Episode 414: 3 Alternatives for Emergency Expenses

June 23, 2016

Stuff happens so it’s a good idea to have an emergency fund to pay for unexpected things when they pop up. But let’s get real, we live in the real world and it’s not always easy to find the money to save and if you do have the money – time has a way of just slipping by and the savings just don’t happen – but that doesn’t stop emergencies from happening. So in the meantime, until you can save a proper emergency fund, here are three alternatives but if you decide to use them use them with caution:

  1. Keep the balance low on your credit cards – yeah, I not a fan of using credit that you may not be able to pay back immediately but emergencies happen.
  2. Keep one credit card just for real emergencies and pay it off as soon as possible.
  3. If it’s an emergency that can’t be charged, you can take money out of your retirement plan for 60 days without penalty but you must put it back within the time frame or there could be penalties on top of taxes. I’ve had some clients who missed the deadline and they didn’t think much of it, that is until tax time.

However, when you can – save, save and save on a regular basis. That’s when things happen and if you can make it automatic with direct deposits to savings or investments, it’s less painless as well.

And, that’s the minute for today. I love helping people with all aspects of their financial lives. If you have a question, send it to me at info@mindingyourmoneyminute.com.

Thanks for listening and as always remember that minding your money really is the path to a richer life!

 

Episode 401: What’s in Your Emergency Fund?

June 6, 2016

It’s Monday and I have a question. Is your money working for you?

Well, I’ll get right to the point. What’s in your emergency fund? An emergency fund (cash cushion, cash reserves) whatever you call it is an account you have to bail you out if something unexpected happens – your car breaks down, you get sick and can’t work, you lose your job – you get my drift. So how much do you have packed away?

If the answer is nothing or you aren’t sure, now is the time to replenish it or start one.

To quote Denis Waitley, “ We should Expect the best, plan for the worst, and prepare to be surprised.” But I’m not a fan of surprises that put me in a financial bind and that’s why having an emergency fun is so important. So how much should you keep in your emergency fund – well it depends.

How does it cost to repair your car? Pay your expenses for a month or two or three? And so on. So start by thinking about how much you need to have on hand. $5,000, $10,000 or more to tide you over. And if that is way too much start where you can start and add to it every time you get paid until you build up a comfortable amount. Then as you use it don’t forget to put the money back. And here’s the key, don’t keep the money in your regular checking account, set up a special account to there will be less temptation to use it for non-emergencies.

And, that’s the minute for today. I love helping people with all aspects of their financial lives. If you have a question, send it to me at info@mindingyourmoneyminute.com.

Thanks for listening and as always remember that minding your money really is the path to a richer life!