You wouldn’t jump out of an airplane without a parachute, would you? They why do you go day-to-day without a stock pile of emergency money to take care of a disaster if one arises?
Here’s the deal: Trouble lurks around every corner. And you NEVER know when it’s going to happen. No one writes you a letter to let you know which day you’re going to have to deal with:
- Automobile breakdowns
- A flooded basement
- Needing a new roof on your house
- Medical expenses
- Job loss
And as long as you don’t have enough money saved up to handle emergencies like this, you’re pretty much a sitting duck for financial disaster.
Spare Me the Excuses:
“I don’t make enough money” you say. “I won’t ever need one” you say. Go stand in the corner. Those are terrible answers.
Unfortunately our society has spun into a nation of people just scraping to get by. In fact it was recently revealing that the average savings rate in 2013 for Americans was just above 2%. That is really sad.
So why do you have to be like everyone else? Why not buck the system and actually be prepared in case something really terrible does happen. Here’s what to do:
Build an Emergency Money Fund:
Building an emergency fund of 3 to 6 months worth of living expenses is not really as terrible or painful as you may think. There are a lot of things you can do to get there:
- Pay yourself first. Just like when you save for retirement, you HAVE to discipline yourself to pay into a fund that you can’t touch under no circumstances unless there is a true emergency. It doesn’t matter if its $25, $100, or $1,000 per month. Just make a commitment to make a payment and stick to it.
- Review your expenses. You know you buy a lot of stuff you don’t need every month. Make a list of everything you buy in a month and look for opportunities to make some cuts. Usually when people seriously do this they can take off approximately 10% with very little effort. You can then divert the cash you would have spent into your emergency money fund.
- Cut down your bills. Maybe you can’t cut out an entire expense. But why not reduce it? For example: Why not refinance your 72 month auto loan into something more sensible and at a lower interest rate? I did that and ended up saving almost $50 per month on my online bill payment. That’s $50 bucks I can use for my emergency fund rather pay to some bank.
- Make some extra cash. If you do something for someone on the side or sell a few things on eBay, why not use those proceeds to build your emergency fund. Its money you didn’t have before and money you won’t miss in the future.
- Divert your raise. Speaking of money you didn’t have before, what did you do with your last raise at work? Why not use some of that to fund your efforts?
- Find part-time job. There are tons of small and part-time jobs out there! Check out the Internet to find one quickly. With just a few hours here and there will give you the bump in cash you need to build up your fund.
What Would You Give Up?
If you still can’t seem to get yourself into the mindset of saving or even needing an emergency fund at all, then here’s what I want you do. Imagine yourself in an emergency – a true emergency such as needing $10,000 or more. How are you going to come up with the funds to pay for this crisis?
You’re a bright person. You don’t want to rack up a ton of debt on your credit card paying off that high interest rate forever. You also don’t want to pay twice what you should to some scammy instant payday loan. You also know that raiding your 401k retirement fund will pretty much destroy your chances for building your nest egg.
So then your only option is to drastically cut back on your expenses. What are you prepared to give up? Cable TV? Eating out every week? Your house??
Now stop imagining. The good news is that right now you’re NOT in a crisis situation. You don’t have to give up your home or anything drastic like we were imagining.
But that doesn’t mean you can’t take action. So while there is no emergency, I want you to comfortably pick and choose what expenses you can afford to live without to make this work. Being able to pick which ones right now is a lot better than being on the other side of the fence. So don’t waste this opportunity. Build up your emergency money fund now. Your finances are counting on it. And so is your well being.
The Ultimate Preparation
While it’s not fun to think about, one thing we must all be prepared for is the ultimate emergency: The day when we can no longer be with our families to take care of them. Unfortunately, this isn’t something we can decide where and when it happens. It just simply does, and we need to be prepared for it using life insurance.
There are a million ways to get affordable life insurance. Often you can buy it privately or add on to your plan at work. But keep in mind that if you go over a certain amount, they will require a medical exam to continue. But no worries! If the thought of this freaks you, remember that there are always no exam life insurance alternatives available out there for purchase. These types of policies can be guaranteed without any sort of medical exam.
Be sure to protect the ones you love by taking care of them financially; even if you’re not there to do so physically!
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