"Devotional time with the hubby:)"
Be Intentional About Life
Getting out of Debt: Expect the unexpected
My wife and I were driving home from my in-laws a few months ago when I hit a pothole. Lo and behold, the darn thing blew out my tire and put a nasty dent in my wheel rim. That little pothole cost me nearly $600! You know what, though? I knew it was going to happen before it ever did.
Sorry, no Magic 8-Ball here. Money magazine says that 78% of us will experience a major negative event in any given 10-year period. Now, busting up my tire and wheel don't qualify as "major" in my book, but because we know that life happens - usually unexpectedly - my wife and I have an emergency fund in place for when the rain comes.
Remember that the first part of getting out of debt is changing the way we view debt and making the choice not to go into debt any more. If you have an emergency, you have to cover it with your emergency fund - not your VISA. Putting emergencies on credit cards will keep you locked in the vicious cycle of debt.
For most of us, having $1,000 in a savings or money market account is the First Step on the road to freedom!
Sorry, no Magic 8-Ball here. Money magazine says that 78% of us will experience a major negative event in any given 10-year period. Now, busting up my tire and wheel don't qualify as "major" in my book, but because we know that life happens - usually unexpectedly - my wife and I have an emergency fund in place for when the rain comes.
Remember that the first part of getting out of debt is changing the way we view debt and making the choice not to go into debt any more. If you have an emergency, you have to cover it with your emergency fund - not your VISA. Putting emergencies on credit cards will keep you locked in the vicious cycle of debt.
For most of us, having $1,000 in a savings or money market account is the First Step on the road to freedom!
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Replies to This Discussion
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Permalink Reply by Rachel Lukasavige on -
This is a great post. Of course unexpected things happen to everyone, and what I've found is that when something unexpected comes my way I try my best not to touch my emergency fund. However, if I didn't have it and a negative event happened I would probably be freaking out. Take my computer, for example. I tripped over the cord of my laptop, bringing it crashing to the ground, and completely ruined my screen. The best option was to replace my computer altogether, which I wasn't prepared to do. I knew I had my emergency fund, but also thought I could get by hooking the computer up to a desktop monitor while I saved for a new one. I felt better just knowing that $1000 was there in case I absolutely needed the computer ASAP. Not only does it get you out of emergency situations but it provides peace of mind.
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Permalink Reply by Justin Lukasavige on -
One of our dogs had $2,500 surgery a few months ago. I thought about putting it on a credit card and paying it the next month, but then realized that I teach this stuff! It happens to all of us. This was an emergency fund expense and our beloved dog is very happy to still be alive.
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Permalink Reply by Derek Sisterhen on -
These are great examples of unexpected expenses that can easily derail your debt-dumping plan. Rachel, I like how you've made due by hooking the laptop up to a standard monitor - that's a fantastic way to buy some time until you can incorporate saving for a computer into your budget.
That "peace of mind" factor is HUGE! It's funny how having an emergency fund almost prevents emergencies from happening. I think the definition of "emergency" changes when you have $1,000 in the bank. -
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