subject: Put Money In an Emergency Fund by:Elizabeth Williams [print this page] Surprisingly, many people don't have an emergency fund. Having cash on hand is a requirement for paying for life's little unexpected bills. It's absolutely invaluable and is exactly how people are able to live debt-free lives without relying on credit cards and loans when emergencies or unexpected expenses present themselves.
Some people argue that they cannot afford an emergency fund - but the truth of the matter is, if you feel this way then you can't afford to live without an emergency fund. Chances are you rely on credit cards to get you through hard times but the increasing debt repayments only makes it that much harder to make ends meet financially. Here are a number of tips for how to put money in an emergency fund:
Starting an Emergency Fund
First, you can look for any small source of cash that you have to start an emergency fund. Roll loose change collected from around your house or car. Return recyclables and deposit the money from your bottles and cans. Most savings accounts do not require a minimum amount to open an account, so take advantage of it and find a few dollars to start your emergency fund. If possible, choose an account that will earn some interest while the money is in the account - but make sure it is one where you have quick access to your money w hen needed.
If you are working, you should consider having a certain amount of money transferred to your new emergency fund each pay period. It doesn't have to be a lot to get started, especially if you feel you live paycheck to paycheck - even $2 a week will add up to more than what you currently have if you aren't saving anything, right?
Sell some things in a garage or yard sale, or on Ebay. You might be surprised at how quickly your fund grows using these simple methods.
Once you have about $500 in this fund, you can move on to the next step, but remember to keep adding to the fund a little at a time and do not use it for anything that is NOT an emergency!
Find Money in Your Automobile Insurance Policy
Most people set their automobile insurance policies up with a low deductible so that if they are in an accident they don't have to come up with a lot of cash to pay their deductible. Once you have $500 in your emergency fund, you could raise your deductible from $250 to $500 and the money you save on your insurance policy each month can be added to your emergency fund to grow it faster. You might even consider raising the deductible to $1,000 if your emergency fund grows to surpass that amount.
If you have multiple cars, you can do this to both vehicles which will double the amount you can save on insurance policies and grow the emergency fund that much faster.
Long Term Goal: 3 Months of Living Expenses
Most experts recommend that you have three months of living expenses saved in your emergency fund. When you reach this goal, you might consider transferring a portion of that money into a certificate of deposit or money market account in order to benefit from higher interest rates - just whatever option you choose be sure that you can access the money when you need it for emergencies.
This system is self-sustaining - if you have to use the funds, then you will replenish them with your source with which you started out. You need discipline to make it work, but it's well worth the effort.
About the author
Elizabeth Williams, Editor-in-Chief for CreditCardFlyers.com
http://www.CreditCardFlyers.com makes it easy to compare and apply for a variety of credit card offers featuring low balance transfer rates. We are the leading source for searching 0 apr balance transfer offers online.
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