Your Most Important Fund

Different people save for different things. They have Christmas Club accounts, vacation funds, a home fund, and many many others. But the most important fund that you should have before all others is an Emergency Fund.

Emergencies rear their ugly heads especially when you least expect them. The washer breaks or the dryer stops working. The furnace needs a repair or the A/C dies. You car needs a repair or you have a leak in the house and need a plumber. There are so many things that could happen that you need that Emergency Fund. 

So many times people have said, “But I can’t afford an emergency fund, I have too much credit card debt or a multitude of other excuses.” 

You can’t afford not to have an Emergency Fund especially if you are in credit card debt. Let’s say the dryer stops working. You have a few choices. You can try to fix it yourself by googling what the problem could be or looking for a You Tube video to watch that would show you how to repair it. You still may have to pay for an expensive part. You can call the service people to come and repair it. Or you can hang your laundry to dry until you have enough money to fix it. But no you want it fixed right away so you call the service repair people who cost you $85. -$90. just to come out to the house plus the cost of the repair.

Since you don’t have the money to pay for it you put it on a credit card that you already owe $4,000. on. That credit card you pay a bit more than the minimum payment every month. Your interest rate is
11% or more. So now you owe more on the card and if you don’t pay the repair off when your bill is due, you pay interest on that portion too. 

Have you learned your lesson and started an emergency fund? No you just hope that you don’t have another emergency any time soon. So 2 months later, the furnace stops working. You call someone to repair it and put that repair on your charge too. Do you see the vicious cycle that you set up for yourself? 

No matter how much money you have coming in or how much you owe, you have to save an emergency fund. Then when something breaks, you hopefully have the money saved to pay for it.

So how much money should you save? It depends on your situation. But when we first started saving for one over 50 years ago, we saved $1500. It was not easy back in the 60’s but little by little we saved it. Then we never touched it except for an emergency. If we did need it to repair something, we replaced whatever we had to spend as fast as we could. Back then, we only made 4 figures. Today you should be able to put more than that in an emergency fund. I would save $5,000. or more and hope that you don’t have to use it any time soon while you are saving up.

We finally built ourselves up to a year’s expenses in case Hubby lost his job. Then we started saving for buying our cars and bigger things. Once you start doing it on a regular basis, it just builds and builds. Then when you have a true emergency, you don’t have the stress of how to pay for it or have to put it on a credit card. 

Even if you are living paycheck to paycheck, social security to social security or pension to pension or are in credit card debt , you should be able to build that fund. I don’t care whether you can only put $5., 10., up to $50. or more a week into that fund, you have to start today to build it.

You have no extra money, you say to me. Well, then you have to either make more money or cut your expenses. It’s easy to cut your grocery budget by $5. or $10. per week or more. Just shop carefully, forego junk food or desserts, buy cheaper meats or do away with meat for a # of meals, and use every morsel that you purchase. Don’t throw food away. There are so many ways to save on food and other items that you need. But I will go into many of those ways over the next few months. I think you get the idea. 

Do not use that emergency fund that you are building for anything but a true emergency. And going to the movies, buying a cup of coffee out, going out for a drink or to a restaurant are not emergencies. They are wants; not needs. 

Please start doing this over the next week and do it every week thereafter. It will take you awhile to get it built to where you want it but it is the right thing to do for yourself and your family. 

I hope you all have wonderful weekend.