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Friday, February 27, 2015

Building An Emergency Fund?

As we all debate the color of #thedress (BTW:  I said blue and brown, Em said blue and black), it's time for a Friday blog post! We thought we would take a look at one of the more important aspects, for us, of saving and paying down debt:

The Emergency Fund.

You have to have it.  I don't think this is something that many people are opposed to.  We all like the idea of having the "rainy day" fund.  However, how many of us actually have one?  When we started our debt journey back in 2012, we certainly didn't.  However, It was one of the first steps we took.  Why?  Because life happens.

If you're not familiar with the term, an emergency fund is money you tuck away in savings.  You do not touch it.  It is there when you need a life line.  No matter how careful you are, there is going to be a doctor bill... especially if you have kids.  You can be up to date on your oil changes, but the car will need new brakes.  It's Sunday afternoon and your washing machine breaks?!?!  You cannot predict life's circumstances, but you can be ready for that proverbial "life" curve ball.

We kept, and still keep, an emergency fund of at least $1,000.00 in the bank for such occurrences as the ones listed above.  That doesn't mean $1,000.00 is the end all saving point for this fund.  It is a good place to start though.  Once you have that figure in place, it's probably a good idea to keep adding based on your income and household numbers.

So how do you build this fund? Check these 4 quick ways to build an emergency fund from Dave Ramsey:

http://www.daveramsey.com/blog/4-quick-ways-to-build-your-emergency-fund/?ictid=btxt?atid=davesays

Hope you have a great Friday!

In Christ,
Bryant and Emily


2 comments:

  1. I know I mentioned this when you started the debt project but I'll mention it again: Suze Orman recommends an 8 month emergency fund that would cover all your bills and minimal living expenses for that time period. IMO $1k is far too low and should be increased ASAP. Just my 2c!

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  2. Hi Sarah. First, thanks for reading! Hope you are well. You make a great point. I probably should have clarified that once you've paid off your debt, that you would save for a 6-8 month emergency plan. We survived on our 1K emergency fund through our debt pay down. That allowed us to pay down on our debt ASAP, which was our goal. I think either strategy could work and depends on what goals you have. We have now started to increase that number for the very reason you're getting at i.e. loss of job, unforeseen circumstance, . . . Whether it's 1K or 10K, I don't think many people have this in place. My hope for folks out there is to actually have an emergency fund no matter what amount they decide on.

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