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5 Steps to Rebuilding Your Emergency Fund
Meeting your emergency fund goal is a huge accomplishment. So, when it comes time to spend the money for an urgent or unexpected purpose like paying a big tax bill, draining the fund you worked so hard to build can be extremely disheartening. Having to fork over funds you've spent several months saving is a letdown and it's easy to lose momentum.
How Long Could You Survive Without a Steady Paycheck?
Emergency funds are more important than ever, but most people still haven't built theirs up enough to get through unemployment. Just take a look at the results from a recent MetLife study that asked Americans to evaluate how they'd fare if pink slips were handed to them.
50 percent of Americans say they are only one month — or only two paychecks — or less away from not being able to meet their financial obligations if they were to lose their job, and more than half of these, a startling 28 percent of the total respondents, couldn’t survive financially for more than two weeks.
Resolve to Live Below Your Means in 2009
The concept of spending less than we earn seems simple enough, yet many of us struggle to put the idea into practice. Living within your means is a great start to financial stability, but living below your means is a way to ensure that this path isn't disrupted.
Step one is eliminating a reliance on credit cards for anything but emergencies.
Money Tip: What to Do When You're Done With Your Debt
Forty-seven percent of you have credit card debt, and another 12 percent of you are almost finished paying off your balances — keep plugging away! It's common to lose momentum in becoming financially healthy once you are rid of debt; enjoy the feeling of having a huge weight lifted from your shoulders, but avoid the temptation to relax your rein on spending.
Hopefully you were able to put some money aside while paying off your credit cards, but when you're done with your debt, turn your main focus to saving and building an emergency fund.
Definition: Debt Snowball Plan
Personal finance guru Dave Ramsey developed the debt snowball plan as the debt repayment part of his method for getting finances on track. The plan is based on psychology and relies on determination. The debt snowball plan goes as follows.
Money Emergency? Which Resources to Tap First, and Last
When disaster strikes and your internal panic button ignites, your frazzled instincts might tell you to tap into the first financial resource that comes to mind. Practice damage control by knowing which actions will cause the least harm to your overall financial health, and which will threaten it the most.
CNN Money lists 17 ways to get your hands on cash ranked from the best to worst.
How Much You Need in Your Emergency Fund
More than half of you are still building up savings for a rainy day or haven't been able to save anything just yet. In order to be sure you're on track or to set a goal in the first place, you need to determine how much you'll need if emergency strikes. The biggest case for an emergency fund is job loss — if you lose your job or temporarily lose your ability to work then you'll need to rely on the money you've saved to get by.
Your Two Cents: Do You Have an Emergency Fund?
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Your Two Cents: Do You Have an Emergency Fund?
Yes, I have an emergency fund.
I've started saving for a rainy day, but haven't met my goal yet.
You're Fired! Are You Prepared?
We're taught to keep a first-aid kit in our car's glove box and jugs of water in our cabinets in case of emergencies, but preparing for a job loss isn't something that's a given when thinking about disaster prevention. Unlike buying canned items in bulk, there isn't anything that we can pick up at the store when we're setting ourselves up for success after potential job loss.
Even the most realistic person may find themselves uncharacteristically optimistic when reviewing their work situation because getting fired is just not something any of us like to think about.
Six Tips For Finding Extra Money to Start Your Emergency Fund
Because everyone prioritizes his or her spending needs and wants differently, you'll never catch me telling you that you should be spending a certain amount of your income in one category or another. Budgets depend too much on how much money you bring in, your cost-of-living, and your debt situation for me to suggest how to allocate your funds. So, while it's up to you to decide how your money is best spent, I will tell you that having an emergency "rainy day" fund is a key component of feeling more financially secure and can save you from debt-tragedy if an emergency were to arise.
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