Hey, Hey … Welcome back to the Life Lessons on a Sunday podcast! I’m your host Jaimeson and we are going to continue our Money talks. Today is all about your $1,000 emergency fund! Why should you have it? Do you already have it? How do you even start to get it? Enough with the questions, let’s just right to the fun …
Last week, we talked all about our Relationship with Money. Some of the things we were looking to recognize is if we have a love – hate relationship … a love – love relationship … or maybe even a hate – hate relationship with money. What did you find out? I am currently at the love – hate phase, but getting closer to a love only relationship.
We were also going to be more aware of our spending habits and take a few notes. Were you able to do that? One thing I realized this past week is that it is much easier for me to stay focused on my food spending during the week than on the weekend. I’m really good about packing my lunch for work and fixing a meal at dinner time, but when the weekend comes and the hubby asks you out to dinner – you don’t say No!
And I’m not saying this a bad thing, I’m just saying that this is one of the things I noticed about my spending.
And just one more recap from last week … Did you ever fill in the blank to the statement … “If I had more money, I would __________”. I hope you did or do this week. I think this might become our money statement for the series … I mean, who doesn’t love more money right?
Speaking of more money, don’t forget to include Stephen with Boyd Wealth Management into your financial research. He can be a wonderful asset. Make sure to visit his webpage at BoydWM.com, that’s B-O-Y-D-W-M.com.
Now to your $1,000 Emergency Fund! And let me just go ahead and warn you that I might get a little excited today because I love talking about the $1,000 Emergency Fund, and well, just money in general.
First up, I would like to start us off with one of my favorite quotes by Dave Ramsey (you’ve probably heard it before, but it is worth saying again and again)
If you will live like no one else, later you can live and give like no one else.
YES! YES! YES! I have heard this quote for years, but this year I am holding on tight to it! I have it posted in my house and have it written across the top of my monthly budget pages so I keep it at the forefront of my thoughts this year as my family is working really hard to reduce our debt and become a debt free household! Eek, I’m so excited!
Okay, the second way for us to live like no one else now, so we can live like no one else later is to have the $1,000 Emergency Fund. Remember the first way is to identify your relationship with money (link to episode 10 here).
I was going to give you some big, fancy statistics here for the average savings account balance, or the lack there of, but I realized two things … First, THIS ISN’T ABOUT ANYONE ELSE BUT YOU! It’s about you, your plan, your budget, your safety net and how YOU are going to get there. And second … there are TONS of stats and they all pretty much contradicted themselves, so no need to share that here.
Let’s just focus on YOU and I – okay?
Now you may have a few questions already … Why do we even need this Emergency Fund and why does it have to be a $1,000? Both are legit and great questions.
Why we even need an emergency fund is because, well … LIFE! Life happens! We can plan and hope for the best, but then inevitability something at sometime that is unexpected or is an accident will happen and we need to be prepared for it.
Why the $1,000 you ask? The short answer … Think about your deductibles on your home or car – they are probably at least $500 if not $1,000.
Okay, so let’s talk about what an Emergency Fund IS and IS NOT!
A true emergency fund is strictly for emergencies! An emergency is a flat tire, the fridge goes out, someone hit your car and you have a deductible, you are sick and need to go to the doctor, someone passes and you need to get to family, anything and everything that is unexpected and you have to deal with in less than 15 days basically. This fund is there for the “oh no – now what’s”. It is there for your peace of mind! And let me tell you – from someone who has had an emergency and has not had the fund … it is very stressful! Hopefully you’ve never had to relate, but I’m going to guess that we’ve both had emergencies with no funds before! That’s why I am so passionate about everyone having an emergency fund and at least $1,000.
An emergency fund IS NOT … for clothes, a new cell phone, an account you can dip into when you decide to spend extra or go out to eat too many times that month. It is also not a vacation fund. It is actually there in case something bad happens while on vacation, not to get you to vacation.
Basically, once you have the emergency fund – you need to forget about it until you need to use it! I would actually recommend that you have two to three savings accounts. Have one strictly for this $1,000 emergency fund. Once you get there, open a new one and never touch the emergency fund until that dreadful emergency happens. This way, you know for sure that it will be safe and sound right where you left it and able to access easily enough. Plus, you can earn some sweet interest while it is just sitting there too – of course you’ll need to shop around for the best interest rate and it might not be with your current bank. BUT, the main goal is to just open one and get started, so if that’s $10 and at your current bank – whatever is easiest and quickest to get started … we will talk about getting the most for your money and savings later – right now, we just want it open and started!
Now, let’s talk about how to reach that $1,000. You may already have a savings account and well on your way! Proud of you! You may have one large savings account that you have your vacation fund, emergency fund and basically all your savings in one account. That’s awesome … as long as you remember to ALWAYS minus the $1,000 when thinking about how much money you have to spend on vacation or anything. I would actually recommend you transfer $1,000 to a separate account – and you can take the time to find the best interest rate. In fact, head on over to foralifetime.org and I’ll list some current online accounts with the highest interest rates and who I currently use.
Okay, for those of us that are starting from scratch, let’s get our plan together, which will include things we can do to get the $1,000 and a time frame. And this goes for any income level by the way … the first time I created my $1,000 emergency fund and realized the benefit of having one was when I was 21 years old, after I had an emergency and no funds to help me through it. I was a young, single mom, earning $1.00 over minimum wage at the time, living penny to penny on every paycheck and I was able to create my $1,000 emergency fund in three months. I’m not saying this for kudos, I’m saying this so that you know wherever you are currently financially, it can be done and should be done immediately. Over the 19 years, we have had to dip into that emergency fund, and every time we did – it brought us peace knowing it was there – then we worked and worked to build it back up as quickly as possible! That’s the other thing … it is there to be used … just don’t forget to rebuild it!
Now for ways to build (or rebuild) the emergency fund to get to $1,000:
I’m going to start with the obvious and quickest way to get there … SELL STUFF!
- Have a garage sale … and spring is almost here, which is the perfect time! My family and I have at least one if not two yard sales a year. Sometimes they are great and sometimes, only $100 – but you know what, that’s $100 you didn’t have before. One great way to have a better yard sale is to include your neighbors or family and friends. The more stuff you have, the more likely it is that more people will stop and see what’s there. Remember, the more the merrier!
- CRAIGSLIST: If you have a large item that is not easily shipped or transported, then Craigslist may become your friend. We have actually decided to sell our professional pool table. It is an expensive piece and needs to be moved by a pool table company so it can be taken apart and put back together properly, so it is not something that I want to deal with in a garage sale. Also, selling on the internet vs. a garage sale gives your item the opportunity to be seen by more people.
- SELL ON APPS: With technology these days, there are tons of apps and websites to sell items as well. There’s POSHMARK for clothes, EBAY, LETGO, and the list goes on. If you have clothes or smaller items that are fine to ship, I would highly recommend checking out these options as you can do these on your own time.
- Don’t forget about Auction Houses: Especially if you have some older or rare items. Yes, the auction house will take a percent, but they also have the right buyers that will pay top dollar and added bonus, you don’t have to do any of the work to sell the items.
My Second Recommendation would be to adopt the “EITHER OR” method! This is when you are going to do something, pull out your money to pay for it … STOP and think … I can EITHER have this OR I can put this to my Emergency Fund. You will be amazed at how quickly you can get to $1,000 … and fair warning, this method has also been known to make people sick when they see how much money they have been “wasting” instead of saving. But, on the bright side … it is a HUGE eye opener and easy way to get to your $1,000. Some examples that could happen in just one week are:
- I could EITHER buy this fancy coffee every Monday – Friday for $6 a day OR I could save $30 a week – which is $120 a month!
- I could EITHER go out to lunch with my co-workers every Friday for $20 OR I could save $80 a month!
- I could EITHER buy this super cute outfit that is on sale for less than $100 OR I could put that money in my emergency fund!
The “EITHER OR” method can be used for everything! I encourage you to start using it today! Just keep “EITHER OR” on top of your mind … in fact, just say it 10 times and it will stick with you! Ha Ha But seriously, this “EITHER OR” method will put your money relationship in check, it will also bring us back to the quote I used last week from Rachel Cruze,
Every dollar you spend is a reflection of your values.
Okay, my third and final recommendation to get extra money to build your emergency fund … GET A SIDE HUSTLE! Yes, I mean work more! You may be thinking … I have no time to work – all I do is work … but, I say two things to that: First, okay, then you must do both of the first two recommendations without question. Second, I say, “Suck it up buttercup”. Desperate times call for desperate measures … and you not being ready for an emergency is desperate times! Now, I’m not saying that you have to go get another job that requires you to clock in and clock out – although there is absolutely nothing wrong with that and you can surely know how much you will make and how long it will take you to reach the $1,000 goal and actually may open some doors for you that you weren’t expecting. I say go for it! But you may be the type of person that needs to do something from home or on your schedule because you have kids or other obligations. Whatever the case may be, there are tons of possibilities out there and this is the perfect opportunity for you to turn your passion or hobby into a paying side business. Now, I am a firm believer in network marketing companies … you just have to find one that you love the products and believe in the company. There are plenty of great ones out there. I am also a firm believer in starting your own business. I say this is the perfect time to go for it … put yourself out there! What do you have to lose? Nothing … but you could gain your $1,000 emergency fund and more!
I think with those three recommendations, you will be on your way to building that emergency fund in no time. But let’s talk about time. How quickly would you like to have it? And no, yesterday isn’t the answer. Let’s be realistic. 1 month? 2 months? 3 months? Maybe you think it will take a whole 6 months? I don’t think it will take that long, but the main goal is to try to get a time frame and plan written down, so that you stay focused. Plus, if you beat that goal, you can have your peace of mind sooner and keep going to a new goal … maybe pay off some debts, save for a vacation … the sky is the limit when you see what you can do with the time and money that you do have and when working toward a goal.
A quick tip and how I reached my $1,000 way back when (remember I was making only $1.00 over minimum wage and a had a baby) … I gave myself 3 months, roughly 90 days. That was $11.11 (eleven dollars and 11 cents) I needed to save a day. I printed out three months of calendars and put them on my fridge with the amount on each day and a BIG $1,000 at the 90 days. It was a great visual and a reminder to stay focused. I wasn’t able to save the $11.11 everyday, but if I sold something or did extra work, I was able to mark off more than one day at a time and that felt really good!
So, what do you think? Do you think you could find $11 a day to give you peace of mind and to be ready for when an emergency hits. And just remember, it’s only for a short amount of time, then you can go back to that coffee or lunch out. But, I have a feeling, that once you do this, you may get bigger dreams and goals that you want to reach with your money … that a $1,000 is just the beginning!
Time for our THOUGHTFUL TIDBIT. Today’s tidbit is from Will Rogers,
The quickest way to double your money is to fold it in half and put it in your back pocket!
That is so true! I am sure we all have many life lessons or one liners when it comes to money! So, help a lady out … share a life lesson and use the #LifeLessonsonaSunday or simply leave a comment on these show notes at foralifetime.org. You never know who you will impact with your story!
Make sure to come back next week, we are going to keep talking about … you guessed it … MONEY!
Until Next Sunday …