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Turn down the music, unplug the phone, turn off the cell phone, and close all IM windows; what you are about to read is very important to you now and in the future.
Emergency Fund – $1,000 In The Bank
Turn down the music, unplug the phone, turn off the cell phone, and close all IM windows; what you are about to read is very important to you now and in the future.Put the next $1,000 dollars you save into a savings account that is very liquid but only meant for emergency expenses. A regular savings account or if you bank offers them, a money market account will do the trick. The idea here is very simple and one that every person who is tempted by using credit cards should do: use the cash you have saved up instead of swiping the card.
Having that cash available in an account for emergencies will squander the need/want to use the credit card to pay for emergencies (i.e. microwave breaks, car breaks down, etc…). I have used this method for two solid year now and it has saved me from having to essentially go into debt over an emergency. You should not have to get into debt over something that you have no control over. In 2006, I saved up the $1,000 dollars and had it sitting in a money market account which was earning 4.5% at the time. In November of that same year my car broke down, and required $600 to fix.
Thankfully, I had money set aside for this kind of situation, not knowing that my car would break down. So, instead of having to borrow the cash from a friend or family member, or even having to slide the credit card into debt, I simply transferred the amount required to get it fixed from the money market account and into my checking account where I was able to write a check from. No debt, no monthly payments to cover fixing my car, and I didn’t have to alter my budget for this expense. I still had the money in my budget to put food on the table, and fulfill other financial obligations spelled out in my budget, all because I had this money set aside in case of an emergency.
Wherever you are in life, start saving money and put aside $1,000 to cover the unexpected that is guaranteed to happen in life. You will not regret it and your financial future will thank you. If you can only put $5 towards this saving goal a month, DO IT! You don’t need to have the resources to have this available right away; the small amounts will get you there all the same and your diligence to do this will begin to create a self discipline which will stick with you for the rest of your life.
Not having an emergency fund is like:
- Driving without car insurance
- Owning a home or renting an apartment without home owners or renters insurance
- Acting like the unexpected doesn’t happen to you
Having an emergency fund is:
- Peace of mind
- No debt
- Solid planning
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Excellent savings advice! It always pays to be prepared for any emergency.
Especially when you don't have to use debt to get out of the emergency!!
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