Tuesday, October 10, 2017

Emergency Fund Roadmap

Ms. Debt-Free again!

My last post was probably extremely boring for a lot of you, unless you also understand the pull of Target and Sephora!  Today I want to get a little more serious and practical and talk about building an emergency fund.

This was a totally new concept for me when I met Mr. DebtFree.  I was skeptical at first.  I mean, how the eff can I build an emergency fund when I have almost $100,000 in student loans I need to pay off?  Eventually I stopped whining long enough to ditch the bad attitude and listen.  Here's what I learned.  
No matter how little you make or how much debt you have, building an emergency fund is a necessity.  Unexpected expenses (accident, car repair, sick dog) are one of the quickest ways to get derailed on your journey to financial freedom.  Taking time to go over your budget and carve out an emergency fund is super important if you're trying to get ahead of debt.

What should your goal number be?

Time to consult Mr. DebtFree.  He says, "6 months of spending."  Do a little reviewing, check your bank statements if you don't have an awesome Mint account or app.  Figure out your six month spending number and start your savings!  I've been keeping it all in my checking account.  If that's too tempting for you fellow shoppers, put it in a separate savings and pretend it isn't there!  

But what if I don't make much money?

Now that I have a job where I'm not living paycheck to paycheck, this emergency savings thing is coming along pretty well.  A couple ideas if you're on a fixed income making minimum wage (like my mom) are to see if you qualify for assistance programs and to see if you can decrease any of your bills.  For example, my mom qualifies for an income-based apartment and she also qualifies for a small amount of supplemental food stamps.  I know some people get pissy about government assistance, but everyone deserves to eat.  I qualified for food stamps my last year in nursing school and you better believe I signed up!  

Another great savings opportunity is your phone plan.  Mr. DebtFree is mega frugal at $12/month with an original plan from Republic Wireless and my mom is looking at StraightTalk or Cricket.  I am more frugal than I used to be, but I am not ready to give up my LTE speeds.  I signed up for the cheapest Verizon plan with the assistance of my awesome salesman cousin.  I will be saving $50-ish/month and I get a 22% discount through work.

There are a lot of ways to shift your budget around so you can build an emergency fund.  The bottom line is you have to be motivated to save the money.  I complained so much when Mr. DebtFree first proposed I start building my E-Fund.  When I actually evaluated my resistance I realized I was not wanting to make small sacrifices (like coffee shops only once a month) and I wanted to keep on spending with the excuse of "I don't have any extra money to save."  Once I got my priorities in check, the rest became easier with each paycheck.

Ms. Debt-Free's E-Fund

No comments:

Post a Comment