Search Results for: emergency fund

America Saves Week – Planning for The Unexpected

Life is always unpredictable. Just when you think you are all set with your finances, here comes an unexpected expense.

Here are some of the unexpected expenses we have incurred:

Ruptured toilet feeder line damaging the bathroom and bedrooms floors

Car breakdown that needed immediate repair

Unexpected high medical bills that insurance didn’t cover

Pet / Vet expenses

Unexpected loss of income / non-payment from client

So, what do you do when something happens to you and your still have bills to pay? Yes, you can use credit cards as an option. It wouldn’t be my first choice, as this creates another bill to pay. My choice would be to have an emergency savings account to have the funds to pay for what life sends your way.

Experts agree that you should have 3 to 6 months of your income saved in an emergency fund. Personally, I think you should build up to a year in an emergency fund. If you want to start to save, see my post Save for Your Future.

It’s Never Too Late

Welcome to 2022!

It’s time to think about your finances. What are your financial goals for the upcoming year? Are you looking to save for an emergency fund, retirement, a new home or home improvements, education, an emergency fund?

There is so much to accomplish and never enough money. Well, that is how I used to think. But not anymore.

I started by taking small steps to achieve my financial goals. My first goal was to create an emergency fund of $5,000. Sounds overwhelming, but I broke it down into small steps:

$5,000 in one year is $416.66 a month – $5,000 in one year is $96.15 a week – $5,000 in one year is $13.70 a day

Next, I needed to find this money in my budget. What could I cut back on or do without? It turns out it was multiple ideas to come up with this money. We spaced out haircuts, we stopped buying beverages for work (we bring our own), we trim our dog’s nails ourselves and more.

Lastly, we automated the savings. Each paycheck we save $100.00 into our emergency savings automatically. It’s set and done.

Now we have the emergency fund we need to be prepared for whatever happens in our life.

Please know that it’s never too late to start to save for your goal. Obviously, the earlier you start the better off you are. But not starting is a mistake. Make a plan and decide to start now. You too can achieve your financial goals this year.

Things To Do Before You Retire

Whether you are just starting out or nearing retirement, there are things you can do now to make retirement easier for you. You don’t want to retire and not have the money to do what you want. Here are some things you should think about:

Do you have enough in your emergency fund? This past year many people were laid off, furloughed and/or unemployed. An emergency fund helped many get by. These funds will help you with an unexpected need for funds i.e. fridge dies and needs to be replaced, your car breaks down and you need to rent a replacement car, etc. Life happens whether or not you have the funds. Create or increase your emergency fund to cover 6 to 12 months of your expenses.
Have you maxed out your retirement contributions? You may want to fund your retirement accounts both through your employer (401K, 403B, 457, etc.) and your personal (IRA and Roth) accounts. You can never have too much money for retirement.
Is your budget balanced? One of the biggest mistakes you can make is to have more expenses than income. If this is the case, you will be accumulating debt and therefore not savings money. Eventually, this could snowball and you will be a slave to your debt. Make changes now to live within your means.
Is your debt paid off in full? Just like living within your means, having your debt paid off in full is important. When you retire, you will be living on less income. Having debt paid off will help you living within your means. Make a plan to have your debt paid off.

According to AARP, more than half of the full-time workers age 50 years and above will lose their job involuntarily. Keep track of your finances, live below your means and be prepared for whatever comes your way.

Goodbye 2020, hello 2021!

2020 was a year for the record books. This past year has brought many issues for many people, from job losses, reduced wages, not to mention healthcare issues. If this past year didn’t convince you that you need an emergency fund, I am not sure what will.

For us personally, we have had job furloughs and reduced hours – therefore less income. Luckily, we have an emergency savings to help us out. In addition, we took on part time weekend jobs for additional income. What about you, how are you surviving?

Our goal for 2021 is to get our finances back on track – replenishing our emergency savings and eliminating debt. Fortunately, we are back at work and earning income (and we have kept the additional part time work). So here is our plan:

We continue to automatically save a portion of each paycheck.
We have made a plan to pay down some debt we accumulated.

Notice that we are doing both at the same time. Personally, I don’t believe that all your money should go to paying down your debt while not saving anything. If you have an unexpected expense, then what will happen? You will go into more debt. That’s why I believe in doing both at the same time.

For us, we are using the snowball method to payoff the debt we have accumulated. What is your plan to get back in track in 2021?

2020 A Year For The Records Books – Part 1

2020 has been a year unlike any other – from job loss / furloughs to pandemics to hurricanes. All of this has signaled changes in our lives, not only in what we do (or don’t do), how we live and how it affects our finances. We must learn to adapt our finances to changing times.

For many this is a year that you started (or continue) to accumulate debt. Not a good thing!

Let’s first talk about all the ways that you may be accumulating debt:

Not having an emergency fund. You have heard me preach over the years about having a savings account for life’s what ifs. This was the year that many of us needed to fall back on our emergency savings as jobs were lost / furloughed and the unemployment system was overwhelmed, and payment were delayed. Your emergency savings was the way to get you through in these uncertain times.

Adapting to change (the new normal). As your life changes, so should your finances. Meaning that if you have job loss / less income coming in, you need to tighten your belt and cutback on your expenses. Answer these two questions. Think what can I get for free that I have been paying for? Think what can I reduce or eliminate in my monthly expenses? Want more information, check out my past newsletter, Budgeting By The Numbers.

Eating out / take out. Food is one of the biggest expenses in a family’s budget. Typically, when I coach a family, it the food that is an issue with their spending. How much is it costing you to eat out, pick up take out, grab a beverage versus bringing and cooking at home? Track this and see where your family stands.

Reimbursable costs. In these uncertain times, you may have more medical than other years. Make sure to utilize all your options such as FSA and HSA accounts, in network providers, etc. I was speaking with someone who hadn’t submitted any expenses to her FSA account. She potentially could be leaving a lot of money on the table by not timely submitting her expenses for reimbursement.

Check out next week’s newsletter for part 2.

What Have You Learned?

This year has been like no other year. I like so many of you have been at home for months, only going out to buy groceries and to work.

I have had a lot of time to access my life to see what is working and what isn’t during this time of staying at home. Here are some of the questions, I have pondered:

Do I have enough of an emergency fund? My answer was we were okay for a few months but need to build this up.
Do I really need to buy this? I came to the conclusion that I spend too much on things. That is changing.
What really matters? I really miss the interaction with family and friends. Yes, there are internet platforms, but it’s not the same for me.
Do I want to keep writing this newsletter? Still pondering this, but leaning to less often.
What has to change in my life going forward? Still working on this one.

I was also able to accomplish some projects that I have wanted to do for a while. I completed a big scanning project that I have been trying to do for 10 years. We replaced some grass in front of the house with new plants. The biggest accomplishment we have achieved is that we are walking every day for 45 to 60 minutes.

What have you learned / done during this stay at home period?

111 Ways To Save

Have your been laid off or furloughed? I am sure that you can see that value of having an emergency fund. While you are home more, now is a good time to start to get your finances in order and start to save or save more.

111 Ways To Save is meant to help people with their personal finances think outside the box to reduce their expenses, and getting them started on the path to financial independence.

111 Ways To Save is 10% off in April’s Financial Literacy Month when purchased at JillRussoFoster.com. Select the book and make the purchase through my website / BookLocker and use code 10FinancialMonth to receive the discount.

What Are Your Financial Goals for 2020?

What is it that you want to achieve with your finances? Is it to have an emergency fund? Is it to save for a specific goal such as a down payment on a home / car? Do you want to save more for retirement? Whatever you want you can achieve it.

Start by writing down your goal (in a SMART format). Then break it down to manageable steps.

For example, I want to save $500 by the end of the year – that’s

that’s $41.67 per month
that’s $9.62 per week

Now think of ways to find that money to save

could you bring your lunch / coffee to work one day a week
could you add an extra week between haircuts / manicures (if you do your nails every other week that’s 26 times a year, switching to every three weeks would be 17 times a year – that’s a savings of 9 manicures)
could you cancel or reduce your unused memberships / subscriptions
could you research lower costs for utilities / insurance
could you eliminate a fee (bank account, credit card and more)

With this in mind, you could find the $9.62 a week to save to meet your goal.

Remember that breaking it down to manageable steps is key so it doesn’t seem so over whelming.

Let me know what your financial goal is and maybe I can help you break it down in to smaller steps.

Bon Voyage to Your Debt – Part 4

Say Bon Voyage to Your Debt Part 4: Prepare for Surprises

Originally Posted August 1, 2014 By Jill Russo Foster

Step four might surprise you.

I want you to start an emergency savings account and your goal is to save an initial $1,000. Yes, you read that right.

Why would I tell you to put money into savings when you’re trying to pay down debt? It’s not like the interest you earn is going to be more than the interest you’re paying, right?

Because, if you don’t have a savings account to fall back on, you’ll be back in debt the next time you’re blindsided by an unexpected repair or medical bill. Life happens. If you don’t have money in the bank, how will you pay for the surprises it brings? With a credit card or a loan? It’s a bad habit, and it’s better to start breaking it now rather than later.

Just like your debt didn’t happen overnight, your emergency savings isn’t going to happen overnight, either.

1. Make a plan to save money from each paycheck.

2. Start small with $5 per week and increase over time.

3. Remember to pay savings first (and automatically) before you pay the bills.

You can put money in savings automatically through your payroll department. If you don’t have a direct deposit service through work, you can set it up with automatic transfers at the bank.

As I said, start small and work your way up. The ideal goal is to put 10% of your income into savings. But first, start with the emergency fund so the little emergencies don’t discourage you from your quest of paying down your debt

Next issue: We will actually start paying off your debt – bet you thought we wouldn’t get to this.

Budgeting By The Numbers

Do you ever wonder how much of your income should be going to this and how much should be going to that?

I know that you are aware that the general rule for your monthly mortgage payment should be 28% or less of your gross income. The mortgage payment plus your monthly debts (credit cards minimum payments, auto payment, student loan payment, etc.) should be less than 36% of your gross income.

These are the guidelines that help us to determine where your finances stand at any point in time. You may be higher or lower, but your know how you stand against the suggested ratios.

Here are some other suggestions:

Emergency Funds – 3 to 12 months of income. You need to have money aside for yourself when emergencies occur. There are several thoughts here for amounts – I believe that homeowners should be more towards the 12 month or more range, as you never know when you might need to make an emergency repair right now. Also, if you become unemployed, it seems that the older we get the more time there is in between jobs. This plus many more scenarios could make you rely on this emergency fund. Start or increase yours today.

Savings – the more the better! You can never have too much savings. Automate your savings and pay yourself first. Have your savings deducted from your paycheck each and every paycheck – that’s the pay yourself first part. You need to do this, as there is never money left over to save. Living off what’s left is the way to go. Remember to increase this amount often (at least every time your get a raise). If you haven’t do this start small – maybe $20 / paycheck and keep increasing this. I would love for you to aim for a minimum of 10% of your income.

Food – this one is a hard one. I know that we spend a lot on our food budget. Maybe you think this way too. I personally have tried different ways to keep this under control – from vegetable gardening, to only buying with cash, to sticking to lists (meal planners and grocery lists), but it’s tempting to spend more – that are so many items (not on my list) that we seem to want.

For a general guideline of what percentage of your check should be, check out this article from Every Dollar. Remember that these are suggestions and you can tweak them to fit your lifestyle.