Emergency Fund Substitutes That Take the Place of Cash

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At the end of the day, nothing compares to cash in an emergency fund when something unexpected occurs. Cash in an emergency fund can ease the ramifications of financial burden when something unexpected happens, which is why it’s so frequently referred to as an emergency fund. Many financial experts recommend that every family start with a fund that contains at least $1000, and add to it from there. As you add to it, your goal should be to fill that fund with at least six months expenses in case anything should happen to your job or your family. Unfortunately, most of us don’t do that. Most of us have cash in savings, but we don’t have an emergency fund with that much money in it, designed to ease the burden when it is – God forbid – needed most.

That’s why so many Americans turn to what could be considered substitutes in a way. These are programs designed to ease the financial burden even further, and they are especially important to anyone that does not have an adequate emergency fund. There are some very well-known substitutes out there, and many of them promise to help you out when times are tough. This is often true, but many of these funds are not designed to bail you out completely, which is why they are worth looking into before you commit.

Roadside Assistance

This could mean anything to you from your vehicle’s emergency assistance program to AAA to your car insurance policy. Each one is different in its own way. AAA usually runs anywhere from $50+ per membership per year and includes things like roadside assistance, towing and flat tire changes. Your vehicle’s emergency assistance program could entail much more than that. I pay $30 per month for OnStar in my Enclave, and while many do not believe that this is a price that is worth paying, I think it is.

In addition, if you find yourself under arrest if you’re the one responsible for a car crash, it’s important to know who to contact first. That first call may determine how long you spend behind bars. Don’t spend more time locked up than you have to. When you only have one phone call and need to post bail, call a bail bonds agency for help.

Furthermore, to give you an idea as to why I feel that OnStar is worth it, I have used it more times than I can count to do things that usually cost a lot of money. I have had them jumpstart my vehicle after my battery died thanks to lights being left on by my kids on numerous occasions. When the Enclave senses my keys in the car without a human in it but the doors are shut, the car will automatically lock itself (I could be wrong about why it locks itself, but this has happened to me twice and the car does not lock itself when the doors are shut and the keys are not in it so it’s the best that I can come up with).

This has happened twice, and I’ve been able to call OnStar and have them unlock my car for me in a matter of 60 seconds or less from the time I call. If this service did not exist, I’d have to call a locksmith, wait hours and pay a small fortune. Additionally, I get a monthly diagnostic report; I get so much from it.

This is a service that is definitely worth it, no matter which one you choose to go with.

Extended Warranties

These are a gamble in every sense, but they are not necessarily a bad thing. Here is how to make them worth it for you. First and foremost, consider the warranty that comes with the product as many items come with one already, and you don’t necessarily need another one. Then you have to consider the longevity of an extended warranty. Sure, you get a 3 year 30,000 mile warranty with your car when you buy it, but do you need to spend the extra $1000 on the extended warranty, which is 10 years and 100,000 miles? If you drive your cars forever, perhaps it’s a good deal.

If you are like me and you drive your cars for a year or two before trading them in, this is not a good option for you. Finally, if you use a major credit card to purchase your item, that card might offer a warranty on the product already – this is usually typical in electronics, toys and things of that nature.

Supplemental Insurance

This is something that you might want to consider as an addition to your typical health insurance. This insurance, which you might recognize thanks to the Aflac Duck, makes life so much simpler in many instances. For example, you can purchase a policy that will pay you cash to cover expenses if you are in the hospital for something unexpected. For example, if you are hospitalized for an accident and unable to work, you could get this kind of insurance to cover your expenses with cash while you’re in there, so that you don’t have to worry on top of everything else.

Travel Insurance

This is one that goes both ways. Sometimes it is worth having and other times it is not. For example, if you are going to book a trip domestically, you can probably cancel much of your purchase up until the last minute without any worry. Many hotels allow patrons to cancel up to just a few days in advance at no charge. Most rental car companies don’t even charge you up front. Airlines offer a less expensive version of their own travel insurance, usually just a few dollars per passenger.  That one might be worth it, but an expensive insurance policy on a domestic trip that can mostly be canceled until the last minute without charge is not worth it.

However, an overseas trip is usually always worth it. It’s more expensive, and these insurance policies also offer you the opportunity to have insurance on things that you might not be covered for when you are overseas. For example, what might happen if you are in an accident in another country and require a helicopter to take you to a hospital? You will need insurance coverage for that, and your American policy might not cover that.

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