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 essential to do if you do not have one. A double dip recession may be right around the corner. This fund needs to contain three-to-six months of living expenditures. This is recommended by Bankrate. Taking $ 50 a month and putting it into a money market account is a good start. Treat the contribution as a bill that must be paid. One month of expenses can be moved to a one-month CD following the money market account has two months in it. Following the month is up, you nevertheless have things to do. The principal and interest should be moved to another one month CD. A two or 3 month CD will soon be what you need. You need to wait until you’ve another month of living expenditures inside your fund though. You’ll be able to move on eventually. You’ll be able to do six month CDs.
Be less stressed with this money
Some personal finance basics will help develop an emergency fund. Studenomics gives a good piece of advice. You can pay the emergency fund before paying any bills you have. Being cheap is not necessary. Spending money wisely is important. Especially if they can control their debt (see emergency fund). 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. An emergency fund is a great stress reliever. Plus, it provides some leeway for dining out, entertainment and a worthwhile family trip.
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/
