This is known as "Murphy-proofing" yourself. Face it, something is only an emergency if you aren't prepared for it. Murphy's Law can't happen to you financially if you already have funds in place to take care of those pesky things that pop up. Please note, this money should be in a separate account from the one you do your day to day banking from. You want something that you can get to in an emergency but isn't sitting right there with the rest of your money. The temptation is too great to dip in to it then. I highly recommend an ING savings account.
I know $1000 doesn't really seem like a lot but its more than most Americans have in savings. And really, if you think about it, $1000 will cover most unexpected expenses....washer breaks, A/C needs fixed, new brakes for the car.....you get the picture. The key here though is being clear about what an emergency is. New shoes are not an emergency. A weekend away is not an emergency. Replacing something simply because you want the newest, shiniest model is not an emergency. Trust me, this is a hard one for me too. Especially when it comes to bright and shiny techno geek stuff.
A lot of people want to skip this step and go straight to the paying-off-debt phase. Don't. Trust me on this. You can't imagine the peace of mind that $1000 will give you, especially if you do need it.
So I know someone is probably saying "But I don't have enough spare cash to save up $1000. It would take me forever"! Been there, know that feeling oh so well. Most people can find some extra money in their budget (which will be the topic of my next financial post). However, there are other ways to find money as well. Look around your home. I bet you can come up with any number of items that aren't really serving any purpose in your life. Sell them!! Use this as an opportunity to de-clutter and simplify your life. About half of my original emergency fund was funded from selling things I really no longer needed and wasn't using. For me that included a really nice 35mm camera with lenses and filters, and a motorcycle helmet.
(BTW, just as an FYI, don't ask me to come over and help you de-clutter unless you really mean it....because I will, and will take great joy in seeing things go away. I am a minimalist at heart and purge my home at least once a year following the rule that if I haven't used it in the last year I obviously don't need it.)
Honestly, once I took a hard look at my finances and readjusted my budget then sold a few things I had my emergency fund in place in a month. So if you don't have that $1000 set aside yet, start working on getting that taken care of. You won't regret it.
I know $1000 doesn't really seem like a lot but its more than most Americans have in savings. And really, if you think about it, $1000 will cover most unexpected expenses....washer breaks, A/C needs fixed, new brakes for the car.....you get the picture. The key here though is being clear about what an emergency is. New shoes are not an emergency. A weekend away is not an emergency. Replacing something simply because you want the newest, shiniest model is not an emergency. Trust me, this is a hard one for me too. Especially when it comes to bright and shiny techno geek stuff.
A lot of people want to skip this step and go straight to the paying-off-debt phase. Don't. Trust me on this. You can't imagine the peace of mind that $1000 will give you, especially if you do need it.
So I know someone is probably saying "But I don't have enough spare cash to save up $1000. It would take me forever"! Been there, know that feeling oh so well. Most people can find some extra money in their budget (which will be the topic of my next financial post). However, there are other ways to find money as well. Look around your home. I bet you can come up with any number of items that aren't really serving any purpose in your life. Sell them!! Use this as an opportunity to de-clutter and simplify your life. About half of my original emergency fund was funded from selling things I really no longer needed and wasn't using. For me that included a really nice 35mm camera with lenses and filters, and a motorcycle helmet.
(BTW, just as an FYI, don't ask me to come over and help you de-clutter unless you really mean it....because I will, and will take great joy in seeing things go away. I am a minimalist at heart and purge my home at least once a year following the rule that if I haven't used it in the last year I obviously don't need it.)
Honestly, once I took a hard look at my finances and readjusted my budget then sold a few things I had my emergency fund in place in a month. So if you don't have that $1000 set aside yet, start working on getting that taken care of. You won't regret it.
I am working my way through paying off my debt at this time. Getting an emergency fund first was definitely a priority and I was surprised how easy that was once I started paying attention to where my money went!
Its amazing how money seems to just disappear when we aren't paying attention to it. That's why budgets are SO important!! And yay you for working on the debt!