Emergency Saving Part 1: SOS SAVING FUND
My car just needed repairs, and that is was prompted me to share our Emergency Fund which we call, SOS Savings Fund in this FreeFinLit101.com BLOG. Every now-and-then, life throws us a curve ball and sometimes we miss the curve ball, and it hits us right in the guts. WHAM! Down come the stress and anxiety produced from that gut shot. The only thing that can rescue or relieve me is the knowledge of knowing we have an Emergency Fund set up just for these situations. In my case, my car just needed repairs, and in the same week my wife threw a “curve ball” with her steering wheel and hit an unmovable object and need body work done to her car. These two happenings are what prompted me to share our SOS SAVING FUND with you, the readers of my FreeFinLit101.com BLOG.
Studies have shown more than 42% of Americans could not come up with $2,000.00 if they had to within a month. Meaning, in the event of a true emergency, they’d have to charge that $2,000.00 to a credit card. WHAM! Can you feel that hit?! To get a true picture view the video below:
Our SOS SAVING FUND is considered our financial safety net. Emergency money should not be a home equity loan or lower-interest credit cards. In the long term, these are, a negative cash flow and not a positive and have the effect of your emergency even costing you more. Savings should be your primary source for emergency funds needed for a medical emergency, the breakdown of your car, or malfunction of appliances such as a refrigerator, air-conditioner, washer, dryer, or paying your co-pay. You get the idea.
My wife and I have found that having an SOS SAVING FUND makes us feel we are not living paycheck to paycheck. As your emergency fund continues to grow, you will begin to lose that anxiety over fear of something breaking down and the stress on how to pay for it. Now I know we, as well as most, are far from being wealthy; but we don’t stress so much over what are unexpected emergencies (Or they could be called EXPECTED unexpected emergencies because you know they are going to show up one day.) or pending emergencies like having the knowledge my car just wasn’t running right. Having the SOS SAVING FUND turns what could be a catastrophe into just an inconvenience.
I like to view our SOS SAVING FUND similar to insurance protection that we hope we never need. However as quickly as we use the monies from our emergency fund, which we’ve had to use it twice this past week, we replace what we’ve spent as quickly as possible before the next “expected” unexpected emergency. We keep our SOS SAVING FUND in a separate savings account The goal is not to think about it.
Building your own emergency fund does not have to be daunting. Start small, saving $1 a day for one week. At the end of the week, you’ll have $7. Then, up it to $2 a day for the next week to have $14, then $3, then $4, etc. If you find the maximum you can save is $10 a day for a week, just stay at this number and continue this for a year. At the end of the year, you would have saved $3,325! To make it easier than trying to remember which week it is, and how much you are saving a day that particular week, decide how much a week you can save into your SOS Savings Fund such as $10.00/week. In 52 Weeks you will have $70.00 X 52 weeks = $3640.Can you see how consistently stowing away money, albeit seemingly small, can make a huge impact in building your emergency fund and providing you with a safety net?
Whatever you decide, make sure you Keep this SOS SAVING FUND in cash so that you will not be penalized for withdrawing early or “cashing in” to obtain the actual cash.
Did you know it is also recommended that you save for the loss of income emergencies, caused by loss of employment or health reasons in the amount of 3 – 6 months of your essential living expenses such as:
- Transportation to include insurance and gas or public transportation costs.
Be sure to watch for my next FreeFinLit101.com blog when I talk about this LOSS OF INCOME EMERGENCY FUND.
How are you doing with your emergency funds? Let us know if you have one or both, or plan to start one in the comments?