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Posts Tagged ‘Emergency Fund’

Don’t Bring Me Down

January 21st, 2009 No comments

Reading back through my posts, the majority of them seem to have a negative slant, but that’s not my intention.  Our plan to get out of debt shouldn’t be depressing, and it isn’t; I get excited when I think about it.  Every time I see how much money we have budgeted (and ready) for something, it gives me a warm fuzzy feeling.  We’re definitely not invincible, but knowing that I have that $1,000 sitting there and ready in case something happens is a wonderful feeling.

The pace of our debt reduction is slower than I want, but there is progress forward.  I hope that at the end of January, when we have our emergency fund resupplied, we should have a couple hundred extra bucks to put towards one of the accounts, and, God willing, we have that $4,000 retired by May.

Another good thing is that our Flex spending account this year will be back to being as functional as it was in previous years.  Before, we had a debit card that you could you not only for prescriptions, but also to handle copayments, glasses, contacts, over the counter drugs, etc.  Last year, when our insurance switched, you could only use the card for prescriptions.  To add insult to injury, any long term prescriptions you had were required to be ordered from the insurance company’s own mail order pharmacy, making the card even less useful (and the mail order place balked at letting you use the debit card issued by the insurance company!)  So the money I had budgeted for the up-front cost of contacts and such can now go towards debt. $18 a paycheck, but it will make a difference.

So my latest goal is to not sound down or negative about our finances all the time.  We’re gonna get there, stumbling blocks or not.

Our 2009 New Year Resolutions

January 1st, 2009 No comments

Since everyone else seems to be posting them, here are our goals for 2009.  I hope that by putting these out for the world to see, that we might be more inspired to work towards them.

  1. Get organized.
    Our house and lives are still severely disorganized, and it definitely costs us money.  I needed a hex wrench a month ago, and, even though I know I own two sets, I could find neither and ended up going and buying another set.  What a waste.  Even more annoying, I just found a set I didn’t even know I had in a box of junk I bought at an auction.
  2. Get all of our credit card debt paid off.
    This should be pretty straight forward if things go well.  You can track our progress on the gauge on the right.
  3. Have $10,000 of our Emergency Fund saved.
    If we get our credit card debt paid off, we should be able to make this.
  4. Lose 20 pounds (each of us).
    My wife has made incredible progress losing weight, I have made none.  I might have to try the grapefruit & fish oil diet again.
  5. Go to the Liberty Bowl parade.
    Our two middle children are going to play in the marching band in the parade, and our oldest son lives near there, so we would like to make this Christmas.
  6. Entertain more.
    We built a deck in our back yard two years ago and used it quite a bit that summer.  This past summer, I think we used it once to entertain, and we really missed it.

What are your goals for this year?

Tips For Financial Success

December 31st, 2008 No comments

The Not Made of Money blog has some excellent tips to help with your financial success in 2009, and one of them caught my eye as an excellent addition to my post on your emergency fund and why you need one:

Be Prepared The worst financial disasters don’t come from the surprises life throws at you. They come from your being unprepared for those surprises. Fortunately, you can take steps to weaken the effect these surprises will have on you. Have an emergency fund in place; that will certainly take the string out of unexpected blows.

This tip has a Dave Ramsey like quality to it:  an explanation that, when you hear it, makes you immediately feel both enlightened and foolish for not realizing it yourself at the same time.

So much of financial independence is common sense, so why do so many of us not use it?

The Best Late Plans

December 31st, 2008 No comments

I have a spreadsheet planning out our stages to become debt free:

  1. Snowball credit card debt into oblivion (watch our progess on the gauge to the right.)
  2. Save six months expenses.
  3. Pay off our mortgage.

There is a row for every payday, showing how much is going to which goal, so I can see when we will be out of debt.

This plan starts on my next payday, January 2nd, 2009, and I am already three weeks behind.  It can be very frustrating when a plan gets off track.  We ended up over spending for Christmas, which is a one time thing (it just happens, a lot.)  And now, the replacement car we purchased in November is having problems and not running so well, so I need to take it in to be serviced, causing us to dip into our emergency fund (See?  You need an emergency fund.)

So now we will need to step back and replenish the emergency fund before we start moving forward again.  It is almost guaranteed that this will happen to you multiple times.  Don’t get discouraged, it’s the normal way things work.  Just keep focussing on your goal:  Freedom from debt.

Baby Steps: Baby Emergency Fund

December 28th, 2008 No comments

An integral part of your plan to get out of debt is your emergency fund.  Life is going to throw curve balls at you, and, no matter how well you plan, expenses are going to come up that you either don’t have enough money set aside for, or didn’t even consider!

Most people seem to use credit cards for these types of expenses, but that will leave you with a number of problems:

  • Credit cards are evil.
  • You might be tempted to run up the balance on the card and not have enough for emergencies.
  • You are going to pay interest, why not have the money and possibly receive interest?
  • Credit card companies are lowering credit limits, increasing interest rates, and even closing accounts due to the currently in-progress monetary apocalypse.  Will that card be available when you need it?

Let’s face it, most people who are in debt wouldn’t be without credit cards.  They make spending too easy.

So, once you get your bills current, using whatever is left from your budgeted items (you do have a budget already, right?), start socking that money away until you get $1,000.  You could go lower, but a grand is going to cover most things.  If you have a deductible on your car insurance, make sure your emergency fund is at least as much as the deductible.

It might be hard to imagine, but knowing you have that money tucked away will be ridiculously comforting.  Now don’t touch it unless it is an emergency!  This isn’t going to be the end of it, this is just the first stage of your emergency fund, enough to tide you over until you retire all of your debt.  Once that is done, you are going to work on building up three to six months of expenses into a full-fledged emergency fund.

How Did We Get Into This Mess?

December 11th, 2008 No comments

As of a year or so ago, I had no idea how much debt we had, how much our bills were, or how much money we had in the bank.  And we hadn’t reconciled the checkbook in years (literally.)  I had two 401Ks that amounted to about a years salary and nothing in savings.  I knew we were having problems, but ignored them, letting my wife pay the bills (I worked, she didn’t; I figured that was fair,) causing her all kinds of stress.

It came to a head when I backed into a car, and, upon calling the insurance company, found out they hadn’t received payment and we were canceled.  We were in trouble and I couldn’t ignore it anymore.

Our church was signing people up for a Dave Ramsey Financial Peace University course and, while I was a little skeptical about it, I convinced my wife that we should try it out and it changed our lives.  Nothing in the course is rocket science, almost all of it is common sense, but the presentation is nicely done and it convinces you to try it and stick with it.

So, now we have a budget, we reconcile our checkbook (almost maniacally, my wife would say — I start jonesing if the statement hasn’t shown up by the 12th or so,) a $1000 emergency fund, and one small credit card payed off, leaving two others.

Coming up, I will tell you about how we hit each of these steps, and the things that didn’t work.

About

December 10th, 2008 No comments

Somewhere before my 39th birthday, I “woke up” and realized that, even though I have two 401k plans, I only have about enough money in them to support us for a year.  I had credit card debt, a mortgage, and not a dime of savings.  This wasn’t the way to live.  My church was getting ready to start a Dave Ramsey Financial Peace course, and, even though a bit skeptical, my wife and I decided to take the plunge.  It was life changing.

Now, we are on a budget, have a $1000 mini emergency fund, and are getting ready to start snowballing our debt into oblivion.

We live in a small town in the Midwest and have four children, three that still live at home.