Conventional advice says a full emergency fund should equal three to six months of living expenses. Aiming to have a significant cash stash is important, but for starters, you only need to sock away $500 – $1000.
This IS doable.
When your debt is gone, creating an emergency fund with three to six months of living expenses will be your main objective. But for now, how are you going to get together $500 – $1000? And where will you put it?
First off, it’s important you understand the significance of an emergency fund.
Up until now, when some sudden expense came up (car repairs, dental work, whatever) you may have been inclined to whip out your credit card. Unfortunately, when the next emergency came up, you did the same… and the next, and the next. Now your credit card bill is out of control and you have no savings. And in some cases, you may be bringing in less money than is needed to shovel out to creditors.
So, how do you get an extra $500 – $1000 fast? Here area few ideas:
- Stop eating out. No restaurants until the emergency fund is established.
- Sell some of your things. Sell things on Ebay, Craigslist or have a garage sale.
- No new clothes. If you need apparel, hit a garage sale or consignment shop instead of paying full price.
- Clip coupons and plan every meal. Yes it will take time, but you’ll save hundreds every month.
One of the best ways to rein in your spending is to start tracking exactly where your money goes. Once you have the actual dollars you spend and what you spend them on, then you can begin to cut out unnecessary spending and shave off expenses.
It may take a month, two at most and you will have the extra $500 – $1000 tucked away for an emergency.
Rather than keep the extra stash in your checking or savings account, open a high-yield savings account online. This way, you will begin earning interest and it won’t be easily accessible (like it would be if it were stashed at your local bank). However, if you do need access to it, it’s easy enough to transfer the money to your checking or savings when you need it.
Have you created your emergency fund? How long did it take?
High Yield Savings Accounts:
Read this article for more ideas on how to find more money… click here.
Read this article for steps to getting the most out of your coupon clipping… click here.