Today, I’m going to tell you about the Emergency Fund!
What is an Emergency Fund and Why do we need one?
Both very good questions, so lets start with the first one, What is an Emergency Fund?
An Emergency Fund is money that you saved and have, preferable in a bank account or somewhere where you can’t see it so that you don’t spend it, on anything but Emergencies. So why do I need one if I can’t spend it? Another excellent question. Let me go on and I’ll tell you all about it. So, as I was saying, the Emergency Fund should be in a safe place, preferably where you don’t see it and can’t touch it unless you have to physically go to the bank or make a call to the bank to get to it. Because an Emergency Fund exists for that reason, an Emergency!
What is an Emergency? Well, it can be anything from a car repair to a trip home because someone is very ill or died and you live far away (God forbid!). It can even be a doctor’s appointment you hadn’t counted on. So for me, it’s very important to always have that money set aside because it can make all the difference between getting stressed because your car won’t work one day to simply it being an inconvenience. Don’t get me wrong, It gets me annoyed, specially because I not only am going to be late (to wherever I was going when the car didn’t start) but I also have to rebuild that Emergency Fund!
As a starter Emergency Fund I follow Dave’s rule of $1000, because it’s small enough that we can save it in three or four months but it’s big enough that if the washer dies you are ok! You can afford to replace it without getting credit to pay for it. Let me tell you a secret, the first time we had to save a thousand dollars for our Emergency Fund was the only time it was easier. I did a 14 day Money Hunt and I got about $250! That was nice and after that I just kept on selling stuff and worked a bit more to quickly put that money aside and move on to start paying off our debt.
Here are some little steps to help you get there a little bit faster if you need:
I’ll be doing my 14 Day Money Hunt soon, if you want to join, stay tuned to our Instagram and Facebook accounts so you don’t miss it, or better yet, send us an email so we will tell you when time comes!
S
