My Journey out of Debt

Featured customers currently enrolled in a CareOne Debt Relief Plan, share journey to become debt-free; hear how they juggle family, finances, and more.

Emergency Funds...Yes You DO NEED One!

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Emergency Funds...Yes You DO NEED One!When I think about the recession and the fact that it marked the nation's worst economy since the Great Depression, I realize how lucky I am. 

  1. I've been able to keep my job.
  2. I've been able to earn extra income-although the demand for my second job teaching Pilates certainly took a nose dive, I was still making a little extra.
  3. My boyfriend didn't lose his house.
  4. I don't have any health issues that could have compromised my financial situation.
  5. I paid off my debt right before the recession began.

Then I think about how many people suffered and are still suffering, and I wonder how much money would be enough to protect me if I weren't so lucky?  My emergency fund amounts to a little over six months' worth of living expenses. 

I always believe I'll do whatever I have to if I lose my job, but what if I don't find work for years? 

How do you prepare?

Many of us are living paycheck to paycheck.  Even though banks are insured, most people don't have any savings to speak of. 

On the contrary, most of us owe money. 

I recently watched a documentary on homeless families in Orange County, near Disneyland, that are barely making it.  They are homeless in the sense that they don't have an apartment.  They are not on welfare, or receiving any assistance.  Most are working jobs that pay minimum wage or a bit more and they live in cheap hotels with two beds. 

In some cases, there are five or six people living in one hotel room.  This doesn't include the 90,000 homeless people that live in downtown LA.  There are more homeless people than there are residents - no kidding!  (You can Google the numbers.)

Those families didn't do anything wrong.  They simply lost their jobs, were not able to receive assistance, and were no longer able to make enough money to live.

Although I don't have any magical answer for how not to end up homeless during the next recession or loss of a job, I do have some goals to keep my emergency fund growing.

1. Stay debt free.  It's bad enough to lose your job, but what if you owe a credit card company on top of that? I'd be even more depressed.

2. Save, save, save.  It doesn't really matter what you call it, as long you have something to fall back on.

3. Ignore the noise.  I have to admit that I do own an iPhone, but I have a very basic plan and spend less that $80/month on my phone.  Although it is difficult to hold off on certain purchases, I'd rather wait to get the new TV and couch I need rather than have to sell it to pay bills later on.

4. Cut your expenses.  Look at things you really don't need or can't afford.  Cable? A landline telephone?  Lattes?  Dining out?  All of these expenses add up.  I'm a firm believer in treating myself for a job well done, but have also learned the value in skipping some nights out for a nice night in.

What are your goals for starting an emergency fund or funding one you already have?

Related Posts:

Unemployment Survival Guide: How to Survive with a Reduced Income

The 5 Financial Habits I'll Keep

Make Your Body a Part of Your Financial Future 

Cheryl_BigosCheryl Bigos

Cheryl Bigos graduated from a CareOne Debt Relief Services Debt Management Plan (DMP) in 2008. She is now blogging about life as a DMP graduate in the My Journey out of Debt blog. She works as a Purchasing Manager in Los Angeles, teaches Pilates, and lives with her boyfriend of four years. Cheryl is looking forward to sharing what she has learned from her experience in the DMP and after! Look for great tips about life 'after' debt! Compensated Blogger for CareOne Debt Relief Services.

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  • I will keep al l of this great advice to heart. I do not like living paycheck to paycheck. My husband and I are trying hard to save but it is hard. We have had major car repairs recently over $1200 which set us back about 2 months. That is when we started care one to help improve our credit and to mange our spending. We our in month 2.

  • Hi kmpritchett.  At least you are doing something to try and get yourself ahead of the game.  Saving is hard - especially when you are behind on your bills.  Although it may seem like a long way off, you'll be done before you know it.  And after a few months, you'll find that you are able to manage money better and start a savings account!  Best wishes as you start on your journey!

  • When I found myself in a tough situation like this I downgraded my cell from T-mobile to straight talk, from 80, to 30. Tough times call for tough measures and I recommend cutting spending asap as soon as a job loss occurs.

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