Do you have an Emergency Fund?

I am not the most financially sound person in the world. One thing I do know – is just when things seem to be going well something unexpected always seems to happen where money is suddenly needed.

I make decent money and typically have “disposable” income to pick up a little of “this” or a little of “that“. Typically go out to eat once a week, and pick up some preparedness supplies. Kids needs clothes, car taxes need to be paid, prescriptions need to be picked up, etc.

This may be a preparedness blog – but as the title says – “Thoughts on survival and the world today“. Well, many people today live from paycheck to paycheck. Many people also constantly complain about being broke but the reality is they just spend money on frivolousness things. With the economy today and the future uncertain – we all need to take finances more seriously. If you already are – congrats as you are one for the few who do.

Experts generally recommend starting an Emergency Fund for those “just in case” moments. An Emergency Fund consists of a sum of money sitting in a bank account or other secure location which is to be accessed when some type of emergency comes up. Now – here is where I have to put a preparedness-spin on this topic. Depending upon the emergency which requires your extra money – having it sitting in a bank might not be the best location for it. If there is some type of power outage where “cash is king” – a debit card or check may not be acceptable forms of payment from many vendors. Options? How about a fire resistant lock box at home – possibly bolted to the floor? Being able to get to cash at anytime may be important depending on what transpires.

My point with this post is if you do not have an Emergency Fund – start one. Set a goal – maybe $500. Stop renting movies, don’t go out to lunch so often, sell some stuff on eBay -whatever – just start saving. Once you reach your first goal – set another. Many financial experts suggest having 6 months worth of expenses put back. That sounds impossible I know – but start small.

Take care all –

Rourke

 

 


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12 Comments

  1. This will undoubtedly sound stupid, but it does work, and I have been doing it since about 1995. It has saved my rear a few times, over the years. This assumes you use cash for most every-day purchases.

    Every time you come home, take all that heavy, annoying change in coins out of your pockets, dump it into some large container, and try to pretend it does not exist. (NOTE: I now separate out the quarters into their own container, because I have to use them for laundry, but the principle still applies). You probably won’t miss the change. Think about it. Unless you’re a little kid, and if you have a job, those pennies and nickels in your pocket mostly mean you’ll sink faster if you fall into a river, they’re not ‘money’. Kind of a sad social commentary, but true.

    Every year or so, you can get paper coin-wrappers and cash in at a bank (if you are rather OCD) or spend 3% and an hour at a Coinstar machine. Some banks will sort and count coins if you have an account there. Stick the paper cash in your stash-spot of choice, and pretend THAT doesn’t exist either, until absolutely necessary.

    A 1lb coffee can will hold anywhere between $90-$200 in coins. You might be surprised how quickly they fill up. Fairly painless, too.

  2. I thoroughly agree. I have a friend who wanted support in improving her finances. Amongst other things she wanted to start an emergency fund but never had any money left after paying her bills to grow an account. Over a twelve month period I tried all sorts to get her to make it a priority. Finally one day I got her to open her purse and select a note, any value. I suggested she put it in an envelope and add to it each week, even if it was only 20 cents from her purse. She put the note into an envelope but later that week took it out to buy a coffee on her way home and never did develop her emergency account. The rest of her finances stayed in a mess as well.

    You need to make an emergency account a priority so you have it when you need it. All the excuses in the world won’t be any use when the emergency comes. Supporting my friend for a year had one big pay off for me though. My finances improved by over $50,000 that year. I couldn’t give advice and not do it myself. My emergency account developed to $3000 in cash (well hidden) and it was incredibly useful on more than one occasion, the worst being when someone smashed into our parked car and wrote it off.

  3. Good post Rourke. I believe that an emergency fund is directly tied to preparedness and survival. I’m glad that I was able to teach and sponsor Dave Ramsey’s FPU a while back. It was a true blessing.

    I would add that an emergency fund should be 3-6 months of expenses. But you should at least start with $500-1000, pay down your debt first, then stash the 3-6 months…I would say not all at home…at least not yet. 😉

    You will also want small denomination of bills at home. Keep $5, $10 and $20. You might not find people who have change in an emergency scenario.

    It’s not hard to come up with an emergency fund if you are willing to get rid of some of the “fun” like cable, eating out (until you get the $$$), etc… You can also sale stuff around the house that is collecting dust or hasn’t been used in 6 months – 1 year. Have a garage sale or use Craigslist. I have done both and both work well.

    Peace,
    Todd

  4. I have payed off everything I own. I only have my rent,car insurance and phone bill that I have to pay every month. I own my car and my truck both of which I payed for in cash when I got them. Everything else I own free and clear. I got rid of all my credit cards except for my debt card. I have not had any cards for the past 5 years and don’t miss them at all. My credit is exceptional but I have no need to get anything on credit. I go out and get something small on credit every now and then to keep my credit up but immediately pay it off after 3 months. I am of the belief that my money is safer in my small fireproof safe than at any bank. I keep just enough money in the debt card to pay my small bills off and the rest stays with me, nice and safe and hidden.

  5. I like the idea of getting a safe. For me sticking money under the matress or in a sock drawer is a lot better than sticking it in the bank. For me it is because I can visually see the stash grow and I like to count it. When it is in the bank the temptation of just clicking a button to move the money over is way to high. For whatever reason it is harder for me to take money from a stash than from the bank – Probably because you actually get to see your money go away. I am gonna have to look into a safe so when the stash of cash gets higher than $100 I can move it from the matress to the safe.

  6. I never was good at cutting back to do things such as this. I do, however, firmly believe that selling old and unusued stuff online is the way to go. Certainly you get money for your effort but you free up space (for more stuff) as well; it’s a win-win.

  7. I have an old mason jar on the desk… it gets all the quarters and dimes. There is a small bowl next to the mason jar and it gets all the nickels. Up on the window sill is a coffee cup that gets all the ‘slug’ pennys. I have an old bank sack that gets the ‘coppers’. I take whats left in cash assets each month and turn it into ‘junk silver’ and it goes into bags of ‘cart wheels’, halfs, quarters, dimes. Golly am I a good fella er what. When Mamasan and I come into some larger chucks o cash…. it goes into the safe as cash along with the sacks o cartwheels, halfs, quarters and dimes. This has taken some to develope the disipline to do…. the habit. Now we have it and the ‘money’ pad we have wanted.

  8. Cash is king, so I put 20% of each pay check into my safe and more on occation. I am debt free, payed off the cards and closed them a few years ago, (it hurt my credit initially, but am back in the 700’s). I have also gettign back t micro-managing our family budget. cost of living in Ca, is a roller coaster ride.

  9. Typical penny is 95% copper and 5% zinc. Current spot price for the copper is about 2.3 cents per penny. In other words, each penny is worth 230% of its face value in raw metal.

    Melting point of copper is a tad under 2,000°F. Boron ceramic home crucible with either electric element (kind of expensive unless one is doing this full time) or with a small home forge and a decent set of bellows will get up to 2,400°F. Most metal recycle yards will weigh the slug of metal to ensure the seller is not melting down US coinage (a bit illegal according to the Feds). One solution is to add in about 10% extra raw copper (strip some old wiring and toss it in) to change the unit weight of the melt.

    Net profit is about $3.00 per pound. Assuming it takes 2 hours to melt, cast, and transport 10 pounds of penny and copper wire “scrap”, the hourly wage for this bit of nefarious activity is about $15.00.

    In comparison, the local Wal-Mart pays a little over $7.00 per hour to assist them in selling 4 acres of mostly Chinese stuff.

    Or you could just pick up an old Civil War cannon and use the pennies to repel boarders, in-laws, and revenuers. They won’t fly very straight, but they will make a mess of anything they hit.

    Personally, I just throw the stuff in a jar and let the grandkids use it to help keep the local ice cream truck in business. Occaisionally, we will dig out the quarters for poker night.

    • Hi Harry –

      Actually your composition description of the CURRENT penny is backwards – 97.5% zinc and 2.5% copper. Prior to 1982 the penny was 95% copper.

      Thanks – Rourke

  10. Just dropped the cash for some more “junk silver”.

    Between the collectors market and the silver content, I have a “decent” fund there.

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