by Hope
Unlike the other bloggers, I have no savings, no emergency fund. I did, until my son broke his hand this past December, and now it’s gone.
And for the last few months I have flown by the seat of my pants, and that really stinks! I mean, big time! I always feel broke because after paying all the necessary monthly bills, keeping out just enough for the grocery budget, I throw everything I’ve got at debt. And then I’m broke…until a client pays me. Now I’m really blessed to have mostly reliable clients who pay me at least within the standard Net 30, and some who pay within Net 10, so I “know” I have income coming, but I don’t always know exactly when.
So this week was one of those totally broke weeks. I didn’t even have two dimes to rub together. It was exponentially harder as I had to drive a lot due to standardized testing for the three youngest in a different city. Needless to say, I ran out of gas. And I did not have the choice to stay home or bike to where I had to go (we can bike to pretty much anywhere we need to go.) I even stooped so low that I asked my ex to pay his child support early (he’s really great about giving financial support to our kids, really great, the only issue is, it’s on his schedule, not mine and not always regular.)
So you can feel how desperate I was, right? And you are probably saying “duh, Hope, start an emergency fund.” And you would think that my incident last summer where we were out of toilet paper would have convinced me of the same thing. Yeah, but no, I’m hard headed and stubborn and always see the glass half full and know everything is going to turn out alright.
But in this dark hour when I needed to get my kids to testing and had no gas, I searched through my wallet and found a $50 bill. Evidently at some point, I knew I would need an emergency gas fund, and being the “out of sight, out of mind” kind of person I am, I put my “emergency $50” out of sight but right where it should be had I needed it. Joy, relief flooded and we finished out our testing week with no other financial crisis.
But I am now convinced, I need an emergency fund. Two, in fact! I am going to replace my “emergency $50” immediately and as I mentioned last week I am going to start funding a traditional emergency fund with a percentage from my new job. It will go slow, it’s not my priority, but after the toilet paper, the broken hand and this most recent gas debacle (along with a few that I will not mention here,) I am convinced that it is necessary. (And in using my new job’s money, well, it doesn’t affect my current debt payoff, yeah!!!)
Hope is a creative, solutions-focused business manager helping clients grow their business and work more efficiently by leveraging expertise in project management, digital marketing, & tech solutions. She’s recently become an empty nester as her 5 foster/adoptive kids have spread their wings. She lives with her 3 dogs in a small town in NE Georgia and prefers the mountains to the beaches any day. She struggles with the travel bug and is doing her best to help each of her kids as their finish schooling and become independent (but it’s hard!) She has run her own consulting company for almost twenty years! Hope began sharing her journey with the BAD community in the Spring of 2015 and feels like she has finally in a place to really focus on making wise financial decisions.
Excellent decision. Everybody needs an EF. It may be small at first but it is such a relief to have one. I always tuck some money in my wallet just in case. I also keep some cash at home in a small safe. I am glad you have made this decision.
I’m glad you were able to resolve this in this case. Honestly though, I really think you should follow what seems to be the DR principle here and put your debt on hold for a month or 2 and get your EF to at least $1k. Then you can go back to attacking your debt with all you might. That extra 2 or 3 months you push out your debt might cost you say $100 in extra interest over however long you have left but that amount is insignificant.
I think that EF’s are even more of a necessity for people with kids (and you have a lot). If it’s me alon and I had no money, I could drink water or juice for 3 days and make it through but I wouldn’t want to put another person through that.
There are SO many unexpected things that could come up, said bicycle could break, appliance in your house go kaput, child fall sick or break something. I was like you before and really wanted to attack my debt but you have to step back and look at the big picture.
Plus it’s always one way to try and prevent you from falling back on your CC when sthg unexepected but immediate occurs (think burst toilet plumbing).
Hi Hope – I also think you should make it first priority to have an EF – even if it’s only $500.00 to begin with and then gradually add to it – maybe $50.00 a month until you have a thousand. The peace of mind this will give will be worth it in the long run. I get the mental thought process that the “money is just sitting there that could pay debt” but you have to get past that and realize that this is “insurance keeping you from acquiring more debt”. Good luck.
I’m glad you found that extra $50 exactly when you needed it. What a relief! I’m also in agreement with the above posters about a small emergency fund. It’s necessary when you’re single, but essential when you have kids.
My apologies if you’ve already covered this in a previous post, but do you have a credit card? I’m a little bit confused as to why you couldn’t just use your CC to put some gas in your car when you ran out. I fully understand not wanting use your CC all the time if that’s a weakness of yours, and when getting out of debt people stop using them so they don’t dig themselves in further. But honestly? I think they’re a useful tool. And with kids, these types of emergencies is exactly why I would always have one with me.
Different strokes for different folks, but just something to think about as you progress in your debt reduction.
Yes, those are all great reasons to start a small EF. I’m shooting for $1k until my credit cards and student loan is paid off, at which point I will be increasing it substantially. Extra money in a savings is never a bad thing.
Have you considered visiting one of your local food banks once or twice a month for a little while? I think that if you did that, you might give yourself some breathing room. And you could put the money you save into your new EF. Just something to consider.
A savings account with a small amount of money in it is a must. Dave Ramsey insist that it takes at least 1 thousand to tackle most emergencies. It’s a good thing that you had a 50 dollar bill hanging out in the purse. Let this be the beginning of a long lasting relationship with a new savings account.
Totally agree that you need an EF. We didn’t for 20+ years with three kids and it was just dumb. We’d then ended up putting things on the CC and the cycle would repeat. I swear when we decided to start the EF is when the debt cycle stopped! It was slow – we sold things on EBAY, had a garage sale, found money in the cushions and used our birthday money……and even though I never thought we could find $1,000 we did it in 2 months! We’ve had to use the EF over the last 5 years, but have always replaced it as fast as possible…..and the best thing is – we sleep so much better at night knowing it’s there PLUS we are getting out of debt faster because we are not adding to our CC.
We use an online savings account for our EF so that it doesn’t tempt us.
Good luck and thanks for the honesty!
Until I finally read the Dave Ramsey books about 2 years ago, I didn’t get this concept. I pull down a very good living and although things are tighter since my divorce, not a day goes by that I am not grateful for my circumstances.
But for the first time in my life, I have an EF. It’s not huge, but there is some comfort in knowing there’s some $$ there if I’m up the creek.
Unfortunately I found out last week that my 9-year-old, paid-for car with 105k miles on it is dangerously close to the junk heap. I have to get a new car. I can’t avoid it anymore. I did NOT want a car payment but it’s unavoidable. My poor car won’t hardly be worth anything at trade-in. So now I’m trying to decide — get a pre-owned, higher-mileage car at like 2% through my credit union or get a brand new one through a dealer at 0%? I just worry if I buy pre-owned, I may be buying someone else’s problems unknowingly.
I’m certain I will qualify for the 0% … and since a family member can get me the car at invoice price with no doc fee and no delivery fee, I feel like it might be worth it. I’m at the point where my car is no longer safe to drive, and if I put into it what it needs, it would cost several thousand $ and I’d maybe get another year out of it.
When it rains, it pours. As Dave says, the minute you push yourself to the limit, dumb, broke and stupid move in with you. 🙁
Sorry, I keep having more thoughts, lol. Another thing I did, as a result of listening to David Bach’s books over and over in my car, is the concept of “making it automatic.” I have always believed in paying myself first, and I do.
But since my divorce I’ve gone into hyperdrive with trying to save money in spite of myself. I joined a credit union and every week, twice a week, small bits of cash funnel out to two accounts. It’s to keep the $ away from myself. One is EF and the other is purely for “fun” and/or gifts. Because you do have to have SOME fun, you can’t be stretched tight 24/7.
I’m periodically increasing the amount of $ that goes out every few months. You’ll be surprised at how quickly it adds up. Interest in paltry but interest isn’t the point. You need cash reserves so you don’t charge and put yourself into more debt. And you need to automate it or it won’t happen. Start small. Even $5 a week or whatever the min withdrawal is. I started with $15 a week 2x a week and now I am up to $25 a week every Monday and $35 a week every Thursday. It may not be much to some people but it’s more than I’ve ever thought to do before. It’s never too late.