If you faced an unexpected $2,000 expense, how confident are you that you’d be able to come up with the money? According to a recent survey from the market research firm TNS, less than half of us believe we could find the funds. Of those who said they could, about half said they would tap savings, about a third would turn to family for help, and about a fifth said they would rely on credit cards.
One of the most stressful ways to move through life is to do so without an emergency fund. If you have any debt other than a reasonable mortgage (I like to see the combination of mortgage, taxes, and insurance require no more than 25 percent of monthly gross income), I’d encourage you to build an emergency fund of one month’s worth of essential living expenses, then focus on getting out of debt, and then get your emergency fund up to six months’ worth of expenses. These steps should be taken before investing for your later years or a child’s college expenses. Where do you find the money to accelerate debt payoff or build savings? Cash flow. I’ve never met anyone who couldn’t do a better job of managing expenses more effectively.
For more ideas on spending smart, join me on Facebook or Twitter. This week, in honor of Veteran’s Day, I used Facebook to post some pictures of my late father during his time of service in WWII.
Matt,
Way to go! Hope to see this on the charts as a top rated web site/blog in popularity with millions of hits.