Every day, good intentioned couples are faced with a practical financial decision: Should we build back up our rainy day savings account or continue to save more for retirement? We just had this same dilemma in my own household. After having tapped our emergency fund for immediate cash to use a down payment on our new house, we’ve now got a big hole to fill. But that poses a financial problem. Every penny we earn that exceeds our budget is supposed to go towards our early retirement by age 45 plan. Plus, as we’ve demonstrated before here, saving your money in tax-sheltered accounts can compound into huge financial benefits later on. So then, why am I choosing to build back up my rainy day fund and put my extra retirement … [Read more...] about Should I Build My Rainy Day Savings Account or Save More for Retirement?
Where to Park Your Rainy Day Savings for Growth Without Much Risk
We all know that part of a good, healthy financial well-being is to have a decent sized chunk of money set aside in your emergency fund or rainy day savings fund as some people call it. Some advisers tell us it can start off with as little as $1,000 (I believe that one is a Dave Ramsey thing). More commonly I see suggestions to have as much as 3 months, 6 months, even 12 months worth of living expenses set aside in easily accessible bank account. Fortunately for my wife and I we have done a pretty good job of building up our rainy day fund over the years to as much as $20,000! That’s a pretty admirable amount and it would easily cover around 4-5 months of our living expenses should anything awful ever happen to us. Back when we … [Read more...] about Where to Park Your Rainy Day Savings for Growth Without Much Risk
3 Painless Ways to Build Your Emergency Money Fund
The other day I was having a conversation with a few of my coworkers about how long we'd be "okay" financially if we were to lose our jobs. (None of us were in any sort of trouble, it was just one of those conversations.) Much to my surprise most of them said they didn't think they'd last more than a month. A month? Perhaps I'm brain-washed from living in this money-blog community of mine, but doesn't everyone know by now that you're supposed to have 3 to 6 months worth of emergency money stashed up at all times? Disaster could strike at any time whether you're ready for it or not! And if you're not prepared well in advance to handle such a situation, you'll find yourself in a whole lot of trouble. Why Don’t We Do A … [Read more...] about 3 Painless Ways to Build Your Emergency Money Fund
You’re Going to Need A LOT More Emergency Cash – Bad Things Will Happen!
If you’re one of these people who walk around in a cloud of optimism thinking that nothing bad will ever happen to them, and that a safety net of $1,000 or so should suffice, I’ve got some bad news for you… You’re going to need A LOT more emergency cash. And I mean A LOT more than you think! Let me tell you what happened to us over the Christmas break. It’s a pretty funny story – funny for you to hear, but not funny to me at the time. All I can say is start saving! You never know when something like this is going to happen. But its inevitable that it will! Here’s my story… What Happened? On the last day of work before our official Christmas break started, I drove my wife’s GMC and noticed some pretty weird … [Read more...] about You’re Going to Need A LOT More Emergency Cash – Bad Things Will Happen!
Another Reason Why You Need Emergency Money – For Stupid Car Repairs
If you think that having $1,000 or so in your emergency fund is going to cut it, think again! I’m normally not a huge promoter of this topic, but over the last 2 weeks, I’ve had to dip into my stash more than I’d like. And if I didn’t have access to emergency money, I’d be up a creek either paralyzing one of my investments or taking on unnecessary debt. Here's my story of what happened: … [Read more...] about Another Reason Why You Need Emergency Money – For Stupid Car Repairs
My Alternative Emergency Fund Strategy and How It Works
Lately there have been a number of great posts and strong opinions about having an emergency fund, and I wanted to weigh in with my own opinion and experiences. I have had a long a standing love-hate relationship with emergency funds. Sure, you need them for critical situations! But my problem (and I think this is where a lot of people struggle) is how to save up enough. Depending on which advice you subscribe to, the recommendations can be anything from 3 to 12 months of your gross monthly income. If you’re a typical American household making $60,000 per year, that’s anywhere from $15,000 to $60,000 that we need to have in the bank! Ouch! Is it any wonder we fail at this? … [Read more...] about My Alternative Emergency Fund Strategy and How It Works