Comments on: Save Money In An Emergency Fund

By: t-luck

t-luck — Wed, 08 Apr 2009 03:35:19 +0000

In my earlier days as a student, when I was still blind about finances, all I did was to save money in an emergency fund. Just savings in a simple savings account. I continuously did this for a couple of years and completely forgot about this sum of money after some time. Though it was not really used as an emergency fund, when I was looking out for down payment to purchase my apartment, this stashed away cash came in real handy! t-luck’s last blog post..Painless Way to Clear Your Debts

By: Randy

Randy — Sun, 10 Aug 2008 23:34:28 +0000

Honestly, an emergency fund is useless if one carries a high credit card balance because it’s highly unlikely, that you’ll be able to keep those CC balances at the introductory (or balance transfer) interest rates for the long haul. So, all and all, that extra saved cash will be losing interest, to paying off the bigger CC loan.

The best thing to do, if you have CC debt, is to insure that you have enough additional credit to carry you, between jobs, if there’s a layoff. So in fact, pay off the balances and then, shore up a cash-only emergency fund.

Also, if you’re a trader (of some sorts), don’t make your gold, commodities, or forex accounts a type of emergency fund. Those are specifically growth funds designed to earn you an income stream, during good or bad times. Emergency funds are highly liquid, cash-only intermediates, which can be from a multi-currency CD, however, do realize that you’re treating this pool as an invest but as a hedge against job losses and major emergencies.

By: Kelly from My Small Cents

Kelly from My Small Cents — Sun, 18 May 2008 07:45:47 +0000

This post has been included in the 5th Carnival of Snowflaking, going live May 22nd at My Small Cents.

By: LuLuGal

LuLuGal — Thu, 08 May 2008 11:36:06 +0000

Hey Shawn thanks for clarifying the reason for having the emergency fund.

I think most people do not realize that they need to form the habit of saving….even if is just $1 a month. That is what I started with, even while I was paying off my credit cards.

Just having the mentality helps so that you know you can control what your money does.

By: Shawn Knight

Shawn Knight — Wed, 07 May 2008 22:29:15 +0000

Great post on the emergency fund.

I started following Dave Ramsey’s Total Money Makeover plan earlier this year, and Baby Step 1 is to create a $1000 emergency fund as fast as possible. I put pretty much everything on hold and generated this in about a month. It is comforting to know I have that money there in case something unexpected happens, it won’t wreck my monthly budget and leave me broke and feeling bad.

JoeTaxpayer and Flimjo – The point of the emergency fund isn’t to make money off interest, so paying that on a credit card instead is not a good idea. It is a rainy day fund, so when something unexpected does happen (and it will), you won’t have to go charge that expense to a credit card and thus, feel like you aren’t making any traction with your get-out-of-debt goal.

I agree with LuLuGal, everyone should have an emergency fund, regardless if you have credit card debt or not.

Ralph – If you follow Ramsey, the $1000 is just your initial, baby emergency fund. Once you are out of debt (except the house), you should then stock your emergency fund to 3-6 months worth of expenses. This will of course vary for everyone, but it’s a good general number.

By: Flimjo

Flimjo — Mon, 05 May 2008 17:33:34 +0000

I agree with Joetaxpayer. An emergency fund is essential, but paying of credit card effectively creates cash flow for you, and that extra money you have can then be saved.

By: SavingDiva

SavingDiva — Mon, 05 May 2008 15:43:36 +0000

I really only think about my emergency fund when there is an acutal emergency. It’s not readily accessible…I would need to click a few buttons…but it’s there when I hit panic mode

By: LuLuGal

LuLuGal — Sun, 04 May 2008 18:05:52 +0000

@ Ralph:
$1000 would only last me about one month if I had to LIVE on it. The reason I am aiming for such a low figure right now is that I am paying off credit card debt and it does not make sense to have a large amount of money gaining less interest than what I am being charged on my debt.

When I get rid of all the credit card debt then I will have a bigger fund set up.

By: Ralph

Ralph — Sat, 03 May 2008 05:46:44 +0000

Even though the it is true that Emergency fund information is all over the internet and TV these days, I think it is important to keep talking about it. I’m sure there are still tons of people out there who don’t have an emergency fund, so kudos for continuing to talk about it.

My only concern would be that you mention having a $1,000 emergency fund. How long could afford to live on $1,000?

By: LuLuGal

LuLuGal — Fri, 02 May 2008 23:17:19 +0000

Good for you that you knocked out the student loan AND you are saving in a high interest account.

Feels good to have that savings doesn’t it?

By: The Conscious Snob

The Conscious Snob — Fri, 02 May 2008 22:55:33 +0000

At this moment, I am keeping $1000 in my checking account at all times, that is my buffer. I then automatically put about 50% of my paycheck into a savings account that provides 3% interest. I just paid off my student loans, so saving is number one on my list.

By: LuLuGal

LuLuGal — Fri, 02 May 2008 22:53:57 +0000

I do have credit card debt that I am paying off while i am building my fund. I currently send $5 a month to the fund. In my case the mentality of saving is good for me right now.

The emergency fund strategy I spoke about can be applied by someone who does not have debt since it was meant to illustrate how easy it is to get your fund going.

Thanks for dropping by and please come back again.

By: JoeTaxpayer

JoeTaxpayer — Fri, 02 May 2008 19:22:52 +0000

Before starting that fund, I’d ask – do you have any credit card debt? Your savings can ‘earn’ you up to 24%/yr by using that money to pay down the credit card debt. For most, it makes little sense to have $1000 sitting at 3% and $4000 owed at 24%.
Just a thought.
Joe