What is an Emergency?

Now as I said, the emergency fund should ONLY be used in an emergency. So what constitutes an emergency?  Simply put, it's an unexpected expense that comes up during the month.  Obviously, this does not mean "I forgot, we want to buy pizza tonight", "Oh, we need the oil changed this month" or "my daughter needs a prom dress".  Those are all things that should be worked into your month-specific budget and yet another reason why a proper budget is crucial.  But if your transmission blows, you have a visit to the emergency room, or you get in a car accident and have a deductible to meet, these situations are what the fund is for.  If you took the time to watch our debt free story, then you saw that during our journey in becoming debt free we had some emergencies arise.  When I was 6 months pregnant with our 2nd daughter, the air conditioner died, in August no less. (This was actually edited out of the video segment.)  We also had our house flood when a faucet connector in the bathroom came out.  We had to pay the insurance deductible for the repairs.  These were legitimate emergencies and the reason why you have a fund for them in the first place.  Remember it's not a matter of if, it's a matter of when one will occur.