Jan 17th, 2009
Emergency Funds Need Funding Too
I was recently listening to a financial radio program when the point was made that in these difficult times, it’s necessary for the government to spend money (probably way more than they ought to) because they don’t have much of a choice, but when financial times are better, they really need to be more responsible by paying down debt and building up funds.
In many ways, the same is true for individuals. I have an emergency fund, which is not as well funded as I’d like (I actually use my vacation time as a sort of emergency fund by keeping a month’s worth of off time available at all times). I had to dip into it a few days ago to pay the deductible for the truck repair that I’ve blogged about before. That cuts my fund down sizably, by about 25%.
That money is not going to replenish itself (well, with interest it could, but it would take many years)! It needs to have dollars funneled back into it when times are better, so starting next paycheck I’m putting $50 per paycheck into it (in addition to the rather modest $25 a paycheck I was putting in to try to build it) until I’ve repaid the $500. That way when there’s another emergency–I wish I could use if, but it’s when–I’ll actually have a fund that’s back at its previous strength.
Carnival of Saving Money – Fourth Edition…
Thank you for participating in the Carnival of Saving Money….
[...] proud to have planned well enough to have an emergency fund to draw on at all. The problem–as I’ve discussed a little while ago–is that an emergency fund doesn’t just replenish itself. So now that my fund is [...]
[...] so if your emergency fund only has 3 months worth of expenses in it, now what? I’m working to fund mine with a years worth of after tax living expenses, just in [...]