I Hate To Say This, But I Was Saved By A CREDIT CARD!!!

by Khaleef Crumbley on March 4, 2013

in Credit Cards,Debt Management,Personal Finance

I have written a few times on my weight loss blog about having to bring my car to the mechanic. I think I have made 5 trips since the end of November for the same problem.

During this time we have replaced practically the entire cooling system – including the radiator! After spending $1,600 to do this, my car started overheating a week or two later. At the same time, someone brought a car like mine (just one year older) in to my mechanic with the same exact problems. They found air in her cooling system just like mine! However, they did not detect any problems inside of her cooling system, as with mine.

This prompted him to check the Internet to see if this problem was common. He not only found tons of complaints in forums and other places, but he also discovered that this is something that GM knows about but are choosing to ignore. It seems that the problem is with the intake manifold gasket, and it usually happens after the car is already out of the warranty period.

It cost us about $650 to replace it (this was mainly labor, since the job took many hours), bringing our total to fix this problem up to $2,250! That doesn’t even included all of the countless hours on the road to and from the shop, who knows how much gas and wear & tear on both of our vehicles, as well as dozens of hours driving, worrying, and even sitting on the side of the road waiting for the engine to cool down.

[Find out how to save money on car repairs!]

I’ve talked in the past about how having an emergency fund can help when these types of necessary but unexpected expenses pop up. Fortunately, we were able to pay for some of these repairs (specifically replacing the intake manifold gasket) by tapping our emergency account. However, in order to cover the other $1,600, we would have had to drain the account completely!

Saved by Credit Card

I hate the idea of have a $0 emergency savings account, so we really needed to come up with another way to pay for these expensive repairs. Since we are deeply in debt bondage, we don’t have a lot of “wiggle room” when it comes to our expenses and our paycheck (most of our expenses consist of nothing more than debt payments), and although we try to keep a cushion in our checking account, we don’t have an extra $1,600 sitting around.

We could have tried to take out a personal loan, but I really don’t like the idea of owing people money. Another option would have been to take out a payday or other short-term loan, but we are really trying to avoid increasing the amount of interest we have to pay out this year.

So, as a personal finance blogger, I had to turn to the one place that was probably the least expected…a credit card! I’ve written about the benefits of credit cards in the past, so it shouldn’t come as a surprise that I don’t hate them. I just hate that many of us us them for the wrong reasons.

Last year my wife and I found a credit card that would allow us to charge any car repairs over $299 and have the interest deferred for 6 months. This means that if we can pay off the balance by the end of the 6-month period, we will have received an interest free loan. :-)

Normally, I don’t like to be put in a position to have to place an expense (or multiple expenses as in this case) on a credit card, especially since we already have a ton of debt, but in this case it seemed to be our best option. The very worst case scenario (outside of us needing additional repairs) has us draining our savings at the beginning of the summer to pay for the repairs, but if we are able to use every extra dime to pay down the credit card, things won’t be as bad for us.

So this is definitely a case where having a credit card was a great benefit to us. I just pray that we can get back to moving in the right direction with our debt repayment plan…having our car need over $2,200 in repairs (and it needs more, plus my wife’s truck has a few things wrong with it as well) definitely set us back.

photo credit: Dan Esparza

Reader Questions

  1. Have you ever used a credit card to bail you out of a jam? Not, to buy a tablet or a toy, but for an actual emergency.
  2. Do you think we should have just emptied our savings account even though the credit card may not cost us an interest payments? If so, why?
  3. How do you feel about someone not having an emergency savings account at all, and just having a credit card or two (especially a rewards card) to pay for emergencies?

© 2013, Khaleef Crumbley. All rights reserved.

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{ 12 comments… read them below or add one }

1 Chris

I hate credit cards as much as the next personal finance blogger but not having one is silly as demonstrated well here!

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2 Khaleef Crumbley

Credit cards definitely have a place in many financial plans. Even if your savings is enough to cover all emergencies, the prospect of benefits and rewards should entice people.

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3 JW @ VisualFin

It think it was a smart choice to use the credit card. You can’t argue with no interest. The only time I would use cash to pay for a purchase like that is when I receive a discount. My mechanic will cut 10 – 20% off the bill when I use cash instead of a card.

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4 Khaleef Crumbley

You have a sweet deal set up with your mechanic! I hope we don’t have to see any big charges from a mechanic for a while!

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5 cashflowmantra

Very interesting story. I have been listening to Dave Ramsey quite a bit recently and am trying to get out of debt, but feel that the $1000 fund as the first baby step might be a little low given that most of my emergencies are more than that. I just found out yesterday that my van has a blown head gasket and was quoted $3000 for the fix. Ouch. Not sure what I will be doing yet.

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6 Khaleef Crumbley

That’s exactly how I feel. I know why he wants people to have a low fund while in debt, but as you said, most “emergencies” can be way more than that! Sorry to hear about your head gasket, I’m hoping that isn’t the ultimate problem with my car (although, there is no smoke coming from the exhaust).

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7 John@ WILDaboutFinance

Don’t feel bad, this one time I got stranded in Thailand and the only way I got out of the BAD situation I was in and flew outa there was with a credit card. It happens to the best of us, and always good have there inc ase of emergency.

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8 Khaleef Crumbley

Oh wow. I think that definitely calls for a credit card!

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9 Pam@Pennysaverblog

I think it’s okay that you used your credit card, especially as you don’t have to pay interest for 6 months and should be able to pay it off by then. If you were paying interest, though, I would have definitely recommended that you use your emergency funds, after all, that’s what they are for.

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10 Khaleef Crumbley

Yeah, I have a tough time emptying my emergency funds…I had to do it last year and it was tough. I definitely will do it if the card isn’t paid off at the end of 6 months.

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11 Josh @ Live Well Simply

Great story of how the much maligned credit card is still a useful tool! It’s like fire. Useful, but ‘Handle with Care’. :)

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12 Khaleef Crumbley

I think that is a great analogy!

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