Not having an emergency fund is why most individuals end up carrying too much debt. One small upset means debt without an emergency fund. You might end up with a huge financial disaster. That mostly happens when something bigger comes along. Most people are living in the dark. They expect only good things will happen to them. It is also easier to say create an emergency fund than it is to actually do it. You might try saving nickels and dimes so you’ve money for tomorrow’s disaster. So possibly creating an emergency fund is easier than most people think.
Emergency fund needed by every person
Consider car repair. 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 additional money, along with a bad credit score. She could not qualify for a card from Sears, which makes a bundle offering high-interest credit. The only card the customer service could get her was a $ 400 line of credit with a $ 59 annual fee and a 28 percent APR. Even that card, with its harsh terms, wasn’t enough to help her.
Make certain you pay the savings bill
If you don’t have an emergency fund, you need to get one. Bankrate says this is something essential to do. Some say there is a possibility of a double dip recession still. Bankrate explains the importance of having three-to-six months of living expenses in this fund. It is good to use a money market account. Then, you can just put $ 50 a month in until your fund is built up. Make this a bill as part of your mind. One month of expenditures 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. Once you have one more month of living expenses as part of your fund, you are able to move it to a two- or even three month CD. You will be able to move on eventually. You’ll be able to do six month CDs.
Money buys stress relief
An emergency fund is easy with personal finance basics. Studenomics recommends paying the emergency fund first before all the other bills. Being cheap is not necessary. Spending money wisely is important. If they can control their debt, it will be even easier. It is nevertheless ok to enjoy your life. It doesn’t have to be hard saving money. Saving can even make life more enjoyable for many. Many individuals like the stress free environment. This comes when having an emergency fund. Plus, it provides some leeway for dining out, entertainment and a worthwhile family vacation.
Further 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/
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