Today I went to the bank to deposit some cash to cover the cost of the yearbook t-shirts I ordered for the kiddos today. While I was there I set up a direct deposit into my "summer saver" account. This savings account is designed for teachers who only get paid on a ten month cycle, so you can save enough to cover a month without pay. It has a higher interest rate (3.57%) than a regular savings account, however it automatically dumps into your checking every August. Then I can transfer it into my regular savings, which has a lower interest rate.
I've never put money in this account, because you have to do it through direct deposit and I hadn't figured it out. Plus, I get paid on a twelve month cycle, so I don't have a dire need to save for August. Also, since I am focused on paying off my credit cards, I haven't been doing much (any) saving. But, I thought it made sense to at least start saving a small amount each month, so that I'm not totally dependent on my credit cards if something goes wrong.
So, starting with my March paycheck, I will be saving $100 per month. It feels good to start saving, and this will be the beginning of my emergency fund. Which leads me to the question: how much do you have in your emergency fund? Or perhaps even better, how much do you want to have in your emergency fund?
Yay for saving! It's addicting I tell ya! I have about $3,000 in my emergency fund and I want to get to $10,000, but since I am unemployed I'm not saving anymore and will most likely spend it if some unexpected expense comes up.
ReplyDeleteMy logic was that I wanted to pay the minimum amount due on my credit stuff until I got $1,000 in my emergency fund, then save regularly but pay down debt more aggresively. I'm so glad I did that because I have had to use that emergency money for a lot of things that have come up (moving, car expenses, etc). If I didn't have that money I would have had to resort to credit cards for emergency expenses and my debt would be a circular cycle. No matter how much progress I made paying down debt that wouldn't have helped me get through my first month of unemployement (before I started getting checks). I am a big believer in having an E-fund!
Just my two cents... happy saving!
Nicole has it down, first get it to $1,000 where it will turn a crisis into a mere inconvenience. From there build it to 3-6 months wage, 3 months if your job is stable, 6 months if it isn’t. An E-fund makes life less stressful.
ReplyDeleteI have $1500 in my E-Fund right now, and I'm aiming for about $10,000. I've set up little benchmarks for myself to get to $5000 by the end of the year (so I want to be halfway to my final goal by the end of 2010). Having money set aside really does make life SO much less stressful - in addition to my E-Fund I have a separate car repair fund, and that came in handy just recently when I needed to spend almost $100 on some minor repairs. Normally I would have been totally mad at having to spend the money, but it was no big deal because I knew the money was THERE.
ReplyDeleteIt's a good feeling to have :)
Yeah, I've heard 3 months expenses is a good rule. Rock on!
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