Monday, April 27, 2015

The Emergency Fund

Welcome back!

I am glad you returned. For those of you who don’t know last week I kicked off a series called Financial Freedom. This series is a three part series in which I will discuss the culture of consumers in America, debt, and practical ways we can overcome this epidemic called financial crisis.
Last week I painted a picture for you all. I gave you all a sense of what most of our lives look like… a financial crisis. I left you all with two questions. “Are you tired of being a victim of your bank account?” and “Are you tired of being controlled by your money?” Today I ask you “are you ready to do something about it?” If not, that’s fine. We all have our moments where we say enough is enough…maybe you need to fall a little harder before you decide it’s time for a change. But, if you are ready to do something about it then you have come to the right place.

Disclosure: This is not one of my “feel good” posts. You most likely will not walk away from this post with goosebumps.  Nevertheless, it is a post that can radically change your life. Let’s start with asking ourselves this question? “If I were in a situation could I pay my way out of it?” You may be asking “what does she mean?” I am talking about if you had an emergency. Car breaks, down, medical emergency (with no insurance), fire happens, something that can alter your life or alter your week at least. Something that would have to be addressed right then and there. Would you have sufficient funds to take care of the mess? If you say no then don’t worry. I am right there with you. The cool thing about this series is that I will be doing the work with you! You are not alone my friend.

A few months back I had built my emergency fund to a total of $ 3,000.00. A situation arose that caused me to move out of the home I was in and into a new one. So now, I am back to square one. It’s important to have an emergency fund. You are important. Your family is important. What I am about to say may take you by surprise. But, you are number one. That debt collector can wait, that party can wait, and the lifestyle can wait. You need to have insurance. That is what an emergency fund is. It’s insurance. If something goes wrong then there is money to fix it.
What is NOT an emergency fund? An emergency fund is NOT a fund you dig into to buy that flat screen TV. It is not a fund to dig into when you don’t have enough to pay the restaurant bill. I say this with love if you can’t pay the restaurant bill you shouldn't be going out to eat. An emergency fund is for emergencies! It’s to fix a problem. It’s insurance. Now, don’t get me wrong. If you have to pay rent then pay it! Don’t go telling your landlord that you can’t pay your rent because you’re building your emergency fund.  The point is to put the things that are not so necessary on hold so that you can build your emergency account. You need to survive and the emergency fund can help you do that when the poop hits the fan!

Ok, now that we got that covered your next step is to actually build this fund. I took a course called Financial Peace by Dave Ramsey. If you can get a hold of the materials he offers online I would say that is definitely worth spending your money on.  Dave Ramsey has such a gift in the area of finances. His classes are funny, he is real, and he will give you practical ways to start your path to financial freedom or as he calls it financial peace. Anyway, so I took his course…twice. What Dave recommends is that you save 15% of your income. Now, he states that if you make less than $15, 00.00 a year then you should have at least $500.00 in your emergency fund for emergencies. If you’re making over $15,000.00/year then you need to be saving 15% of your income. You can always adjust the number to your needs. But, no matter what you need to have an emergency fund! I just started mine again. I won’t tell you how much I make (hehe) But, I will say this. I have already put aside 15% of my pay check into an emergency fund. Yay!

Today’s takeaway: Build your emergency fund. Go home, do the math, and start to put aside some money. If you cannot put aside 15% of your income then start with 500.00 dollars. There also are other ways to build your fund. Get creative. Whatever skills you possess put it to work. Sell old books and clothes on amazon…do whatever you need to do to build this emergency fund. Note: This is something you build quickly.

I hope this message was something that blessed you. If so, please put in the work towards financial freedom. And please feel free to share this post on Instagram, Twitter, or Facebook.  For social media info please visit the contact me tab. Have a rockin Monday! Meet me here next Monday for getting a post on Getting out of Debt.