How to Fly Around Financial Ash Clouds

by Kevin on April 20, 2010

The ash cloud generated by a volcano in Iceland has stranded thousands of travelers in Europe. Some, it seems, are even going broke.

Here’s a stunning quote (emphasis mine):

“We’re at the end of the holiday so we’ve spent all our money,” a weary-eyed Andrew said, as he sat with his family next to the Qantas customer service counter at Sydney Airport. “Because that’s what you do on holiday.

Wow. Just… wow.

Prepare for Financial Emergencies

I’m all for dutifully saving money to take a nice vacation. We’ve done it. We’re doing it. And someday we’d love to take a long European vacation.

But does it make any sense to save all of your money for the vacation? You happily leave the country fulling intending to spend your last dime?

No thanks. Not for me. I would much rather have money set aside for a rainy (or ashy) day.

Play “What If?”

Trust me. It’s a fun game. You can play it in  your head, or have a discussion with a friend.

Just ask yourself what would you do if ___________ happened.

What if…

  • your employer lost your paycheck and you had to wait an extra week
  • the water heater stopped working
  • gas prices tripled for two months before going back down

Don’t get me wrong. I understand “a volcano in Iceland will erupt and the ash cloud will cancel all flights when we’re trying to come home from vacation” is pretty far down the list of “what if’s”. (I guess I’ll need to add that one to the list of what if questions I wrote about last year!)

But this ash cloud still falls under the emergency category.

Save an Emergency Fund

So how would I have prepared for this situation?

Simple: I’d have an emergency fund saved up. A big pile of easily accessible cash that I would access to pay for hotel and food while I waited on flights to resume.

It sounds so simple yet 7 out of every 10 Americans is living paycheck to paycheck.

This ash cloud situation is a perfect example of what can happen when people who are living paycheck to paycheck decide to take a vacation without a financial safety net.

Don’t let it happen to you. Build that emergency fund! (It’s Step Three in my No Debt Plan.)

Comments on this entry are closed.