As I talk to people about their finances I always encourage them to build an emergency fund. Do you have an emergency fund? Like it or not, emergencies will come and they’ll be a lot easier if we plan for them and have a bit of cushion in our finances.
If you’re working on paying down your debt your first goal should be to have a $1,000 emergency fund. (Once your debts are gone your goal should be three to six months of expenses.) While $1,000 may sound like a small amount of money, I can promise that it’ll be helpful if the car breaks down or any number of other crazy circumstances.
When your emergency comes you won’t have to charge it to your credit card because you’ve already planned for it! Think of the satisfaction you’ll have in paying cash instead of having to pay for your emergency years down the road!
Perhaps you feel like a hamster running around in a wheel. You save $1,000 and then an emergency comes and you use that cash. Then, after saving another $1,000, another emergency comes and you have to use that cash! Man, this can be frustrating but you should be so proud of yourself for what you’ve accomplished. You’re not adding to your debt and you’re training yourself to pay cash for purchases! I don’t know about you but that’s something to get excited about!
I’ll be the first to admit that this process can be difficult but I promise that it’ll be worth it once you reach your end goal! Right now you’re at the top of the hill with a tiny snowball. But, once you get that ball rolling it’s going to get bigger and bigger! And, before you know it, you’ll be at the bottom of the hill with no bills in site and a fully funded emergency fund! So my encouragement to you is to keep truckin’.
Tshanina Peterson blogs at Thrifty T’s Treasures where you can follow her journey of living a thrifty lifestyle.