smart spending

Establish an emergency fund

Establish an emergency fund
Next
Slide 5 of 6
Back
Establish an emergency fund

What really saves cash is cash itself. Having an emergency fund eliminates the cost of borrowing in a financial crisis.

When people want to get their hands on a quick $2,000, two popular sources include:

Withdrawing from the 401(k), which has a big long-term impact, says Ted Sarenski, a CPA and member of the National CPA Financial Literacy Commission. To cover taxes and penalties, you would have to take out $3,000, he says. Over 30 years at 7 percent, that sum would be worth $24,300. Having cash, instead of withdrawing from the 401(k), saves $22,300 over 30 years.

That could pay for the down payment on a house, a new car, or two years of tuition at a state college, according to The College Board.

Taking a credit card advance, which often includes a 3 percent upfront charge, plus 16 to 20 percent interest, says Sarenski. The cost over two years of repayment: $421 to $516.

That $421 could buy more than three months' worth of power bills, 128 gallons of gas or four months of premium cable.


Next
Slide 5 of 6
Back

 

advertisement

Show Bankrate's community sharing policy
          Connect with us
MORTGAGE REFINANCE AUTO CDs CREDIT CARDS
Product Rate Change Last week
30 year fixed 3.84%  0.04 3.80%
15 year fixed 3.06%  0.03 3.03%
5/1 ARM 3.14%  0.01 3.15%
 
View Rates in your area Next
Product Rate Change Last week
30 year fixed refi 3.91%  0.05 3.86%
15 year fixed refi 3.16%  0.08 3.08%
10 year fixed refi 3.13%  0.01 3.14%
 
View Rates in your area Next
Product Rate Change Last week
60 month used car loan 2.68%  0.03 2.65%
48 month used car loan 2.76%  0.11 2.87%
60 month new car loan 3.11% --0.00 3.11%
 
View Rates in your area Next
Product Rate Change Last week
1 Year CD 1.07% --0.00 1.07%
2 Year CD 1.18% --0.00 1.18%
5 Year CD 1.76%  0.01 1.77%
 
View Rates in your area Next
Product Rate Change Last week
Balance Transfer Cards 15.86% --0.00 15.86%
Cash Back Cards 16.37% --0.00 16.37%
Low Interest Cards 11.10% --0.00 11.10%
 
Next
advertisement
FRUGAL NEWSLETTER

Discover new ways to cut costs and save more every day. Reduce your spending, not life’s pleasures. Delivered weekly.

advertisement
Partner Center
advertisement

Connect with us