My financial guy is vocalizing the advantages of having an emergency account. Recently, I got to see the benefits for myself.

It's always useful to have some cash readily available for unforseen events. A few weeks ago, the spouse wrecked the car. I found out several years ago that having a low collision deductible on your auto insurance isn't a smart financial move. Your annual premiums are higher so if you don't have a collision every other year, you end up paying more in premiums over the long run.

Accordingly,Based on this premise I set the the deductible for collision on our auto-policy at a very high $1000. Since the accident was judged to be no fault (of course, its hard to believe that my wife couldn't see a 40 foot truck and sideswiped it), we're responsible for the full $1000 deductible. Holy Cow!

So I dropped off the car at a body shop and picked up a rental for my wife . Almost immediately after, I got into an accident myself, which I admit was with a doubt my fault. I've been driving for 17 years and this was the first vehicular accident I've been in. Unfortunately that's another $1000 for the deductible expenses.Double Ouch!

We also got an surprizing $500 bill from the doctor for tests that my wife's insurance refused to cover. Additionally, we had some more sundry expenses that weren't budgeted for.

In total, we were facing about $3050 worth of unforeseen expenses in the past 30 days. If we didn't have a sufficient emergency fund, we'd be desperate for cash. Pretty much like those poor folks who need to access payday loans. It's always a good idea to have a couple of months worth of living expenses readily available in case of unforseen events!