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Friday, April 24, 2009

Emergency Fund

I have been thinking about this and have read several posts pertaining to emergency funds. What I have in ours isn't enough for a real emergency (bankruptcy or my husband's death) but certainly will cover such events as jumping on an airplane to attend my uncle's funeral. Dave Ramsey suggests you begin with $1000, mine is a little higher - but there are more of us.

How much do you need? Bare minimum enough $$ to cover 3 months worth of expenses. Ideally 6 -12 months worth. I think that once the minimum is there you don't need to save as aggressively and can "share" your savings with other things, debt reduction, other expenses that you know you will be incurring. But don't stop completely until the 12 month amount is in place. In this crazy economic time it could be your life line.

Where do you get the $$ to put into this fund? I have seen some great tips and have a few of my own:
  1. Pay yourself first with either a payroll deduction or an automatic transfer from your checking to a savings account set up for this. I use
  2. Save your $5.00 bills, or your quarters, or whatever piece of currency that works for you. Make a deal with yourself to never spend this money and put it directly into your savings account.
  3. Use coupons, and after you pay for the groceries, deposit into your savings the amount you saved.
  4. Have a garage sale, in real life or use ebay or craigslist.
  5. Hire yourself out - is there some way you could earn a little extra money? Babysitting, housesitting, running errands for an elderly person, gift wrapping at Christmas are a few thoughts.
  6. Put every amount of money that you get unexpectedly - gifts, tax refund, rebates any windfall at all into this account.
  7. When you deny yourself a treat - coffee, new gadget - whatever it might be that you just really want but don't need but had budgeted for, put the money you didn't spend here.
I feel like the tortoise "slow and steady, slow and steady wins the race".
Please share how you garner the $$ to fund your emergency fund.

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