Taking Charge of Your Money... #1 Reason Why to Have an Emergency Fund

&

How to Start One

 

 

Follow along with me, one step at a time.

 

I have never learned to control my spending. It has always controlled me. There seems to be more month then money. I have always been short and I never seem to have enough.

Where does it all go!

Sounds familiar?

Well, it does to me.

I've had it. It’s time for me to take control of my money instead of my money controlling me!

This time, I am determined. I was recently introduced to a system that if followed, promises to bring you peace and tranquility knowing that your bills will be paid and that you will even have some money in the bank. The steps are divided into sections and topics, to help simplify the process.

You are on Part 5 of the Taking Charge of Your Money Series

 

Let's take a moment to review

 

If you have followed along through the series you have:

Part #1- Great Place to Start

Part #2- Get Current

Part #3- Mini Emergency Fund

Part #4- Tackling the Debt

and Now you we are on  Step 5... #1 Reason to Have a Emergency Fund & How to Start One

 

Let's Begin

 

read more...

 

 

Completing the steps in order will help us keep focused, see progress, have a plan and help us stay in control of our money and spending habits.

Are you ready for a break through?

 

We are breaking bad habits and starting a new way of living.

Let's be Frugal with a  Plan and Finding Financial Freedom, as we are

Living Life on 1 Income as a Single

.

In Step #1- We wrote down all of our  monthly expenses and periodic expense,

In Step #2- We Got Current, with any bills that were outstanding

In Step #3-We Started a mini emergency fund of $1,000

In Step #4- Paid off all of our debt and

Now...
  Step 5... #1 Reason to Have a Emergency Fund

.

 

This is the steps that staying focus on our goal will challenged.  We might getting  tempted to splurge. Hey, after all we have a little extra money, after getting current in are bills and tackling our  debt. Well, not so fast!

 

It really isn't extra money because we owe it to ourselves to start Taking Charge of Our Money and not let money take charge of us. 

 

Our goal in Step 5 will be to  save 6-9 month of living expenses. 

This is how, we can achieve are goal!

 

We have saved $1,000 in Step #3 "Mini Emergency Fund."

 

If you remember back in the mini emergency fund post, I mentioned how my  mini emergency fund help me, when I suddenly had to replace a tire on my car.  No credit was used  because the emergency funded the ... 

EMERGENCY

 

After repairing my tire, I went ahead and replaced the money I used for the tire before moving on to Step #4 Tackling The  Debt.
 

For Step #5,  we should start considering opening up a bank account separate from our monthly and periodic expense accounts. A great place to save the money is in a money market account.You will not get rich with interest however you will make some interest and you will also get  penalized for numerous withdraws.

 

How are we funding the emergency fund, you might ask?

By:
Getting Creative

Selling Something

Working a Second Job

 Finding a Baby Sit

 

 

All extra money, that comes our way after paying our budgeted monthly and periodical expenses will go into our emergency fund until  it is fully funded. 

 

 

Remember, this fund is there to help us so that when an emergency happening,
we will be able to out the fires in our lives, without using credit.

 

 

To provide an example on how to start I will provide my emergency fund goals.

Keep in mind, I am a commission based, self employed person, with no children living at home and

Living life on 1 Income as a Single.

After Getting Current (Step #2) and  Tackling Your Debt (Step#4)

My New Monthly Expenses are: $2370 YEAH!!!
My Periodic Expenses are: $3570 ( Yearly)

While I am evaluating my new budget:

I will subtract any expenses  from my budget that aren't essentials items from my monthly and periodic expenses.

 

Thinks about it:

 If  an emergency happens: lost  of a  job, you get sick,  etc., would you be buying shoes or entertaining?
Probably not,  at least not until you get back on your feet.

From my monthly expenses: I was able to reduce my monthly expenses by $100. (that was    allotted  monthly entertainment amount) and $500 from my periodic expense (allotted gift giving amount)

My personal goal is to save 9 months of total living expense because of my commission based income however a 6 month would be okay if that is what you chose to save.

                                       Doing My Math: 

Monthly  $2,270 x 9 = $20,430
Periodic $3,070/12=$256.00 x 9=$2,302.50
Minus $1,000  that I have saved already for the mini emergency fund

I will need $22,732.50  to have my fully funded 9 month  emergency fund


Things Will Happen

When they do, we will be ready without the uses of credit.
How does that sound to you?

I am up for the challenge, are you!
Let's Get Funded!!!

How are you doing with theses steps? Do you need help?  Don't hesitate to share your money experiences, challenges and triumphs, we  can all benefits from learning from each other!

Coming Soon:  Saving For Retirement