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Why you Need to Start an Emergency Fund If you believe that having credit cards to deal with life’s emergencies is perfectly all right, you need to start changing your mindset. Relying on plastic to tide you over in case you lose your job is a bad idea. You will be digging your way to even more debt and what happens if you can’t find work in two, three, four, or five months? The credit card bills will continue to mount. How will you pay? This is why it’s important to actually have a cash emergency fund. Dave Ramsey encourages his readers to start saving $1,000 for use for actual emergencies like getting fired, having an unexpected pregnancy, and getting very sick. He also says that you have to start saving up for this fast. When you have a cash emergency fund, you actually have money to spend for life’s calamities. These can happen to you any time so it’s always a good idea to be prepared. Take note that your emergency fund must only be earmarked for those real problems that life throws at you and not for those emergencies that we make up. What are examples of our own made up emergencies? A very common one is a sale at the mall at 50 percent off. You think you absolutely need to have that piece of furniture sold at half the price. Problem is, it’s not in your budget. But you have money stashed in your emergency fund. Stop! A mall sale is not and never will be an emergency. You cannot use your emergency reserves to get that furniture even if it is given at 80 percent off and you don’t have money to buy it. How to Start Putting Together your Rainy Day Fund Now that it’s clear that your emergency fund must only be used for real emergencies, it’s time for you to start putting it together. How do you do that and how do you do so in the quickest possible time? There are actually many ways once you get revved up with your savings plan. If your company allows you to render overtime work (and pays for it, of course) then ask your boss to give you more hours. Work like you’ve never worked before— without sacrificing family time, of course. Try to look around your house for things you don’t need and can sell over on eBay. You can also hold a garage sale in your neighborhood. Remember, one man’s junk is another man’s treasure, so don’t be ashamed to sell your stuff. If you have time for a part-time job then by all means get

one. There are many opportunities to do freelance writing online if that is right up your alley. Another source of money can be found in your budget itself. How much are you earmarking for those restaurant dinners? As you may very well know, eating out is costly. Start making your own meals and eating at home. Brown bag your lunches and make your own dinners. This will give you huge savings on your food money— savings that you can put towards your emergency fund. What about your gasoline expenses? If you can find a way to carpool then do so. Again, money saved here can be put in your emergency fund. At this point, your neighbors and even some relatives and loved ones might think you’re crazy, but always stay focused on your goal. In a month or less, you should have your first $1,000 for your emergency fund put up. When you already have your rainy day fund, you need to find a place to keep it. Your money should be readily available for you to use when a real emergency comes up but at the same time it must be inaccessible for those times when you are just making up your own “emergencies.” You can put this in a savings account that is not tied to any of your debts or you can keep it in a secret place at home which only you know how to get to. This takes a little creativity and imagination but the bottom line is to keep your emergency fund safe until such time that you actually need it.

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Why you need to start an emergency fund