Emergency Fund

Let's talk about an emergency fund. And no, I'm not trying to talk about "Visa" or "Mastercard" as emergency funds. It surprises me to this day how many times I bring up the term Emergency Fund and people look at me with a deer in the headlights expression. Seriously, in this day and age, it seems like there is no such thing.

How much of an emergency fund do you need? Ideally? Maybe about a year's worth of income. But here's the trouble. If we have put ourselves into such habits where we don't have an emergency fund at all, if we were to even be disciplined enough to accumulate a year's worth of income, who's to say that we would let it sit there for emergencies only? It seems more practical that you set a goal for an emergency fund amount that is believable for you. At the very least, stock away $1,000 AS SOON AS POSSIBLE.

My suggestion would be to open up a money market account where you'll still be liquid but your potential for a rate of return would be higher than merely a savings account at the bank.

How to get $1,000 or more as soon as possible? BE CREATIVE!
Here are some simple ideas:

1) Garage Sale

2) Craigslist

3) Part Time Work (Job or business)

4) Freelance Work

5) Claim more on your taxes (***SEE YOUR TAX ADVISOR BEFORE MAKING THIS CHANGE***)

6) Fund Raiser

7) Brown Bag Lunches and save the difference

8) Sell your car and buy a less expensive one (Only works if you're driving a paid off car)

9) Do your own housekeeping, oil changes, mowing, shoveling, etc.

10)Commit to it!

These are all ideas to get your brain working on how to accumulate this money. The important thing is that you begin somewhere. Building up your emergency fund shouldn't be a process that gets dragged out for years on end. Set a goal, $1,000 or $10,000 or $50,000. Whatever it may be, and then work like a mad person to set that money aside, preferably in addition to everything you're used to doing anyway (bills, paying off debt, retirement savings, etc.).

Once you hit your savings goal, DO NOT TOUCH THAT MONEY! Yes, you may have had a stressful month at work, DO NOT USE YOUR EF MONEY FOR A WEEKEND TRIP. Yes, the new designer boots are on sale at Bloomingdales, THAT IS NOT AN EMERGENCY. Use it only for expenses that come up UNEXPECTEDLY.

Why is the concept of an emergency fund so valuable? Because you will build wealth. How? Every time you can avoid using a credit card or a loan you avoid paying interest dollars. Hardworking dollars that want to make you financially bullet proof can then be invested and earn interest FOR YOU instead of the financial institutions that funded your debt.

At the end of the day, being financially independent is what we all want isn't it?

$1,000!