Archives For Emergency Fund

I hope you never have to break your Emergency Savings pig.

I’ve read a few articles about emergency funds recently that make me worry a bit. Seems Americans aren’t saving as much as they should and if they are it’s in all the wrong places.

In a recent Smart Money article (April 2012- Fatten Your Reserves) they cite a bankrate.com study that shows only 24% of Americans hold a 6 month emergency fund and 25% have no savings at all.

This article went on to state that Americans are using alternative methods instead of a traditional savings account like borrowing from 401K, home equity, and insurance. I disagree and believe going down this path will bring more financial disater in the end as these alternatives come with very high risks.

Emergency Funds: The Basics

An emergency fund’s purpose is to shield you from unexpected events and emergencies. There are some basics we must remember about Emergency Funds.

1. Keep it Liquid- No, not in water, but keep it easily accessible. Don’t tie up your emergency fund in hard assets like your home, CD’s, investments. If an emergency happens, you need that money now, not in a several days or weeks that include paperwork and red tape.

It is wise to keep your emergency fund in a high interest saving account or Money Market account with check writing privileges. (Find one now)

Continue Reading…

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A blown tire doesn’t have to blow your budget

We all need an emergency fund just in case something unexpected happens. Trust me, the unexpected will happen.

If you don’t have the funds saved up for a rainy day, you’ll be getting wet.

I’ll be starting a list of reasons why you need an emergency fund.

If you have ideas please send them to my Twitter @ontargetcoach

Why You Need an Emergency Fund Reason #1: Blown Tire

As I was driving to work recently on my morning commute, I felt my tire blow.

I kinda expected to have some sort of car trouble on our 97 Civic with 179K miles on it, especially since I’ve been putting 120 miles on a day.

Now, I’m an urban kinda guy, so I’ve never changed a tire by myself–Never.

I could have called AAA, but it would have taken them 30 minutes to get there and then I would have to be embarrassed to ask some other dude to change my tire and put on the spare.

This is Oklahoma after all where people still grow their own food and raise cows. You won’t hear an Okie saying they can’t do something.

Don’t say ‘can’t’ in the earshot of an Oklahoman–they’ll just angry at you for not figuring out how to MacGyver a way to do it.

I digress.

How to make a tire iron

My Blow Tire

I had a full sized spare [TIP: When you buy a new set of tires, keep the best of the old set and use it for your spare tire], so I didn’t have to worry.

After locating the cheap little jack and tools, I finally figured out a way to make the jack go up. It was difficult and I didn’t have room to turn the jack’s mechanism in a circle.

When I was done I figured out the two pieces went together to form a T in which I could jack the car up.

You knew how to do that already huh? Yeah, my first time-dumb.

After an hour the job was complete and spare tire on. I felt like a stud.

I changed a tire without help looking up how to do it on YouTube. I was a man. I was all grown up.

A State trooper slid up behind me.

“Shows over”, I said.

He saw my black covered hands and brought me an industrial wipe to clean my hands.

Emergency Funds and Car Repairs

Cars break. Especially if you drive them like a chuck wagon on a long journey across hard terrain.

My car crisis, could have turned into a budget crisis and caused much stress in our lives and marriage.

But I can buy a new tire, since I have an emergency fund. In fact, we even have a fund saved up for car repairs for when they happen.

Keep saving and drive safe.

Wagons Ho!

Do you save for car repairs or have a plan for when your car breaks? 

I was reading the 2011 Warren Buffett/Berkshire Hathaway letter.  Warren Buffett is like a wise old grandpa, who just happens to be one of the richest people in the world.

He gave lot of insight into the economy and financial situation today.  What struck me most of all was this letter from Ernest Buffett (Warren’s grandfather) which was on page 23.

Warren found it in a safe in 1970 while executing a will of a family member…along with $1000.  Impressive…especially since it was written in 1939 (10 years after the Great Depression started).

Lessons Learned From Ernest Buffett

  1. Warren Buffett is not a freak of investing and saving nature…he is part of a legacy of savers, businessmen, and wise investors.
  2. Emergency Funds are a must.
  3. Leaving a legacy of character , hard work, and wisdom with money can change the world.  (I wonder what my grandchildren will accomplish?)
  4. You can change your family tree.
  5. Saving money is possible during hard times. (he started this 10 years after the Great Depression before the economy began its recovery)

Are you following the NBA this year? Is your team winning? I’m not talking about the L.A. Lakers or any other NBA

Locked Door

What if this was your job Monday morning?

franchise. I’m talking about the players vs. the owners. Or perhaps it is owners vs. owners?

I’m not sure who is to blame for the lockout, frankly I don’t care to follow the drama.

Have the players thought about occupying the NBA headquarters in NYC? Just tell me when the NBA playoffs will start and then I might start watching.

I’m sure that most of the players and owners have enough money to weather the storm, but could you? Could you survive not working your ‘normal’ job for an entire year?

What if one day your boss called and said your job was on hold and to come back next year. What would you do? Continue Reading…

The last time I (Kristina Histen) had a savings account, I was still in high school. During my adolescence, my parents would double any money my siblings and I wanted to put in the bank to encourage us to save. This would have been a great concept had they explained to us why and the importance of this money. Over the years, my $5 here and $20 there quickly accumulated to over $1,000. During the final months of my senior year, I was especially ecstatic about this because I had over a grand to spend on my prom.

An expensive dress, hair extensions and a weekend full of fun nearly drained my account. The remaining I spent on matching dorm accessories to accommodate my college lifestyle. You know, those bare necessities I desperately had to have.

As a sophomore in college, I opened up my first bank account that came with a sweet credit card in my name. I saw it as free money that was spent on elaborate Christmas gifts and new clothes. Despite my begging with the bank, late fees and missed payments made me ineligible for a higher credit limit causing me to max out quickly. Pretty soon, I found myself counting coins just to grab a drink with friends. Nickel night and two-for-one happy hours became my favorite ways to socialize.

After graduation, I didn’t feel like slaving away at a “real job” and decided to keep waitressing. However, all my friends were accepting $40k+ jobs that made me feel incompetent in comparison. Pretending I didn’t want to save so I could “enjoy the moment” I impulsively bought a brand new car with a hefty payment plan and lived in a nice luxury apartment to keep up. When that wasn’t enough, I scrounged up whatever money I could find and moved across the country to one of the most expensive cities in America.

I arrived in San Francisco, four thousand miles later, at the height of the economic crisis. Unfamiliar with the area, I racked up parking tickets left and right. I could hardly get an interview, so I took whatever temp jobs were offered and waitressed on the weekends. Regardless of working seven days a week, my bills continued to take over my life and I was drowning in debt. I was stressed, exhausted and feeling extremely overwhelmed.

Therefore, I jumped at an opportunity to move to Los Angeles. I assumed there would be more available jobs with less expensive places to live and I’d finally be able to break even. However, I could only find jobs that paid between $12 – $14/hour making it nearly impossible for me to pay for anything. My student loan payments due every month were a constant reminder of the education I was not using and the money I didn’t have.

When all seemed lost, a friend invited me to take the Dave Ramsey Financial Peace University course that she and her husband were hosting. After my first class, I was taken aback. Why didn’t I know any of this?! Why had no one taught me how to handle my money before?! It just seemed so easy…still, with over $52,000 in debt at the ripe age of 25, I was hesitant as to if I could actually be a success story.

However, after each class I felt more inspired and more motivated than the last. I realized that I could in fact grab a hold of my finances and tell my money where to go. I learned about the baby steps and the importance of focusing on one at time. I learned that I needed to budget and have priorities. I learned that I could really do this, like really do it. Me! I could change my life. My first mission: $1,000 emergency fund. Therefore, when a real emergency happens, I can handle it without borrowing and can break the awful cycle of debt.

With the encouragement of my new mentors, a change in my attitude and a confidence I had never felt before, I was offered a job that paid nearly double what I was making. Within a few months I completed baby step 1. I have $1,000 back in my savings account that won’t be spent on a new dress or hair extensions. I am now one step closer to being DEBT FREE!
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Kristina Histen is an aspiring writer living in New York. When she’s not using her money to pay off debt, she is clearance shopping, drinking two buck chuck and budgeting for hair extensions.