Prepare With an Emergency Cash Fund By Lillian Esquival At Isnare.com Ezine Articles

Are you ready for the next emergency? Do you have the cash to survive losing your job, your spouse or your home? If not, it’s time to get your priorities in order. With an emergency cash fund you can keep the wolf from the door and survive the emergencies that come your way.

Any time you want to begin saving you need to take an honest look at your financial situation. Sit down with all the money decisions makers in your household. That can be you alone, you and your spouse or any other members of the family who earn and spend money in the household. Make a list of your income and expenses. Include a list of all your debts. Create a budget that includes saving.

Start with a quick fund. Having a cash fund is not something you can put off for even a few months. Start with every spare dollar in your budget. Cut out all extras, meals out at restaurants, coffee breaks and other splurges for clothes, shoes and electronics. Challenge yourself to set aside at least $1000 as fast as possible. You need to be able to do this in a month or two. Once you have it set it into a savings account you can access at any time or gather the funds in cash and store them in a safe place at home. This money is not to be spent unless there is a real emergency and you have no other funds.

Get rid of debt. The $1000 dollars you’ve saved you should be able to handle any sudden emergency that comes up for the next while. Now it is time to get rid of debt. Make a list of all your debt, this includes personal debt, credit cards, car loans and your mortgage. If you have any debts less than $500, pay them off first. Pay a minimum on any other debt so you can get rid of the small debts first.

Attack the larger debts by starting with the debt with the highest interest rate. Pay minimum payments on everything else and pay as much as your budget will allow toward the debt. Getting out of debt may take a few years but if you stop splurging and make getting out of debt your focus you can pay it off.

Switch to cash. Now that you are getting out of debt it’s time to make cash king in your household. Cut up the credit cards and start practicing a little delayed gratification. Every purchase should be made in cash.

Now that you are not making hundreds or even thousands of dollars in debt payments you can start saving. You should pay off all credit cards before you save. The car payments and mortgage can wait. Keep dumping every available bit of cash into your cashbox or savings account so that you are accumulating a cash reserve. In tough times it is best to have a minimum of 6 months and a maximum of 12 months of income saved in a liquid account. Once you have that amount you can investing in an account that earns interest.

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