Monday, October 15, 2007
Saving for Your Emergency Fund
| By Lynn Forgy I wrote in a post yesterday that the first step, after writing out your budget, to becoming debt free is to save for your emergency fund. Ideally, this would be $1,000, although if you have a lower income your fund would be $500. Today I want to discuss some ways to go about saving for the emergency fund. If you're just starting out, working the plan, you may be feeling a lot like I felt in the beginning. I had so much debt that I was overwhelmed. For some people, the amount of debt I had may be a drop in the bucket. But because my income was low (under $22K), the amount of debt I had was extreme. I did not at that point have a home, but I did have several store credit cards (Old Navy, Best Buy, etc.), at least 2 credit cards (MasterCard and Visa), a car payment, and a student loan. My debt load each month nearly equalled my income. Not to mention I had to pay for day care, groceries, gas, etc. So what did I do? First, I prayed, and I prayed A LOT. Then I made a very conscious decision not to use any more credit cards. I just stopped. It also helped that I cut them up and therefore couldn't use them again. That at least stopped any new debt from accumulating. Second, in order to begin getting traction I had to make another conscious decision to cut down my expenses even further. This added some "income" for me to utilize in funding my emergency fund. Groceries can be an area of the budget that I tend to splurge on. However, after writing down all my budget categories and the income I had at that time, I had very little room in which to splurge on much of anything. So I began cutting down drastically on this expense. Many of the pre-made or prepackaged meals that are bought for convenience sake can be made at home for much less. I have posted a few of my recipes, along with a weekly menu and as you can see my total for weekly dinner meals is around $25.00. My lunches are usually last night's leftovers. I don't eat breakfast (I know, I know - I shouldn't skip breakfast) so that cuts out that expense. Although there are many days, usually mid-morning, that I will have cereal. I buy the cheap cereal, $2.50 per box, which brings my weekly grocery budget to $27.50. (Look for our Frugal Menu Planner with Meal Guide and Recipes coming soon!)  Be creative to find other ways to cut expenses. Below are just a few suggestions: 1) Turn the thermostat up to 83 in the summer and 64 in the winter. 2) Don't use the dryer! In the summer, line dry your clothing. In the winter, dry your clothing inside by placing them on hangers throughout your house (makes a great decoration, too). 3) Learn to say NO - No, I do not need X at this time. If you plan carefully, you can place such "wants" in your monthly budget. 4) Fluorescent light bulbs last approximately 10 times longer than regular bulbs, can save around $30 per year in electricity costs, and use about 75% less electricity. It is important to note however that because these bulbs contain a small amount of mercury, they should be disposed of properly. You can visit Energy Star's website for more info.  5) Check out freecycle.org or other local places to get and give items for free. 6) If you must buy new clothes, for yourself or your family, what about checking out the local thrift stores or Goodwill first? Oftentimes you can find name brand clothing at a fraction of the cost. 7) Unplug unused appliances. 8) Turn the lights off! 9) If you have a landline telephone and a cell phone, consider switching to just a cell phone. Or you could compare the benefits of the VOIP service (if available in your area) versus the traditional landline. For a definition, check Wikipedia. 10) Before you throw ANYTHING away, take a moment to consider if you can reuse it. The plastic bags you get from the grocery or other store makes a great wastebasket liner. Or perhaps recycle it at a local recycling bank for cash. Aluminum cans, newspaper, and office paper are recycled at many places for cash. 11) Have a ginormous yard sale! Anything and everything that you're not using, or haven't used in the past 2-3 months, can't wear or don't wear, hate, etc., SELL IT! 12) Cut out the cable or satellite service. 13) Turn the water off when you're not using it. For example, when you're brushing your teeth turn the faucet off until you need it. This is particularly important for those of us living in a drought - we don't have a drop to spare! 14) Make your own bread and snack items. If you have other suggestions for cutting expenses that aren't listed above, please email me. It is important to know that for most people, your emergency fund isn't completed overnight. It takes time, dedication, and commitment. It is hard work, but well worth it when you have an "emergency" that you don't have to pay for with plastic. |
posted by Krista at 7:37 PM
