an emergency fund is a top priority. Right now.
You're not alone if you're thinking ... "I'm
maxed out on my credit cards. I've created a spending plan
and found that my income and expenses are just about equal.
I have no emergency fund. And I really can't see myself squeezing
out the extra funds right now. My goal is to get out of debt."
Nevertheless, a cash reserve is vital to your
financial health. It will keep you from sinking to an even
greater debt level during a crisis. The cause of a cash crisis can be as
major as losing your job to a more minor, but unexpected event
such as a car repair. You don't want to pull out a credit
card to tide you over in an emergency unless you can pay it
off in the next billing period. Otherwise, by the time you
pay the interest, which grows daily, you can easily end up
spending more than double the original cost.
fund should equal three to six months of living expenses,
and be kept in cash.
Treat the emergency fund as a bill. Pay your
account every month or every two weeks.
Stashing money in an easy access money
market account takes discipline. Once you deposit your
paycheck into your account, there are so many demands coming
at you that it's hard not to spend it. You need to pay yourself
first and determine not to touch it for anything less than