Any rock-solid seminar or book on the topic of handling one’s finances will most certainly involve the strategy of an emergency fund. But why? Well, at a glance it seems so easy. Just put away a certain dollar amount, usually $500 or $1000 to start. Here’s the problem that almost no one will be honest enough to tell you…you’ll have an emergency almost every month, and the only way to stay on track is to continue to feed the emergency fund. And over time, your (LARGE) EMERGENCY’S will only be (small) emergency’s and then as more time goes by, you’ll have less and less (small) emergency’s. This is not necessarily because you’ve become lucky. It is, rather, because you begin to become sensitive about the emergency’s that you encounter, you’ll be more able to be pro-active in dealing with them, as opposed to re-active, which is what you are when you operate without an emergency fund.
A simply story…when we began my journey, we started with a $250 emergency fund. Why not $500 or $1000, as the professionals suggest…because I didn’t have $1000 and just the idea of ever having $1000 sitting in a bank account not doing anything except waiting for an emergency was mind-blowing. But, I did it. In the beginning, I drained that thing every single month to pay for things that I deemed emergency’s. But, as I stated above, it was them that I began to see those things coming: oil changes were going to happen every 3 months, and they usually cost the same amount, and those 5-week months at daycare (oh man, those were a killer), and so as I began to see these coming, I made them part of my written budget, and in turn, my emergency fund began to grow, until one day when you sit in your bed, paying your bills, only to realize that you’re starting a pay period with a $1,000 emergency fund.
For all those living paycheck to paycheck or worse, payday advance by payday advance, there is hope. It’s one step at a time. It’s one hurdle at a time.