Grow an Emergency Fund

If some disaster happens today, tomorrow is too late to start saving.

Maria's words of wisdom

Saving money is hard, especially when finances are already tight. You need an emergency fund. There's no other way to butter that biscuit.

Sometimes what we think are necessities are really the fluffy extras we don't want to live without. I fall into the same trap all the time. I don't need a smart phone or new Photoshop software, but I have them because it makes my life easier--and for now, I can afford them.

The smart phone was an extravagance for sure, but I live in the boonies where my service goes down regularly. That phone has been a lifesaver. And the Photoshop software was unbelievably expensive--hundreds of little doggie dollars. Although it was deductible because I use it in my cover design business, it's still cash out of my pocket.

The trick is to plan your expenses so the surprise expenses don't eat your lunch. There are ways to save without killing yourself.

Here's a quick checklist to get you started.

• First, decide how much you need. The general rule of thumb is 3-6 months worth of living expenses. This is in case you lose your job, or find yourself in a natural disaster (or serious illness) that keeps you from working.

• Start looking at the stuff you can live without. Cut cable, magazines, newspapers, and home phone service. Negotiate for a better cell phone plan, or raise the deductible on your insurance. Stop eating out. Pack lunches for work and school. Quit bad habits. You know what they are.

• Sell something. Consignment stores take almost anything. Selling on Craigslist is even better. And then there's Ebay--and garage sales.

• Scour the house for change. We recently cashed in $50 from a jar of PENNIES. I also have a habit of tucking folding money in every pocket of whatever I'm wearing. Winter is a boon because I always find extra bucks in winter coats.

• Buy nothing new for a month.

• Learn to repair stuff yourself. I've taught myself how to do stuff entirely from YouTube videos. It works!

• Get a side job. Part time jobs and side gigs can be scheduled around your main job.

• Don't shoulder everything alone. Encourage your family to do their part for the cause. After all this is for their benefit too.

• Lastly, and most importantly, never, ever touch your savings unless you're in dire straits. Sometimes when we see a nice nest egg just sitting there it burns a hole in our pockets.

Each and every one of us will suffer real heart-stopping disasters several times in our lives. It's inevitable. That's how life works. But that doesn't mean it should bleed us dry.

Start saving now--this very minute. Even if it's only $10 a week, it's a start in the right direction.

In the meantime, let me blow some fairy dust your way in the hopes that whatever knocks you down will also lift you up.

Do you have an emergency fund? Have you ever needed to use it?


B.E. Sanderson said…
All excellent advice. We used a lot of these ideas to pay off our debt and build our savings. Now we have emergency money set aside and the living frugally thing is just an ingrained part of our lives.
Maria Zannini said…
BE: It's a huge weight off my mind to know I have a buffer. It doesn't make the emergency any less pleasant, but at least I don't have to chew off fingernails trying to figure out how to pay for it.
Dru Ann said…
A great way to save money is opening up a holiday club account with automatic deposits because you can't take that money out until the period is over.
JackieBCentralTexas said…
Emergency fund-Check. Used it yet- No thank goodness.

We have been lucky that both my Husband and I have the mindset to save a certain amount of any windfall rather than spending all of it. We splurge on occasion but on stuff we use like his Digital Camera and my Bookcases to replace ones we lost due to theft and house fire.

Gave up my smart phone last June since have Mac Desktop and an Ipad Mini to use on WiFi at home and out and about, so glad I did as it cured my addiction to swiping the phone all day long to check email and other Internet sites that are basically time wasters.

Maria signed up and glad you got the plug it to subscribe working, although the one where new posts notification at end of comment section sent this to my email today just fine.
Maria Zannini said…
Dru: I've never tried a holiday club account. I didn't realize you couldn't take the money out early. That's a great idea. Thanks!
Maria Zannini said…
Jackie: Whew! Thanks for the update on the sign up plugin. The emailed post goes out at 8am CST, a little later than the actual post. That's just in case I find an error and need to fix it after the fact.

Thanks for the feedback!
Stacy McKitrick said…
We have several emergency funds.
My hubby's teaching money goes straight to the savings account. He said when he gets enough in there to pay the house off, he will. Actually, we have enough in stocks now to do that, but he doesn't want to touch those. They're paying pretty good dividends (better than the savings account).
It didn't used to be this way, though. Money was tight while he was in the service. It's nice to have breathing room for a change. I'm sure it'll all change with he retires, but he assures me we'll be okay (and he's the worrywart!).
Angela Brown said…
I was glad to help, Maria. You're all kinds of awesomeness :-)

And it's interesting that you posted this today. I am in the process of refocusing my funds to start setting money aside for just this kind of thing. Better to be prepared than caught unprepared.
Maria Zannini said…
Breathing room is the perfect name for it.

If you want to pay it off the mortgage faster without incurring more months with interest, add a little extra on the principle every month. The final payout will be lower when you decide to pay it off.

We do that whenever we have a little extra.
Maria Zannini said…
Angela: Good for you!
I still remember the early years when our only car broke down. We were broke. And we had a hurricane bearing down on us, effectively trapping us. Poor Greg was under the car (with a book) trying to fix the part before we were washed away to the seawall. Tense hours!
We cut cable awhile back and love using our Apple TV/Hulu - no commercials! We still have to buy shows/series occasionally, but it's still cheaper for us than paying for cable.

Years ago, we actually went on a whole trip paid for by change. We still save our pennies and cash them in.
Michael Keyton said…
I think saving - even scrimping comes naturally to a post war generation. You imbibed it from your mother's milk. . . and looked forward to lemonade. My recent triumph was negotiating an existing £21 a month sub to my smartphone provider to £4.50 a month. Thing is, do I spend it on drink or save :)
betty said…
In addition, we have an emergency supply of cash around the house that we don't touch. You are right, Maria, just get started; even if it is only a few dollars a week or a month, but it gets you into the habit of thinking of saving. Great tips!

Maria Zannini said…
Betty: I will tell you a story about when my father-in-law died.

The moment we got the news, Greg told his mother to immediately withdraw $1000 from the bank. In those days, banks had people whose sole job was searching for obituaries of their customers. If the customer died, their job was to freeze the accounts immediately.

They'd release the money in due course but in the meantime the survivors would be without any available cash.

Today with computers, I imagine the freeze is almost instantaneous.

You never know what might happen. Having a little cash in the house is excellent advice.
Maria Zannini said…
re: Thing is, do I spend it on drink or save
Now you sound like Greg.

I do think it has something to do with being a post-war generation. Stuff is so available now and worse, companies wave loose credit as an incentive. It's tempting, but in the long run it's a train wreck waiting to happen.
Maria Zannini said…
re: Years ago, we actually went on a whole trip paid for by change.

Wow! Now that's inspirational. Great job!
Great ideas! Budgeting is so essential. This is something Himself and I had in common when we met. I was used to budgeting to the penny before and during college (my 30's/40's), while raising 5 kids. Himself didn't have to be so careful, but he did budget to the dollar. Skinflints, both of us... Still, we didn't have an emergency fund until about ten years ago. We did dip into it once, to pay for private school (a cheap one!) for a troubled grandchild. Not a true emergency I know, but it was worth it to see him put the brakes on some disturbing behavior.

In addition, being retired, we have several years of TIPs which we can use if the market loses all our money. With those in place, our emergency fund doesn't have to cover living expenses.
Maria Zannini said…
re: market losses
Now that is something we think about a lot. If the whole thing went belly up in a repeat of the Great Depression, we'd be hard up but better off than most.

It's scary to think about, scarier still not to have a plan in place if it does happen.
Susan Gourley said…
We had no emergency fund for years and years while the kids were in college. We finally have one and it really relieves a lot of stress. We've built in by working more and more.
LD Masterson said…
We always kept two saving accounts. One was the "spendable" account where we saved for special expenses like vacations or large purchases. The other was the "don't touch!!!" emergency account. The emergency account got fed first to make sure it was always there but having a no-guilt account to draw from made some spending decisions a lot easier.
Maria Zannini said…
Susan: Before we retired we saved as much as we could to have an entire year's worth of living expenses in cash. That's become our baseline now. Anything saved above that amount is happy-happy-joy money that we can spend without guilt.
Maria Zannini said…
Linda: For me, the guilt is at the core of my spending. If I have enough of a cushion I don't mind so much.

That was smart to feed the emergency account first!
Jenny Schwartz said…
I love that moment when you take a jar of coins into the bank and come out with notes! that feels like real spendable money :)
Maria Zannini said…
Jenny: I was absolutely shocked that we had saved that much, and all from nothing more than throwing coins we found on the floor, or in our pockets.
Karen Gowen said…
Your new site is lovely, Maria! This is the first time I've visited but definitely won't be the last. The emergency fund is such a crucial part of any financial plan. Without it, we just rack up the credit card debt to get through hard times.
Maria Zannini said…
Karen: Thank you!
re: credit cards
I hadn't thought of credit cards to get out of a jam. It's like putting your head in a guillotine. No one ever gets out of that burden without sacrifice.
[…] If you haven’t already started your emergency fund, do that now. Go here for tips on how to Grow an Emergency Fund. If you lose your job suddenly, that emergency fund becomes a […]
[…] Go here to learn how to Grow an Emergency Fund. […]