Build an Emergency Fund In Less Than 3 Months

When you are trying to get out of debt, it is best to have a little safety net for “just in case.”  The old saying says anything that can go wrong probably will and you need to have some money set aside for an emergency.  The magic number is about $1,000.

This will help you if you have an honest emergency.  It’s always nice to have it available.  This emergency fund isn’t for the loss of a job or an illness.  This is just a little something so you can work on the money that you owe everyone.  We can get to the more large emergency fund later.

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What is an Emergency Fund for?

Typically, the emergency fund is 3-6 months of expenses.  Expenses meaning the cost of the things we need to live.  Things like shelter, heat, food, transportation, and electricity. These are the necessities.  But for our purposes, we are working on the baby emergency fund while we get out of debt.  That starter EF amount of $1,000.

Now, this is important.  Before you even get started on building an emergency fund, the meaning of it needs to be decided.  If the washing machine dies, is that an emergency?  Can we go to the laundromat for a month until we can save money out of our budget or do we dip into that and then refill the EF?  If the car battery dies, is that an emergency?  Maybe, if you count on the said car to get you back and forth to work.  Unless you have money in your Car Care Sinking Fund to cover that battery already.

Spring wardrobe for your daughter is not an emergency fund.  Flying to Florida because your Grammy is sick, for me, is.

Where to keep your Emergency Fund

Where are you going to put it? Are you going to put it in a different bank that is not attached to your checking account? How about an online bank like Capital One 360? How about in a jar in your cupboard or between the mattresses?  Making this decision first is smart.  Deciding to put it someplace that is a little tough to get to yet can be accessed in just a few hours is your best bet.  But don’t let temptation screw this all up.  You know you.  How much self-control do you have?

How to build an Emergency Fund

Make a budget

If you haven’t done this yet, now is the time.  Sit down and do the work.

Use cash.  That way, you won’t be overspending at the grocery store or Target because you only have a set amount of cash to spend.

Look for any other extra money that you can find.  All the change in all the purses in your closet, the change in the car, the change in the dresser drawers, and in the dish in the bathroom.  That change really can add up.

Start selling stuff. It is an excellent time of the year for garage sales or yard sales. It’s time to get rid of that junk.  Anything that might be worth more than you think a garage sale might offer, put it on craigslist, facebook marketplace or eBay. Go through every room, one by one and declutter, grabbing anything that you don’t want or doesn’t have a purpose. Clear out anything that doesn’t bring you joy.

Cut back on spending

Take that date night money and put it toward EF. Instead of spending $75-$100 on dinner and a movie, pack a picnic and go to the park. Find some free music or free play instead. Grab a cup of coffee and split a piece of pie at a cool diner.

Remember that article about tracking your spending? That might be a great place to figure out where the extra money could be found.

Do a spending freeze.  This takes some prep work also.  You can find my rules and information here in my spending freeze tips.  You can go hardcore on this, and I bet you would be super surprised to see how much you can collect.

Make more money

And lastly, start a side hustle. Something to put cash in your hands right away like babysitting or delivering pizzas. Maybe you know a friend who can get you a job waiting table for the summer or walking dogs while someone goes on vacation.

Pick up an extra shift or work some over time.  Many aren’t able to do this but if you can, now is as good of a time as any!

Before you know it, you will have a nice little stack of Benjamins to keep you secure as you get out of debt.  After you are out of debt, you need to revisit the Emergency Fund and increase it up to 3-6 months of expenses.  But this will hold you off until you get to that point.

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