Go go gadget emergency fund!

Wednesday, May 14, 2008

Paidtwice wrote about starting an emergency fund even when you have debts to pay off. This is a topic that is near and dear to my heart right now, being new to the whole financially responsible lifestyle.

It fills me with pride that I currently have $250.20 ( $0.20 free cents I might add due to interest) in my ING direct account. It will soon swell to over $350 as soon as my bi-monthly $100 clears. I still owe on debt, though. I have been keeping my head in the sand about most of it for quite some time now. The reason is because I was one of the "I can't save any money or pay down my debt because I am always playing catch up." As of April 3rd, 2008 I made a vow to stop using this as an excuse to not have an emergency fund, to not fund my retirement, to not get my company match on my 401K, to not live financially responsible.

I know that as of this minute I am not living completely and 100% responsible because I owe people money that I am not paying. But at least right now I am making steps to correct the problem, where as before I did not even care. The benefit of my emergency fund is that when something bad comes up I will to need to miss bills, or go deeper into debt to pay it off. I will be willing and able to pay cash. This is such a foreign concept to me, but I love it. Even when I do start paying down my debt, if I have an emergency, I won't need to stop paying my debt. I can use my emergency fund.

So I am very much in favor of the e-fund as a starting point for financially responsible living. Paidtwice makes a good point that it also makes a saver out of a spender. I was an uber spender. When I couldn't pay my mortgage, and we got our deposit back from the utility company, we bought a Wii. Yes, I said that right, and it makes me both sad and mad that we did that. You want to know the economy is in the crapper? It's because of people like me. Or at least people like I used to be. Who in their right mind would buy a Wii instead of pay towards their first mortgage not 6 months after buying a house? I remember the rationalisation I made at the time. It's only $200. That wouldn't make a dent in my mortgage payment, and we'll save money in the long run because we will stay at home more. Yeah, right. That didn't work out. But that's the mindset of the subprime mortgage meltdown.

It took my friend who makes less money telling me he paid off his $4000 credit card debt with ING.com account to wake me up. He just paid off more than my past due debt making less than I do. Why I am living this way? My emergency fund helped to get me out of the spending mindset. I could not be more proud of my $250.20. It makes me more proud than owning the hot video game system, or the ipod or anything else. My e-fund made me proud at $50 the first day, at $150 when the first automatic payment, and it will make me proud when it is up to $2000 and we start paying off debts we haven't touched in years.

If you are just starting to get your finances together, the e-fund is definitely the way to start.