I love Suze Orman and Dave Ramsey - love...love...love them!
If you have had the opportunity to listen to their wise words about getting your financial life in order you will be familiar with their thoughts on Emergency Funds.
Interestingly they both have some great ideas. For instance - Suze says that we really should have a 8 month emergency fund because heaven forbid that we lose our jobs and have to live on our savings until we find new employment. When you stop and think about 8 months worth of expenses put back as an emergency fund it can be very intimidating...right?
Well Dave Ramsey puts it into workable steps. One day at a time plan shall we say? Your first goal should be putting $1000 back as an emergency fund. Now - that sounds so much easier than being intimdated with the 8 month goal now doesn't it? Baby steps..save the first $1000 and then begin on the second $1000. Before you know it you will have a completely funded emergency fund.
Just one word about having an emergency fund. IT WORKS!!! Last August when I received the Alabama Fall Semester tuition bill for Chris - I was more than a bit shocked. You see - I had calculated and recalculated and finacially planned for his first year at Bama. Imagine my surprise when his tuition was $6,000 more than I had expected. And this was just for 1 semester too! Surely this must have been a mistake that Alabama made but again much to my surprise they were correct. I live in Texas and while Chris has been in college in Alabama for 3 years (and paying tuition as in in-state student) he was considered out-of-state by the University of Alabama.
Now - once I got over the shock of owing $10K instead of $4K for the fall semester I had to find a way to pay this amount in 1 week's time.
As much as I hated to touch the "emergency fund" I quickly justified this was a true emergency. I had to fund the tuition in some way and I am very thankful that I had enough in my emergency fund to pay this unplanned emergency expense and still have some money left over for other emergencies.
Now I had to think about replenishing this fund quickly because I knew that I would have to pay the same amount in just 4 short months.
If I did not have an emergency fund in place I would not have been able to fund my son's education this year.
If you do not have an emergency fund - it is not too late to start one. I highly recommend it and hopefully this little blog with motivate others to start funding this very special account if you haven't already.