Tuesday, December 16, 2008

Murphy's Visit Part 2 - Does A Punctured Tire Count As An Emergency?

I have great respect for Dave Ramsey for popularizing the snowball debt reduction plan. But I do take exception with his Total Money Makeover recommendation to only keep $1,000 in one's EF while paying off debt. He indicates that $1,000 is often enough to cover an emergency. What his advice doesn't take into consideration is that emergencies often arise at once, not one at a time.

Case in point:

Before I left town on my business trip last Thursday, I had to take my cat to the vet, which cost me $275. The vet recommended additional work that would've cost an additional $400+,which I have yet to authorize. (I am praying that I won't have to in the near future.)

After I brought my cat home, I took my car to the dealership for its 35,000 mile service. (Truth be told, my car already had 38k miles on it.) While I was waiting, the service tech alerted me to a nail penetration through the front left tire.

I asked whether the tire can be plugged but was told it was illegal to patch a worn tire. (I suspect the issue is more about avoiding civil liability than following the law, but I understand why he wouldn't do it.) In fact, he recommended that I replace 3 of my tires since all but 1 of my tires were worn.

Just a little background: The reason why 1 of my tires wasn't worn was because I suffered a flat in Las Vegas last year. I had to replace the tire immediately without opportunity to comparison shop, and was sold the most expensive tire in stock. (Bastards!) Now, the dealer was convincing me to replace 3 of the tires with the "performance tire" I got in Vegas.

(Rant: Why are my tires punctured every time I drive to Vegas? Are the tire shops in Baker sprinkling the freeways with nails in hopes to get business from stranded motorists??)

Anyhow, I discovered (after the fact) that I got snookered in Vegas, so I knew my car didn't need such a high-performance tire. I turned the dealer down.

Nevertheless, I was taken aback by this recommendation since I thought I wouldn't have to replace my tires for another year, or, another 12,000 miles. But ever since my friend suffered a blow out (and subsequent spin out) on the freeway several years back, I've always erred on the side of caution with respect to my tires. Although I didn't have money set aside for this "emergency", I decided I should replace 3 of my tires and researched which tire to buy... somewhat.

My car has P215/55R17 tires on 17-inch wheels, which cost anywhere between $114/tire to $193/tire (excluding environmental fees and installation costs). (Note: The dealer quoted me $240/tire for a tire that's being sold $193/tire elsewhere!) That was pretty much the extent of my research. I used the tire shop's customer review rating on its website and opted for a familiar, reputable brand - Michelins. The tires weren't the most expensive, but weren't one of the cheaper ones either ($161/tire).

The tire shop offered to buy back the rip-off tire I got in Vegas for $30. The shop also offered to give me an additional $30 off if I replaced all 4 tires. I opted to replace all 4 tires since it didn't make sense for me to continue to drive my car with 1 oddball performance tire. I also purchased "road hazard" insurance since I seem to have a knack for driving over nails. Total cost: $788 .

I currently have approximately $100 in my "car maintenance fund". (I would've had about $350 had I not had to replace my windshield in September.) I just spent $55 of the $100 for the 35k mile car service, which leaves me with a balance of $45.

I'm expecting to get approximately $780 from my employer as reimbursement and a bonus. Fellow PF blogger Paranoid Asteroid recommends that I spend the money on my tires. But I was hoping to use the money for the holidays! (Whine....)

Do most people consider this an "emergency" or is this a routine maintenance cost that I should have anticipated?

I still haven't decided how to pay for this Murphy expense. Stay tuned.


Money Beagle said...

My ING Direct account contains money that I sub-divide via spreadsheet into categories. I think you do this too if memory serves (it's what got me starting to read your blog). One of those categories is for 'Emergency' but another is specifically set aside for 'Auto Repair' to cover things bigger cost items (over $100) such as major repairs, tune ups, new tires, or brakes.

Ms. MoneyChat said...

I have a line item in my budget for car repairs. I did a post on nonmonthly expenses that outlines how I treat these type of things.

Miss M said...

I don't have a car repair savings so my miscellaneous fund would have to cover something like that. Trust me I have worse luck with tires, I went through 3 or 4 in a year due to various damage. Low profile tires are tough to repair, they always had to be replaced. In the future, join costco and get tires through them. My tires through Firestone are over $300 each, I got a complete set at costco for $550! Hands down best place to get tires.

Shtinkykat said...

M. Beagle: I do have a car maintenance fund that I've been contributing to $40 monthly. It's one of those things that I should've been contributing to when I first bought the car but I only started to do this early 2008. Hence, the balance is currently woefully inadequate. :-(

Ms. MoneyChat: I'll check out your post!

Miss M: Someone else recommended Costco as well since they inflate their tires with helium rather than oxygen. (I'm told that this slows down the leak if there is a puncture.) Bottomline: I hate car maintenance issues, especially for a car that's depreciating and I'm continuing to pay interest on!

Anonymous said...

I have a separate emergency fund and car maintenance fund. I would use which ever one had money in it! If they both had money I would use car maintenance.

Anonymous said...

I personally would consider tire replacemant maintenance. You have to replace tires, you have to replace mufflers, you need a major tune up. An emergency is when you have an irrepairable flat.

MoneyMateKate said...

Ditto anonymous...you know you have to replace every 30,000 or so miles, so that's fairly easy to anticipate. Not sure I agree about parts like mufflers, just because I don't think they have a demarcated lifespan like tires do.

By the way, whenever it's been time to replace all my tires but one of them is in good shape, that one becomes the spare. Might be worth holding onto that overpriced performance tire...

Shtinkykat said...

MOU: That sounds like a plan. Thanks for the input.

Anon and MMK: Sigh. This is just poor planning on my part. I'm not very knowledgeable about car maintenance and I just assumed I had another year on my tires. You know what they say when you assume. Nevermind. Anyhow, it's too late making my super-duper, rip-off, high performance tire my spare since I traded it in for $30. It's a thought for next time, though!

Anonymous said...

I always hear that you're supposed to put a penny in the treads, and if you don't make it to the top of Lincoln's head it's time to replace the tires.

If it's really going to bother you to not get to enjoy any of your bonus, why not specify an amount for you & then use the rest on your car? It's not quite as nice as having the whole $780 to yourself, but this way you get a little something for you without feeling guilty!

Trevor said...

I am a TRUE believer in having a credit card ready to go just in case. If you have ANY self control at all, it's a really good way to take care of unexpected expenses that take place all at once. Plus, you have a bunch of time to pay it off before interest hits you in the face, so I'm all about it.

I sort of agree with you... $1,000 just isn't enough for most of us in case of SEVERAL emergencies at once.

Shtinkykat said...

Paranoid Asteroid: That's EXACTLY what I'm planning to do. :-D

Trevor: No doubt that credit cards are useful in a pinch. I haven't eliminated credit use but I pay off any new charges in full. Not sure if I would call 30 days a "bunches of time" to pay off, especially if you charge something close to the end of the billing cycle. :-P