Back to the Basics
Do you have an emergency fund?
Last week, I decided to go out and take a long walk. I have been trying to concentrate on healthier activities and so I took a little bit of time to take a 5 mile walk down the new Greenways Trail in St. Charles County. The morning was gorgeous. The temperature was brisk but the sun was bright and it felt great to be outside on the beautiful early spring morning.
When I got back to my truck to head home, it would not start. I put the key into the ignition and…nothing. The key would not turn at all. I tried everything and still nothing. I had to call a tow truck and had it taken to a repair shop that we have used frequently and trust. After all was said and done, the repairs were just a little more than $800. OUCH….I hated to shell out that kind of money for the repairs but, we pulled the money out of our Emergency Fund and paid the bill.
After I picked up my truck, I got to thinking about our Emergency Fund and how we have used it over the years. We have had unexpected medical expenses, car repairs and home repairs. After doing a little research, I found out that – in America – only 4 out of every 10 families would be able to handle an unexpected expense of $500 without using credit. The statistics astounded me!
I don’t know what we would do without out Emergency Fund. It has covered us in so many different situations and has provided us with a tremendous “peace of mind” – just knowing that it is always there to help. Another little piece of information that I found is that 10% of Americans took a “hardship withdrawal” from their 401k in 2015. These families had to withdrawal funds out of their retirement account, slow down their retirement savings to cover some unexpected expenses!
57% of Americans have less than $1,000 in the bank. Tired of the statistics yet??
If you save ANY money, you are going to be ahead of the majority of Americans today. Start putting a little bit of money back – Anything! Start with $50 a month and put it into an account that you can’t touch. If you normally use Online Bill Pay, open an account at a different bank so you aren’t able to do a quick online transfer of funds. Put it someplace that is a little more difficult to access and then Don’t Touch It. These funds are for an Emergency. These funds are not to be used for a special dinner out or a fun weekend with the family. The funds are for an EMERGENCY!
How nice would it be to have an $800 expense on your car and you could take the money out of your account instead of hitting the credit card for those unexpected expenses??
Over the next couple of weeks, we will offer you a few suggestions on how to quickly put an Emergency Fund in place. It will take forever to build up $1,000 if you only put $50 into an account each month so there have to be some great suggestions on ways to build the fund a little quicker.
We would love to hear from you…If you have an Emergency Fund, how did you build the account quickly?
If this seems overwhelming to you but is something that you have been thinking about for a long time, give us a call and schedule an appointment. We are experts at it and will be happy to offer you some basic direction and advice. It is what we do at Hollander & Associates.