Many individuals have a lot of debt. A lot of this comes from not having an emergency fund. Without an emergency fund, the slightest hiccup in a person’s life can result in debt. A greater disruption could be a total financial disaster. Most individuals don’t expect bad things to happen to them. And creating an emergency fund is easier said than done. But the nickels and dimes that get wasted every single day add up to dollars that can’t be used tomorrow. Emergency funds might be easier to get than individuals think.
Emergency funds are a necessity for every person
Think about repairing your car. Brad Chaffee at Enemy of Debt tells a tale of why an emergency fund is needed. A woman came into Sears while he was there getting new tires who had a large bill for repair. She had no cash to spare. She didn’t even have credit to borrow. She couldn’t get a Sears card to help pay it. Sears makes a lot of money off of cards that have high-interest. But the helpful customer service rep found her a card she could qualify for — with a $ 400 line of credit, a $ 59 annual fee and a 28 percent APR. The bill couldn’t be paid with that. She would nevertheless need more.
Make you pay the savings bill
Bankrate explains that getting an emergency fund is something significant to do if you do not have one. Some say there is a possibility of a double dip recession still. This fund needs to contain three-to-six months of living expenses. This is recommended by Bankrate. It is good to use a money market account. Then, you are able to just put $ 50 a month in until your fund is built up. Make this a bill as part of your mind. One month of expenses can be moved to a one-month CD after the money market account has two months in it. When the CD matures, roll the principal and interest into another one-month CD. Eventually, the emergency fund can have an additional month of living expenses that could be invested in a two-or three-month CD. A six month CD can be bought eventually.
Money can buy you stress relief occasionally
Personal finance basics are all you need. They will help you get an emergency fund. You could pay the emergency fund before all the other bills, says Studenomics. Being cheap isn’t really necessary. Spending money wisely is important. It is even more important that they control their debt. And there’s nothing wrong with enjoying life. It doesn’t have to be hard saving money. And best of all, by saving and managing money a person can enjoy life more. Emergency funds relieve stress from time to time. It is easier to do things of luxury. These include dining out, family vacations and even getting entertainment.
Additional reading
Enemy of Debt
enemyofdebt.com/2010/08/perfect-example-as-to-why-you-must-have-an-emergency-fund/
Bankrate
bankrate.com/brm/news/pf/20011217b.asp
Studenomics
studenomics.com/personal-finance/systematic-personal-finance-does-it-work/
