm One issue is that my appliances keep dying. I am on my 2nd washer and 3nd dishwasher in 10 years.
Not really the point of your topic - but maybe take a look at your house's water pressure (it's easy to measure). If it's too high it could be damaging your appliances.
marcopolo
Posts: 8446
Joined: Sat Dec 03, 2016 9:22 am

Re: Why you need a rainy day fund

Post by marcopolo »

LittleMaggieMae wrote: Tue Jun 28, 2022 11:52 am
MrMadoff wrote: Tue Jun 28, 2022 11:33 am This is why renters don't need as big of a rainy day fund.
And I might add - may have more 'disposable' income because they do not need to PLAN to eventually replace appliances, etc... which they save up for a little at a time out of their monthly income...
You don't think this is factored into the rent?
You think the landlord is taking care of those things on their own dime?
Once in a while you get shown the light, in the strangest of places if you look at it right.
bmelikia
Posts: 842
Joined: Mon Jun 15, 2009 9:23 pm

Re: Why you need a rainy day fund

Post by bmelikia »

UpperNwGuy wrote: Tue Jun 28, 2022 5:08 pm
dboeger1 wrote: Tue Jun 28, 2022 3:45 pm
Californiastate wrote: Tue Jun 28, 2022 3:34 pm
UpperNwGuy wrote: Tue Jun 28, 2022 3:27 pm
Californiastate wrote: Tue Jun 28, 2022 3:17 pm There aren't any free lunches. Renters are covering the costs over time also. They're just paying for it in installments.
Whoaaaa.... But we're probably paying a lesser amount in installments. I live in a building with 300 apartments. The failure rate of appliances, electrical, plumbing, and HVAC is averaged out across those 300 units, so the rent covers a statistical average. When you own a house, your failure rate on those items can be much higher than the average... or it can be less. I have owned a home, and I have rented in an apartment, and I believe the rental apartment saves me a lot of money on fixes.
Your cost would be lower if you owned that apartment unit also. Somebody is paying for the maintenance and repairs. The landlord isn't eating the costs because it feels good.
Also, the "statistical average" argument is a bit of wishful thinking. They're not running a charity. They build the statistical average into the rent, but they can also charge for excessive damages, often by withholding security deposits, or simply by eviction. I imagine the likelihood of one-upping most landlords by getting new appliances and such well above rent costs is exceedingly low. You either pay more, or your pay more more, or the owner takes a loss. That's why I used to just accept with things like worn carpets and dying HVAC while renting even though my wife would beg me to call maintenance, because I always wanted to stay on the landlord's good side to avoid getting charged for things and having to fight for my security deposit back.

Regardless of whether renting or buying is ultimately optimal, one thing that's nice about owning your home is that you know exactly how much cost is attributable to your specific usage, as opposed to trying to figure out things like statistical averages and amortization and opportunity cost and so on. A home (including general upkeep but also the occupant's usage-based expenses) costs what it costs when it costs. After the initial purchase, there's really no need to wonder if I'm getting a good deal anymore (unless some weird market distortion suddenly made renting extremely cheap while home values stayed up, and that's assuming I would even be willing to go back to the renter lifestyle now that a child is in the picture).
You sound like a homeowner who knows little about my rental situation.
On the other hand. . .you sound like a renter who knows little about the home ownership situation of others. . .
"I would rather die with money, than live without it...." - Bogleheads member Ron | | A time to EVALUATE your jitters https://www.bogleheads.org/forum/viewtopic.php?p=1139732#p1139732
tibbitts
Posts: 23732
Joined: Tue Feb 27, 2007 5:50 pm

Re: Why you need a rainy day fund

Post by tibbitts »

marcopolo wrote: Wed Jun 29, 2022 12:50 pm
LittleMaggieMae wrote: Tue Jun 28, 2022 11:52 am
MrMadoff wrote: Tue Jun 28, 2022 11:33 am This is why renters don't need as big of a rainy day fund.
And I might add - may have more 'disposable' income because they do not need to PLAN to eventually replace appliances, etc... which they save up for a little at a time out of their monthly income...
You don't think this is factored into the rent?
You think the landlord is taking care of those things on their own dime?
My limited experience is that for various reasons landlords pay about half the costs for repairs/renovations/etc. as a typical consumer like me ends up paying. And that's a large part of why they're successful at being landlords and I wouldn't be.
User avatar
FreddieFIRE
Posts: 826
Joined: Tue Aug 03, 2021 11:49 am

Re: Why you need a rainy day fund

Post by FreddieFIRE »

tibbitts wrote: Wed Jun 29, 2022 1:39 pm My limited experience is that for various reasons landlords pay about half the costs for repairs/renovations/etc. as a typical consumer like me ends up paying. And that's a large part of why they're successful at being landlords and I wouldn't be.
Bingo!!! We have a winner. 8-) They also probably spend about one tenth the time I would "managing" the repairs/renovations/etc. Life it too short to own a home. :P
A house and a job. Once the American dream. Two things I'll never again have. Life is simple (and good).
deikel
Posts: 1616
Joined: Sat Jan 25, 2014 6:13 pm

Re: Why you need a rainy day fund

Post by deikel »

And those are only the 'typical' small emergencies....start thinking about health care scares and your emergency fund needs stocking stuffing

I am on my 4th dishwasher in 10 years, it moved from emergency to standard preventive maintenance to replace every two - three years and be budgeted for....owning a house is an expensive hobby
Everything you read in this post is my personal opinion. If you disagree with this disclaimer, please un-read the text immediately and destroy any copy or remembrance of it.
Caliscotsman
Posts: 410
Joined: Tue Mar 22, 2022 7:18 pm

Re: Why you need a rainy day fund

Post by Caliscotsman »

You don't need a rainy day fund.
You only need enough to pay for things.

(If I had a separate fund I'd spend it on much needed expensive hifi unbeknownst to my wife.)
stoptothink
Posts: 15368
Joined: Fri Dec 31, 2010 8:53 am

Re: Why you need a rainy day fund

Post by stoptothink »

What Boglehead doesn't have years of medical receipts and a stuffed HSA that can be redeemed at any time, multiple credit cards with 0% interest for the next XX months, etc? Rarely do we have more than $5k in cash at any time (nor as a 41yr old homeowner with two kids, do I recall a single event in my lifetime when I needed $5k or more in cash really fast), but we do have multiple 6-figures in assets that could be easily tapped if a "rainy day" did happen to occur. This is a never ending debate; we choose to keep our cash stash small and our investment accounts stuffed.
index245
Posts: 239
Joined: Wed Feb 12, 2020 8:28 pm

Re: Why you need a rainy day fund

Post by index245 »

MrMadoff wrote: Tue Jun 28, 2022 11:33 am This is why renters don't need as big of a rainy day fund.
Great point.

For us, I've noticed that lumpy expenses come primarily from four places

1. House
2. Dental
3. Pets
4. Cars
index245
Posts: 239
Joined: Wed Feb 12, 2020 8:28 pm

Re: Why you need a rainy day fund

Post by index245 »

livesoft wrote: Tue Jun 28, 2022 11:49 am Last month we replaced one of our HVAC systems, but just sold shares of an equity ETF to pay for it. So one just needs access to money. I could call 1000 shares of VEA my "rainy day fund" I suppose.
It is great when you sell VEA for such expenses...you'll likely also get a tax break!

- Says someone who has also owned a lot of VEA over the years
User avatar
AerialWombat
Posts: 3108
Joined: Tue May 29, 2018 1:07 pm
Location: Cashtown, Cashylvania

Re: Why you need a rainy day fund

Post by AerialWombat »

deleted
Last edited by AerialWombat on Thu Aug 25, 2022 6:58 pm, edited 1 time in total.
This post is a work of fiction. Any similarity to real financial advice is purely coincidental.
barberakb
Posts: 629
Joined: Fri Apr 21, 2017 11:14 pm

Re: Why you need a rainy day fund

Post by barberakb »

MrMadoff wrote: Tue Jun 28, 2022 11:33 am This is why renters don't need as big of a rainy day fund.
This is also why renters need to look at things like this before they become homeowners or complain stupidly why is rent higher than the mortgage...

Just last week my AC went out and I had a leak inside my house on the same day. What are the odds?
Broken Man 1999
Posts: 8626
Joined: Wed Apr 08, 2015 11:31 am
Location: West coast of Florida, near Champa Bay !

Re: Why you need a rainy day fund

Post by Broken Man 1999 »

Caliscotsman wrote: Wed Jun 29, 2022 3:52 pm You don't need a rainy day fund.
You only need enough to pay for things.

(If I had a separate fund I'd spend it on much needed expensive hifi unbeknownst to my wife.)
That would be what is commonly called a slush fund.

Or, perhaps what DW and I call a "ain't none of your business" fund, we both have one and use at our discretion. We are adults, so it works for us.

Broken Man 1999
“If I cannot drink Bourbon and smoke cigars in Heaven then I shall not go." - Mark Twain
UpperNwGuy
Posts: 9479
Joined: Sun Oct 08, 2017 7:16 pm

Re: Why you need a rainy day fund

Post by UpperNwGuy »

bmelikia wrote: Wed Jun 29, 2022 1:04 pm
UpperNwGuy wrote: Tue Jun 28, 2022 5:08 pm
dboeger1 wrote: Tue Jun 28, 2022 3:45 pm
Californiastate wrote: Tue Jun 28, 2022 3:34 pm
UpperNwGuy wrote: Tue Jun 28, 2022 3:27 pm

Whoaaaa.... But we're probably paying a lesser amount in installments. I live in a building with 300 apartments. The failure rate of appliances, electrical, plumbing, and HVAC is averaged out across those 300 units, so the rent covers a statistical average. When you own a house, your failure rate on those items can be much higher than the average... or it can be less. I have owned a home, and I have rented in an apartment, and I believe the rental apartment saves me a lot of money on fixes.
Your cost would be lower if you owned that apartment unit also. Somebody is paying for the maintenance and repairs. The landlord isn't eating the costs because it feels good.
Also, the "statistical average" argument is a bit of wishful thinking. They're not running a charity. They build the statistical average into the rent, but they can also charge for excessive damages, often by withholding security deposits, or simply by eviction. I imagine the likelihood of one-upping most landlords by getting new appliances and such well above rent costs is exceedingly low. You either pay more, or your pay more more, or the owner takes a loss. That's why I used to just accept with things like worn carpets and dying HVAC while renting even though my wife would beg me to call maintenance, because I always wanted to stay on the landlord's good side to avoid getting charged for things and having to fight for my security deposit back.

Regardless of whether renting or buying is ultimately optimal, one thing that's nice about owning your home is that you know exactly how much cost is attributable to your specific usage, as opposed to trying to figure out things like statistical averages and amortization and opportunity cost and so on. A home (including general upkeep but also the occupant's usage-based expenses) costs what it costs when it costs. After the initial purchase, there's really no need to wonder if I'm getting a good deal anymore (unless some weird market distortion suddenly made renting extremely cheap while home values stayed up, and that's assuming I would even be willing to go back to the renter lifestyle now that a child is in the picture).
You sound like a homeowner who knows little about my rental situation.
On the other hand. . .you sound like a renter who knows little about the home ownership situation of others. . .
I was a home owner for 20 years.
bmelikia
Posts: 842
Joined: Mon Jun 15, 2009 9:23 pm

Re: Why you need a rainy day fund

Post by bmelikia »

UpperNwGuy wrote: Wed Jun 29, 2022 6:25 pm
bmelikia wrote: Wed Jun 29, 2022 1:04 pm
UpperNwGuy wrote: Tue Jun 28, 2022 5:08 pm
dboeger1 wrote: Tue Jun 28, 2022 3:45 pm
Californiastate wrote: Tue Jun 28, 2022 3:34 pm

Your cost would be lower if you owned that apartment unit also. Somebody is paying for the maintenance and repairs. The landlord isn't eating the costs because it feels good.
Also, the "statistical average" argument is a bit of wishful thinking. They're not running a charity. They build the statistical average into the rent, but they can also charge for excessive damages, often by withholding security deposits, or simply by eviction. I imagine the likelihood of one-upping most landlords by getting new appliances and such well above rent costs is exceedingly low. You either pay more, or your pay more more, or the owner takes a loss. That's why I used to just accept with things like worn carpets and dying HVAC while renting even though my wife would beg me to call maintenance, because I always wanted to stay on the landlord's good side to avoid getting charged for things and having to fight for my security deposit back.

Regardless of whether renting or buying is ultimately optimal, one thing that's nice about owning your home is that you know exactly how much cost is attributable to your specific usage, as opposed to trying to figure out things like statistical averages and amortization and opportunity cost and so on. A home (including general upkeep but also the occupant's usage-based expenses) costs what it costs when it costs. After the initial purchase, there's really no need to wonder if I'm getting a good deal anymore (unless some weird market distortion suddenly made renting extremely cheap while home values stayed up, and that's assuming I would even be willing to go back to the renter lifestyle now that a child is in the picture).
You sound like a homeowner who knows little about my rental situation.
On the other hand. . .you sound like a renter who knows little about the home ownership situation of others. . .
I was a home owner for 20 years.
Like I said - the home ownership situation "of others". . .maybe you just had a bad experience

You're not the only person to have owned a home and/or rented. . .I was once a renter, now I'm a homeowner. . .I'm sure a fair amount of people on this board have had experiences as both a renter and homeowner
"I would rather die with money, than live without it...." - Bogleheads member Ron | | A time to EVALUATE your jitters https://www.bogleheads.org/forum/viewtopic.php?p=1139732#p1139732
User avatar
slow n steady
Posts: 388
Joined: Mon Jan 24, 2011 1:54 pm

Re: Why you need a rainy day fund

Post by slow n steady »

MrMadoff wrote: Tue Jun 28, 2022 11:33 am This is why renters don't need as big of a rainy day fund.
I thought you had locked in free rent for the rest of your life. An amazing deal.

Although I heard the view and the landlord aren't the best...
saver7007
Posts: 83
Joined: Thu Jan 06, 2022 1:30 pm

Re: Why you need a rainy day fund

Post by saver7007 »

bmelikia wrote: Tue Jun 28, 2022 3:15 pm
Wouldn't your landlord be making sure to charge you rent based on these anticipated replacement costs?
Wouldn't rents be set by the balance of supply and demand for rental units in an area just like anything else? I don't think landlords have any guarantee they can always charge enough rent to cover maintenance costs.
bmelikia
Posts: 842
Joined: Mon Jun 15, 2009 9:23 pm

Re: Why you need a rainy day fund

Post by bmelikia »

saver7007 wrote: Thu Jun 30, 2022 4:15 pm
bmelikia wrote: Tue Jun 28, 2022 3:15 pm
Wouldn't your landlord be making sure to charge you rent based on these anticipated replacement costs?
Wouldn't rents be set by the balance of supply and demand for rental units in an area just like anything else? I don't think landlords have any guarantee they can always charge enough rent to cover maintenance costs.
Most renters are renters because it is cost prohibitive for them to be owners, not because they could easily be homeowners but simply choose not to be. . .by default, the advantage is set in favor of the landlord, not in favor of the renter. . .

. . .at the very least, a landlord would hope to breakeven on their property - part of that would require being able to cover maintenance costs, which would therefore have to be costs covered by the renter

. . .raising the bar for the landlord a little more, the goal of the landlord is to increase rents overtime to improve cash flow as well as hopefully participate in the value of the property appreciating
"I would rather die with money, than live without it...." - Bogleheads member Ron | | A time to EVALUATE your jitters https://www.bogleheads.org/forum/viewtopic.php?p=1139732#p1139732
User avatar
FreddieFIRE
Posts: 826
Joined: Tue Aug 03, 2021 11:49 am

Re: Why you need a rainy day fund

Post by FreddieFIRE »

bmelikia wrote: Thu Jun 30, 2022 5:39 pm Most renters are renters because it is cost prohibitive for them to be owners, not because they could easily be homeowners but simply choose not to be. . .
I call.... baloney. Can you back that up or did you just make it up?
A house and a job. Once the American dream. Two things I'll never again have. Life is simple (and good).
bmelikia
Posts: 842
Joined: Mon Jun 15, 2009 9:23 pm

Re: Why you need a rainy day fund

Post by bmelikia »

FreddieFIRE wrote: Thu Jun 30, 2022 5:41 pm
bmelikia wrote: Thu Jun 30, 2022 5:39 pm Most renters are renters because it is cost prohibitive for them to be owners, not because they could easily be homeowners but simply choose not to be. . .
I call.... baloney. Can you back that up or did you just make it up?
I have nothing to support that assumption of mine - do you have something that supports your comment of "baloney"?
"I would rather die with money, than live without it...." - Bogleheads member Ron | | A time to EVALUATE your jitters https://www.bogleheads.org/forum/viewtopic.php?p=1139732#p1139732
Post Reply