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Emergency Fund Sacrifice

February 22nd, 2013 at 01:05 pm

I've said it here a few times: the establishment and maintaining of our emergency fund is what put us on the path to building wealth and staying out of credit card debt.

We started our marriage without an emergency fund. Although we did get some nice cash gifts, including $1000 from my parents. That is where our emergency fund began. We had already bought and paid for enough furniture to fit in our apartment. We were happy with what we had, so we decided to save it.

I suppose that decision right there comes from somewhere, but we did consciously make that decision to hold on to that money. I'm not sure we even called it an emergency fund then. I didn't know about Suze Orman, Mary Hunt, or Dave Ramsey, all who would have encouraged the emergency fund.

I know many people who do not have an emergency fund and they all struggle in some way financially. For many it means debt in every form, for others it is relying on others for help, and most of them don't even save much, if any, for retirement.

Establishing an emergency fund is the one thing you must start. And it often means sacrifice to do so. In our case, we didn't sacrifice much with the first $1K, but in later years, we went without many things to make sure we had established and maintained a rainy day fund.

I will tell you that every sacrifice you make to establish your emergency fund is worth it. It is worth it to forgo cable, even if the big game is on. It is worth it, to eat simple meals at home. It is worth it to keep your tax refund in your savings account than buying a new big screen television. It is worth doing your own nails, or coloring your own hair. Many here on Saving Advice would agree.

Yes, you will have to give up some things, if you are living paycheck to paycheck. The exercise in sacrifice for this one goal will teach you more than you can know. You will find you can live without many things and still be happy.

Emergencies happen. People get sick, or in accidents. People lose their jobs. The water heater or garage door breaks. Your pet is injured. Many many things come up in life that can not be planned. An emergency fund catches you when those unplanned events come up.

Sacrificing as much as you can for a short time to establish an emergency fund is so worth it. If it sounds like I'm talking to you, I am. You don't need a new car now. The vacation CAN wait. You can watch the big game for free at your friends house or a bar. You can do your own nails and hair coloring. You don't need to buy that new thing, yet. You can wait. You will live. That new thing might be cheaper on Ebay in six months. You need to establish your emergency fund now. You NEED to, no excuses. It has to come first.

Yes, you might have debt and you could pay it off with your tax refund. If your refund covers all your debts then yes, pay it off. And then start on your savings. However, if it will take you many many months to pay off your debt, turn your tax refund into your starter emergency fund. Five hundred to $1000 is a great beginning. Let it sit there in an account. Look at it, but don't touch. It's for emergencies.

No more excuses. It's time to start your emergency fund. Tell me how you started your emergency fund. Any advice to readers on ways to save? Where to save? Join in the discussion, now!

6 Responses to “Emergency Fund Sacrifice”

  1. Looking Forward Says:

    **applause** Smile

  2. Danielle Says:

    this is an excellent post!

  3. creditcardfree Says:

    Thanks LR and Danielle! Sometimes it just needs to be said. Smile

  4. MonkeyMama Says:


    Things we have done:

    **Saved gifts I've incidentally had a nice *emergency fund* since age 16 or 17, since a grandparent passed my senior year of high school. Surviving grandparent gifted me. So basically, I never experienced adult life without an emergency fund - sounds insane to me to not have one.

    **Bought very modest/used vehicles (Kind of a must when living in a high cost region - is the obvious trade-off to deal with high rents and insane housing prices).

    **Save big raises. Who knew our biggest raise ever would be transitioning out of college. WE also married/combined resources soon after. Those were our biggest raises by a mile, and we saved saved saved. (We also both received 33% raises soon after buying our first home. SAVED. I remember we splurged on a couch and a TV with the GIANT raise - the rest of our home was filled with hand-me-downs and things we had already owned. & I just remember that feeling like the biggest splurge of all time: NEW/NICE FURNITURE!).

    **Which reminds me, when young we bought absolutely everything USED. With age and means and other priorities and more wealth, we scale back over the years on the used. Like, we actually buy new appliances and furniture these days. But it's different when you replace things on average once in a blue moon versus "furnishing an ENTIRE house" or "affording a new washer on minimum wage." When our friends reached for the credit cards, we bought used.

    **During those times in our lives was very easy to save. On one-income (cutting back/unemployment/bad economy) has been much more *slow* going. BUT, interest rates have dropped in half over the years, so have been able to refinance home to a MUCH smaller payment. (We save about $600/month with interest rate drops, alone). Lord knows we have done well with credit card rewards (I Was seriosuly considering a second job before the credit card reward bounty landed on my lap). We are always doing whatever possible to cut costs and increase savings. Being able to increase income is still always the easiest way - I am doing much better with overtime now that my kids are a little older. (Was difficult/impossible during sleep-deprived breastfeeding years. & those were the years our savings suffered because I Think the only time when "working more" wasn't the obvious answer. We've gotten better at being more creative, in a contracting economy).

  5. TexasDisneyGirl Says:

    I'm a big fan of an emergency fund! We've always had a small fund, but last year we decided to really do it right by getting it up to 6 months of expenses. We lowered our contributions to DH's 401k in order to get where we needed. Now, we have our emergency fund, plus a separate car fund and a vacation fund.

  6. scfr Says:

    Here's another "AMEN" from the choir! When I created our first budget ... way, way back in the day ... I hadn't even heard of an "Emergency Fund." I had heard of saving for a rainy day. And I knew that there were areas where sudden, large expenses could crop up. So I started allocating extra money each month for medical & dental, pet care, automobile, and house maintenance. Now we also have a sizable general EF which should cover darn near anything life can throw at us. There is nothing like the peace of mind that comes from knowing you have the basics covered.

    Agreed that there are no good excuses. The one I was prone to in my young days was "the amount I can save is so small ... it won't make a difference." Not true! If it's just $10 a month, then save $10! Before you know it, you'll be saving $20 then $50 then $100.

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