I write about fun trips that we take as a family but this is only after I established a comfortable balance in our emergency fund. An emergency fund enables me to feel more confident and have a sense of freedom knowing I can tackle any unexpected expense from life.
Credit cards offer many benefits but it is not a substitute for an emergency fund. Using a credit card for unexpected bills will make a situation worse especially by paying more in the form of interest. Additionally, the credit card provider may cancel your card or the place you owe may not accept credit cards.
Life has a way of happening whether we are ready or not. This emergency fund should only be used when an unexpected event takes place in life. An unexpected event is not a new pair of expensive shoes for your daughter because “everyone is wearing them.” An emergency fund is a non budgeted expense such medical bill because your child broke their arm, job loss especially in a weak economy or major car repair from a dead transmission.
Finding extra money can be difficult when you are living paycheck-to-paycheck. In an earlier post I suggested a few money making ideas, here are a few more:
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Set-up payroll deduction
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Skip a purchase such as the latest release of a DVD or CD and rent from the library, don’t order a desert or drink when you eat out.
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Reduce an expense such as a cheaper cell phone package or combine errands into one trip to save on gas.
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Each month save all your dollar bills or coins then deposit it in your new account.
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Review all regular monthly bills to see where you can cut-back or check if another company provides the same product or service at a lower price.
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Look at your recent credit card bill or checkbook register and make a list of items you spent money that you wanted but did not need.
Until you have 3-12 months of living expenses established in your emergency fund, treat it as a regular bill and put money into it each month. Once you have an emergency fund, you will feel more secure and breathe a sigh of relief to know you can whatever happens.
Stay tuned on where to set-up your emergency fund.
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