Friday, October 24, 2008

Re-Building My Emergency Fund for Financial Security

The month is far from over, but so far I am very pleased with where I am at the moment. And my totals to the right do not even include a check I am waiting for from one of my part time jobs. (I never like to include them until the cash is in hand.) Once that comes in, it will certainly help boost me along even further. Considering I was also able to save some money out of my budget, this month looks like it is going to be okay.

I'll write my full review of the month next week when I have all the numbers, but as I say, so far - so good. November has some good things lined up as well. I have more part time job work coming up (from two different jobs) and I am already scheduled for another mystery shopping trip, plus, I should get paid in November for all the mystery shopping I did this month. Of course this doesn't mean that I won't have hustling to do! That, I am afraid, isn't going to stop for awhile, but it is really nice to have a few things already in the works for the month ahead.

As I wrote about earlier in the month, one of my other financial goals is to re-build my emergency funds. It is great to see some of my plans working, but I am still so afraid of something going wrong - some cog in the works going sproing! I have friends that were laid off who had no idea it was coming - what if that happened to me? So, one of the things I did recently was sit down with pencil, pad and calculator and figure out exact what it is going to take to make me feel safe and secure.

The answer was over $10,000, which frankly, seems a bit daunting when I am $900 in the hole each month! (Although imagine if I could live within my means and didn't have the financial burden of this house - I could get that fairly quickly!) It really helped me to figure out roughly how much I would need in each savings account so I could stop worrying about when the other shoe would drop. It was like turning the light on the bogeyman in the closet - suddenly I could see, and although it is still big, it isn't as scary as it once was.

I decided to try having two goals: 1) first and most importantly, get the nine hundred dollars a month I need and 2) try to snowball some small payments into that emergency fund. To that end I directed two payments into the fund this month - one for $20.31, which was a payment I got from Amazon, and the other for $15.44, which was money I was repaid on my Prosper loans. Since Prosper is currently not accepting new loans, I withdrew the money so I can get it working for me somewhere else.

It would be nice to think that every month I could snowball a couple of payments away and slowly rebuild my account to what they once were - and then build them beyond that, to what I want them to be. It might not be possible every month, I know that. However, my car will be paid off in June which will allow me to make massive payments on my remaining credit card debt. Once that is done my only debt will be mortgage, which means I will be able to use those funds for making my monthly goals and towards savings.

I suppose I could take that $35.45 and put it towards that credit card debt I mentioned. I was tempted to do that, but, I am already paying about 5X the minimum payment on that, but what I don't have is emergency cash. I know paying off debt should come first, but I would like to have at least $200 in readily available cash - just in case I hit another deer!

A consideration that has to be taken - what is it going to take to help me sleep easy at night?

Wonderful photo by: Nicholas Gray


Debt Dieter said...

Sounds like a great plan to me! If you have the emergency fund built up over time there won't be any need to use the credit card for anything urgent that comes up.

Paying 5 times the minimum payment while still finding that $900 a month is really impressive, well done you!

Dawn said...

Thanks! My minimum on my cc bill runs about $15 usually. I have been paying $75. That is in the budget - so that $75 is part of the $900. I have always known that I could just pay minimums and "save $60", but paying off that debt will make me feel so much batter. If things get real tight, that is an area I could scrimp, but I would hate to do it.