My Emergency Fund Saved My Bacon
Accidents happens, tragedy strikes, and a lot of things in this life are out of our control. The most we can do is prepare for the unexpected. At the beginning of April I found myself without a job and I wasn't freaking out this time. I had worked hard over the last year to prepare for this day. Sure there were tough decisions I had to make daily, like 'Do I really need these Prada Loafers?' Answer: No.
Here's how I was able to save. First, I needed to calculate my minimum expenses to survive. Mortgage, insurance, car payment, utilities, food, gas, etc. To get you started, I created this handy Google Doc Emergency Plan Calculator template.
Second, I had to figure out how much I could contribute to my emergency fund each month. This told me how long it would take for me to save my desired amount.
Total (from template) / Monthly Contribution = Number of Months
Lastly, was there anything else I could do to reach my Emergency Fund amount quicker?
- Bonuses - to the fund.
- Old designer clothes - Send to ThredUp to resell.
- Stuff I'm not using anymore - Sell it on OfferUp.
- Side Gigs - Set up a profile on UpWork.
Try not to get overwhelmed by the amount you need to save. Start small and shoot for $1200. Why $1200, you ask? That's usually the amount I need to spend for 4 new tires. And that always comes up at the most inconvenient time (knock on wood).
In addition to my emergency fund, I set up an account with Wealthfront, so I could get better returns on the money I've saved. The beauty for Wealthfront is fully automated diversified investments, lower fees, and no minimums. They even invest your first $10,000 for free.
I feel good about my current position. I can use this time to find a job I am truly passionate about. Last time I was unemployed, I racked up $7000 in credit card debt and another $6000 from family friends. I was "robbing Peter to pay Paul" shuffling money from one credit card to another. It was awful, and it took me the next 7 years to pay off. I don't even want to think about the interest I paid on that money.
If you have any questions or need help getting started, please don't hesitate to reach out to me. If you liked this post, please share it with your friends!
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