Destiny Survival

            I know of three financial counselors who say to have an emergency fund—Dave Ramsey, Suze Orman, and Mary Hunt. There are probably others saying it, too.

            So what’s this about an emergency fund? It’s a cushion you can fall back on when something serious comes up that you wouldn’t otherwise be able to pay for. Maybe the car breaks down, your refrigerator died, or you lost your job. We’re talking about financial emergencies, not a slush fund for things you simply want.

            If you’re like most people, you’re likely to put emergencies on a credit card or borrow it from a high interest financial services place. Believe me, I know what it is to be in that position, and all you do is sink deeper into debt.

            Many financial gurus say to pay down those high interest loans and cards as fast as you can. After all, why get 1-2% on a savings account when you can whack down that card that’s charging 12%, 19% or even 30%? That’s a good idea in theory, but when you’re making payments and the financial emergency hits, what do you do when you have no savings set aside? It’s the debt trap all over again.

            That’s why it’s crucial to have an emergency fund. It’s not for investments, so you don’t want it tied up in a CD or something else you can’t get at. This needs to be liquid, such as a basic savings account, cash, or a combination. You need it when you need it, and you must resist the temptation to “need” it for anything but emergencies.

            How much should you have in your emergency fund? I’ve heard varying amounts. A minimum would be $500. A thousand dollars is better. Some say to have three, six, or even eight months worth of income at your disposal.

            If that last one sounds like too big of a bite, at least start somewhere. Set aside a little money each week or month as you can. Even if you have $150 this month in savings and have to use it for a $300 expense, it’s $150 you didn’t have not that long ago. What would you have done without it being there?

            Replenish your emergency fund before it’s totally depleted. Keep it going or you’ll wind up in the debt trap you’ve been trying to avoid.

            Yes, the credit card interest rates will continue on as usual, and you have to keep paying down your bill. However, if something comes up and you have no emergency fund, you may miss at least one credit card payment, and that can only lead to more trouble.

It’s a balancing act, but do what you can to pay down bills while setting aside funds for an emergency. As with any survival strategy, start small if you can’t do anything else, but do something. You won’t regret it.

The rich ruleth over the poor, and the borrower is servant to the lender. – Proverbs 22:7, from the Holy Bible, King James Version

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