by
Carl Hampton
09/19/2006
Student loans!! Mortgage payments!!
Credit card bills!! All of these payments
create anxiety and irritation but they are
all real. They are payments we keep in mind
when we budget for the month. Then suddenly,
an emergency occurs, be it small or large.
Are you as prepared as you should be to
spend those extra dollars?
With many Americans now living from paycheck
to paycheck, emergencies can and often do
send your whole financial situation into a
whirlwind. Your car needs new brakes, your
doctor’s visit required some or more
medication, the kids need new shoes, and the
list goes on and on. So what’s the answer?
Be very careful of placing unexpected
expenses on your credit card. Using your
plastic is not too bad as long as you have a
no or low interest rate card, but the
typical credit card now consists of an 18%
interest rate charge. If you are unable to
pay it off in full that 18% can really hurt
you later.
Homeowners often bail themselves out by
using their home equity. This can in the end
turn out to be a very expensive solution to
your problem. You really should try to stay
away from your 401(k) as well because 401(k)
money is pre-taxed which means the
government has not taken its cut yet. When
you use this money as a loan – i.e. you
pay it back – you will have to pay taxes.
So what is the real solution to this problem
? You must stop procrastinating now and
start building an emergency fund. Your goal
over the first year should be to build up a
fund that would support you for 2 months.
This is a lot easier than you think! You can
begin to build your emergency fund by
getting into the habit of transferring a
small amount of money into a savings account
every two weeks.
For most Americans, an emergency fund of
$5000 would meet this goal. Before you all
fall out of your chairs laughing or throw
your hands up in the air with excuses like
“I can't afford that” lets get real,
it's only $100 every week for 50 weeks.
Saving is a state of mind. Once you get into
it, it becomes very easy. There are a number
of very simple ways to reach your savings
goal. I recently called my cable supplier
and got them to agree to put me on a special
six month deal they were giving new
customers - the savings per month was $60.
Changing over your home phone to an
unlimited VOIP (voice over IP) service can
save as much as $50 per month. Taking lunch
to work 3 days a week can save another $100
every month. Cut back on those coffee shop
drinks. Cutting back from 2 a day to 1 a day
could save another $100 per month. The
biggest savings can be made on your grocery
bills. I found a great way to cut my grocery
bill by as much as 50% or more and it works.
I even still get to buy all my normal brand
name products by just using coupons and
buying the right way. Using the
iCanShop4Less system, I have been able to
save over $125 every week without cutting
back on what we buy.
The only person who can change your life is
you, and it's much easier than you think.
All you need to do is take action and stop
procrastinating. You really can stop those
emergency blues with an emergency fund.
Have an opinion or a question you would like
me to answer, then write me!
http://www.CarlHampton.com
