We will discuss issues such as budgeting, debt management, saving and more. In our first post I want to discuss an emergency fund. If you have spent any amount of time at all reading finance blogs, you know that an emergency fund is at the top of each blogger's recommendations. Sweet Southern Hubby (SSH) and I have been married for almost 3 years...actually 3 years next month, how does THAT happen?
During our 3 years of marriage we have taken on some debt for various reasons including:
1. Buying our first home 2. Buying two very needed 4WD vehicles for our area
3. A major move to a different state 4. Not one but two job losses for my SSH in a 3 month span
To say that we don't have credit card debt would be a lie, and to say we have been fully responsible with our debt would also be a lie. There have been things we have gone in debt for (read 2 vehicles) that weren't NEEDS, technically they were WANTS but they have made our life easier and our income more stable (read: getting to work vs. being stuck in a foot of snow at the house for two weeks).
During our journey to being debt free the amount we have had in savings has vastly varied from time to time. Currently our emergency fund is sitting at a little over $500. Yes, I know most financial advisors and bloggers recommend anywhere from $1,000 to 3-6 months living expenses in an emergency fund...but right now, we are comfortable with $500 sitting in our emergency fund.
Why?
Well there are several reasons to that:
1. We have various other investment income that we could access pretty easily that amounts to over $5,000 in the event of a MAJOR emergency
2. Our insurance deductibles are $500...and yep, we recently had to pay one for an incident my SSH's truck had with a deer.
3. We would rather put our 'extra' money towards paying off debt right now instead of sitting in a savings account earning nilch in interest vs. paying off a 26.99% interest credit card
That being said, there were times where we had NOTHING in savings...not a dime and that part got us in part of the debt we are in now. So, how did we build our $500 emergency fund? For the past 3 months I have been 'side hustling'...selling things on Ebay, doing contract work as an event planner, virtual assistant work and selling things through online classified groups. However, the main funding source of our emergency fund was our tax refund this year. We put a huge chunk of it in savings for our emergency fund and are not touching it until..well, an emergency.
So that brings us to the 'but why?' part of the emergency fund. I thought for years that if a major emergency happened, we would just 'put it on the card'. And we could. BUT that's not the purpose of this journey, we want to be debt free, we believe that God intended for us to be debt free and we wholeheartedly believe that we will be able to bless others more when we are debt free. Things WILL happen, trust me...we have had septic line issues ($800), vehicle 'oopsies' ($500), medical expenses ($500) and more in the past year...although $500 may not cover a major emergency, it would help with a large chunk of it and that's $500 that we wouldn't be paying almost 27% interest on!
So, if there is one piece of advice I can give you, it would be: start an emergency fund TODAY! If it's $1 a week...at the end of the year that $52 you didn't have!
