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Posts tagged with: EF

May 2016 Debt Update

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Late is better than never! Plus, my debt payments are all scheduled for middle-to-end of the month so these are all still true numbers, no additional payments have been made in June yet. Here ya go:

PlaceCurrent BalanceAPRLast Payment MadeLast Payment Date Original debt, March 2014
Navient$725356.55%$980May$74218
ACS Student Loans$85966.55%$20May$8215
Balance Transfer Student Loan #2$73500% (through April 2017)$300May$7650
Medical Bills$58110%$25May$9000
Balance Transfer student loan #1$00% -Paid off in March 2016$5937
PenFed Car Loan-2.49%-Paid off in January 2016$24040
License Fees-2.5%-Paid off in April 2015$5808
BoA CC-7.24%-Paid off in June 2014$2220
Mattress Firm-0%-Paid off in May 2014$1381
Wells Fargo CC-13.65%-Paid off in May 2014$7697
Capital One CC-17.9%-Paid off in March 2014$413
Totals$94292 (April balance = 95,250)$1325Starting Debt = $145,472

The past couple months (April & May) had smaller debt payments than what I’d originally planed. One of our 2016 goals is to pay $30,000 toward debt in total. Here’s a table showing planned and actual debt payments:

Month 2015 2016 GOALS 2016
January $1678 Goal: $3500 $4013
February $1822 Goal: $1000 $1261
March $653 Goal:  $1000 $2134
April $1796 Goal:  $2000 $1521
May $1708 Goal: $2000 $1325
June $725 Goal:  $4000  
July $2125 Goal: $4000  
August $2250 Goal: $2500  
September $2575 Goal: $2500  
October $5513 Goal: $2500  
November $2751 Goal: $2500  
December $2522 Goal: $2500  
Total $26118 Goal: $30,000  

At this point (Jan-May), our goal was to have paid $9,500 in debt so far. Our actual payments put us at $10,254. So even though our recent payments have been below our goal, overall we’re still on track to hit our annual goals. Just as a note, the reason why the goal is set so high for June and July is because I get big checks from my part-time job these two months (instead of spreading out the payment across 4 months, which would be normal sized, I don’t get paid in May or August at all, but instead I get double-sized payments in June & July). Right now it feels scary/intimidating/impossible to be making a $4,000 debt payment (though, to be fair, I haven’t been paid yet this month so that’s probably why). I still want to be cautious and re-allocate some funds back to our emergency fund after having to raid it for life’s recent emergencies.  But I still think (fingers crossed) we should manage to make some pretty hefty sized debt payments, too. Time will tell and I’ll keep you updated! : )

Hope you all have a great weekend!

 


What’s Next

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If you missed my post earlier this week, I announced the exciting news that we are officially consumer debt-free! YAAAAAAAAAAAY!!!! (insert happy dance emoticon)

What’s funny is almost immediately after making the final payment on the car….it broke. Ha!

A bit of euphemism. It didn’t break down. Just a piece of it broke off. Check this out.

IMG_1575

Nothing even happened to cause it to break! I was just driving down the road to get to work, minding my own business, when out of the corner of my eye I saw a piece of our car just flapping in the wind! I immediately exited the highway but on the exit ramp the piece fully fell off and broke into several pieces.

Hubs looked it up and thinks he can get the part for relatively cheap ($100ish) and do the install himself. So all is well, just kind of funny that the second it becomes OURS….it breaks. Ha!

At any rate, I’ve had a couple people comment and ask what’s next now that the car is finally paid in full.

It’s tough because #1) I’d love to start punching Navient in the face, taking out loans left and right, and #2) I have a relatively small balance transfer loan (just over $2100) from what was originally a student loan that I’d love to pay off next month.

BUT…

I’m trying to use my head and not just my heart (which says to start stomping the student loans NOW), and make our first priority re-building our emergency fund.

If you don’t remember, our EF was slowly whittled away the second part of 2015. As was our “living on last month’s income” fund. Hubs’ business wasn’t doing so hot in 2015, so whenever I needed that extra little boost for paying debts, I’d “borrow” here and there. First from the “last month’s income” fund, and then when hubs had a no income month I used our EF and, well, now we’re down to basically nada in either of those accounts (note:  not entirely true…we still have a few hundred in the EF, but not nearly what we’d like to have).

We have 3 big goals for 2016:

  1. Save up $10,000 for a house down payment.
  2. Save $5,000 for an emergency fund.
  3. Put $30,000 toward debt.

Starting in February, we’ll begin chipping away at items #1 and #2. We’ll still be paying toward debt, too, of course. But we’ll be doing so at a much less aggressive rate as we, instead, try to restock some money in the bank.

The plan is to put nearly $2,000 a month into savings. This will be $1250/month toward the house down payment fund (our goal is to buy by the end of summer, so we need to save heavily the first half of the year), and another $500/month into our dedicated Emergency Fund.

In addition to that, we’ll still be making debt payments in the range of $1500-$2000 per month.

It’s going to be tough. That’s a pretty aggressive rate of savings and debt payment. We’re talking about $3500/month between the two, which is more than what our average monthly debt payments were last year (see here for a quick-view breakdown of the majority of last year).

But when you have something so meaningful that you’re working toward, it definitely helps put the fire under your pants. That, plus this will be our first full year both working full-time (and I still have the part-time job, too). It’s just going to be astronomical earnings compared to 2 years ago. Even compared to the first half of last year. So I think we can do it.

The first half of the year will, admittedly, be a little heavy on the savings side of things. Then the second half of the year we’ll make up some ground and really start making some good headway with the student loan debt.

But it won’t be all savings and no debt until then! It wouldn’t make sense to blog for a getting out of debt blog if I wasn’t actively working on the debt!

I’ve got a few tricks up my sleeve to try to make some good progress even while in savings mode! I’ve GOT to have the balance transfer student loan paid in fully by April (that’s when the interest sky rockets from 0% to 13%!!!) But right now my projections show it being paid in full by March. Then I plan to initiate a second balance transfer to do it all over again (they still have the deal with 0% APR for a year, and only a 2% initiation fee; this is half the initiation fee of other offers I’ve received).

I also may consider some type of consolidation program a little bit down the road. I like having my loans separated currently because it gives me a big psychological boost every time I pay off one of the loans (and I target them one-by-one, paying minimums on all others). However, I hate Navient with such a fiery passion that it may be worth it to consolidate with an outside company just to get them out of my life. We’ll see. I’m not jumping on anything now, but keeping my mind open to the possibility down the road.

Anyway, that’s it for now. I just wanted to dedicate a post to the question I’ve been seeing, “What’s next?”

Also…counting down the days until the all-cash paid Cruise 2016 vacation in April! We’ve been planning and saving for it since February 2015 (over a year!!!), so we’re beyond ready! I can’t wait! Whoever said you can’t have a little bit of fun while in debt-repayment mode certainly never read here! It may be a controversial stance, but I’m a believer in balance in life. We’ve worked HARD the past two years to dig ourselves out of the giant debt hole we were stuck in. Yes, we have a long way to go. But it’s precisely because this is a MARATHON (and not a sprint) that I think it makes sense to build some fun into the budget. Otherwise it’d just be impossible to stick to for so long! That’s my view on the matter.

What are your plans once you get out of consumer debt? Tackle student loans? Your mortgage? Get your savings up to snuff? Or are you going to go beyond? Perhaps save enough to retire early? Do some traveling, etc? I’d love to hear YOUR plans!

 


Well Crap…Extra Expenses

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Isn’t this just Murphy’s Law? Anything that can go wrong will go wrong? Especially when a HUGE goal is just on the horizon, mere weeks away!

So I guess this is just life but I’ve got to report to you all with some disappointing news today. News that may impact our January 2016 target date for becoming consumer debt-free. Sigh.

We’re going to have some big unanticipated expenses this month.

First (and the smaller of the unexpected expenses)….I broke part of our dishwasher, and almost caught our house on fire in the process. I really can’t explain it well because I don’t know what all the parts are called, but I tried to take apart some of the inside pieces in the dishwasher to clean them. When I put it back together, apparently I didn’t do it correctly. The next time I washed a load of dishes, the part came apart and landed on the heating mechanism, which caused the dishwasher part to melt (and smell like an electrical fire!!!) Luckily, I caught it in time before major damage had occurred and the dishwasher isn’t totally ruined. However, to replace the broken part it cost $100!! What the heck!? Seems like price-gouging to me, but it’s a necessary replacement.

Dishwasher fix = $100

The second (and larger) expense really, really bums me out to have to talk about. Basically, hubs was in a car accident. It wasn’t terrible, and no people were hurt. He was driving home and stopped at a red light with cars in front of and behind him. The car behind him plowed into him and pushed his truck into the car in front of him. From hubs’ perspective, the entire wreck was the fault of the person behind him. But the police officer who responded to the scene cited the driver behind hubs for causing the incident (not sure what the official citation was) and cited hubs for being too close to the car in front of him. So, ultimately, the person behind hubs is responsible for the damages to our vehicle and we are responsible for the damages to the vehicle in front of hubs.

Deductible = $1,000. We had $250 in our car repair account. This leaves $750 to be paid out of pocket.

Vehicle fix = $750

Can you say OUCH?

And now I’m left doubting myself. We’ve had this super thin emergency fund. It’s continuing to be stripped so we now have no buffer in our car repair fund, only a couple hundred in our annual expenses fund (should be revolving closer to $500ish), $400 in our dental/health/vision fund (should be revolving closer to $1,000ish), and that’s basically it. Still some small balances in other various accounts (pet expenses, birthdays, and travel/Christmas – though the Christmas fund will be depleted this month), but very little buffer between us and disaster. That was all well and fine when I was hoping to be consumer debt-free this month and start re-building our savings in January but that’s no longer going to happen.

In fact, with these huge expenses (particularly the vehicle one), we may not be able to hit our debt free goal in January either. And now we’re talking about pushing back these dates far enough that I start to be nervous about not having a good EF security net.

Also, I’ve been working on some projections for 2016 and am a little disappointed in myself. Even if we hit the consumer debt-free mark in January, it would take us probably an additional 2-3 months to re-stock our savings to a level where we feel comfortable. So we’re talking about being nearly a third of the way through the year before we’re really able to start wailing on some debt again.  I wish we had big Christmas bonuses or something that could really jump-start the savings and get us back into debt-reduction mode faster, but neither of us has a job like that.

Soooo, yeah. I’m a bit torn. Continue on our current path, pay these new debts, and try to become consumer debt-free as soon as possible (January or February at the latest, knock on wood), or sloooooow down just a step so we can get some Emergency Funds back into our bank account so that we are better equipped to deal with any unforeseen disasters.

Also, as an aside, pretty sure our insurance is going to go up. Boo!

But all this being said, I like to count our blessings. We have done a kick-butt job this year with paying down debt and we are proud of our hard work! We’re in a great position for 2016 to be our year! Becoming consumer debt-free, building up some savings, buying a house (!!!) and starting to tackle the student loan mountain. It should be a great year!


Why It’s (Sometimes) OK to Have a Small Emergency Fund

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I’ve mentioned that I’m keeping a very slim emergency fund (just under $1,000) from now through the New Years. Instead of beefing it up right now back to a place where I feel comfortable (which, for me, is about $4,000ish), I’m putting it off until the New Year.

Last week Matt posted about how his emergency fund (EF) has also taken a dip down to right at $1,000. A couple readers commented on how dangerous and foolish it is to allow such a low EF, and the importance of having a reasonable EF in general (side note:  read the comments, as there were some really great points and an interesting discussion).

I whole-heartedly agree that an EF is of the utmost importance. When trying to get out of debt the first basic step is to stop accumulating more debt! The best way to do that is to pay for things in cash and have a bit of a safety net for any possible “uh oh” situation that would otherwise cause one to take on debt.

What one considers to be an “acceptable” level differs by person. For me, my preference is to have one full month worth of expenses in the bank (about $4,000 for our family’s minimum expenses). I know many financial gurus suggest 3-6 months worth of expenses or even 6-12 months. But, some of those same gurus admit that these figures are after debt has been paid off. While still in the trenches working to eradicate debt (some of) that money is better spent paying down debt! Dave Ramsey suggests that while in debt repayment mode to only have a $1,000 beginner EF. For me that’s a little too low for comfort (again, I prefer one month worth of expenses). But to each their own.

All that being said, I think it’s okay to have a meager emergency fund sometimes.

Here is my reasoning and logic for why I’m sticking with a very small EF right now:

  1.  It’s for a limited period of time. I would not feel comfortable with my current level of EF (under $1,000) forever. But I’m not suggesting I keep it that low forever. I’m just trying to get through the rest of 2015. I have some pretty big financial goals to achieve and I’m working my butt off to try to hit them (or come as close as possible!) I’m planning to beef back up my EF in January 2016, so we’re really only talking about a month and a half of our super slim EF.
  2.  It’s motivating. If you have a slim EF, you work that much harder because you’re motivated to be able to build it back up quickly. It’s uncomfortable to know that you have a super small financial security net, so you may be more likely to cut back further (to save additional money), find things to sell (to make more money), etc. All around, I find it motivating.
  3.  I have a steady paycheck. This is a big one because for multiple years we had a VERY variable income. During that time I would have never allowed our EF to stay at such a small level. But we also depended on our EF for our basic livelihood rather frequently. The situation is different now. I have a secure job and steady pay. If we were to experience an emergency that completely wiped out our EF, we’d still be okay because we continue having a steady paycheck! It would just mean that any funds originally earmarked to go toward debt would be diverted to pay for the “uh oh” situation. I feel a lot of security in knowing I get paid like clockwork every two weeks.
  4. We rent. One of the points brought up in the comments on Matt’s post was that renting is inherently less risky than owning.  Anyone remember the Great Flood we experienced last year at this time? I can’t even imagine how costly that was for our landlord. If a roof needed replacement, an A/C went out in the heat of summer (or heater went out in winter), or some other major expense came up, it could cost many thousands of dollars for repair/replacement. We aren’t in that situation right now, so we don’t need emergency funds to cover any of those hypothetical home-ownership-related problems.
  5. I have other savings. I really love how easy it is to have separate savings accounts for different goals with Capital One 360 (<refer a friend link! If you join, let me know how you like it!) Some people are “groupers” and some people are “splitters.” I’ve always been a splitter. You should see my desk at work – I have a different pile for each task I’m working on ; )  Anyway, I’d hate to have to do it, but if an emergency arose that we were unable to cover through our small EF or income, my next step would be to raid other existing savings. We have savings in all kinds of categories:  Christmas fund, semi-annual fees, dental/health/vision, vet/pet expenses, etc. etc. etc. If something big came up and we needed liquid cash immediately, I’d dive into these funds in order to cover our butts. Yes, I don’t consider them part of our EF (and I prefer to keep them totally separate). But, let’s be real. It’s cash money sitting in the bank. If we need cash, it’s an easy place to go.
  6.  I have credit cards. I know this is controversial because some people are big proponents of cutting up and throwing away credit cards. If you have had credit card addiction problems, then by all means get rid of them! But I’ve been pretty safe on that front in terms of being able to charge something credit and pay it off right away. I still prefer using debit cards because it’s easier for budgeting purposes. However, I use a Wells Fargo credit card for our monthly preschool tuition because of the reward points it earns, and I use a Target credit card anytime I buy gifts (wedding, baby, etc.) because I save 5% and get free shipping (remember, I live in Arizona but most of our friends/family are in Texas so almost all gifts I purchase have to be shipped back to Texas). In addition to that I have 2 more credit cards I never use (they sit in a safe in our home).  In all, I have probably $15,000 worth of credit available to me. This would be a last resort, but if a big emergency came up and we didn’t have the cash (or income, or additional savings) to cover it, I could put it on a card and pay for it the following month. That allows us an extra month to get the money together without it actually being new debt (and it would be paid off before any interest accrues, etc.)

Those are my thoughts on the matter, what are yours?

Have you ever had a small EF for a period of time? If so, how did you handle emergencies when they came up? How much of an EF have you kept while in debt-repayment mode? What’s your minimum threshold? 


May 2015 Budget Update

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I have been dreading this post. Like – dreading it!

This month has not been great in terms of our budgeting. I’ll show you the numbers in a second and I know they’re higher than our average numbers, but I also don’t feel like we went crazy or anything.

In basically all categories, our overspending was due to known expenses that I had failed to plan for. Basically – no big surprises came up (no crap river or emergency dental visits). Instead it was stuff like needing to buy the girls new swimsuits for their free swim lessons (they grow too fast! I tried to put them in last year’s swimsuits and the resulting atomic wedgies indicated it was NOT going to happen). Also, I mentioned that my mother-in-law and grandmother-in-law visited for four days. While here we paid to take them out to dinner one night in celebration of MIL’s birthday (and to thank them for their visit). That single dinner blew our entire month’s eating out budget. I should have increased it for the month since I knew this visit was coming up. Same thing happened with groceries. Aside from the one big dinner out, we did most of our eating at home and I hadn’t adequately planned by increasing our grocery budget.

At the month’s end we were over budget by nearly $400.

This is where YNAB comes into play and – again – why I have loved it so much (see my full review here). Going into the software I was easily able to move some monies around. I’d originally planned to put some money toward savings for dental/vision and annual fees but I re-allocated that money to different categories. Additionally, I had to tap into some of my Capital One 360 savings accounts. I didn’t want to pull all the money from my Emergency Fund (more on that in a minute), so I pulled about half from the EF and the other half from my semi-annual fees account. This move was partly psychological and partly strategic. It didn’t feel like as big of a “hit” when I spread the money out (instead of taking solely from my EF). That’s the psychological part. How was this move also strategic?

Sigh…

Here’s the part I’ve REALLY dreaded of this post. I have to tell you guys that this month did not go well for husband’s business. In the past when we’ve had lower income months I’ve gotten all introspective about it and been very public with what I think our mistakes were and how to correct them. But in the interest of keeping some things just between hubs and I, I’m not going to go into reasons this month (though he and I have discussed them endlessly, so its not for lack of analysis).

Long story short, Hubs’ business came up empty-handed this month. Completely. This isn’t the first time, though it’s the first time in a looooooong time (first time since I’ve been blogging). In the early days of his business some 4+ years ago this happened more frequently. There were even some months where he’d lose money! (Yes. As in, we’d have to take money from our personal checking/savings to cover his business losses). On the overall, his business’ trend has been upward. But this is life owning a small business. Some months are awesome! And some months you may not make anything. You hope the awesome months are more frequent and the crappy months are few and far between (and, in general, that’s the trend his business has been taking). But this month was a crappy one.

So how will we survive?

Well, fortunately, I still get paid from my job! And with the shortage we’ll be forced to raid our EF. However, we’ve also been trying to sell things to minimize our losses. Husband has sold some of his shoes (it’s funny, but he has a larger shoe collection than I do!), and has sold a nice watch he owns. Our regular pay will still be business as usual (being saved for the following month since we live on last month’s income). But with any side-money we receive from selling things, we’ll use it to supplement the current month (June) to minimize the amount we have to take from our EF to survive the month.

So there you have it. Last month’s overages and the plan for next month.

Now, onto the actual numbers.

 

Place Amount Spent
Rent 1055
Electricity 127
Water 61
Natural gas 18
Sprint (2 lines) 119
Cable/Internet 99
Car Insurance 58
Health Insurance 394
Trash 35
Preschool 1024
Gift-Giving 29
Restaurants 162
Entertainment 10
Groceries 550
Gasoline 71
Medical 11
Household Goods 100
Clothing 20
Toddler purchases 60
Work Purchases 47
Rainy Day Savings 130
Savings Goals 500
Debt Payments 1708
Total 6388

I hope your May was more fruitful than ours! Here’s to hoping we knock it out of the park in June!

Do you/have you ever had a variable income? How do you handle the fluctuations? Our variable income is one of the main reasons I loved YNAB’s idea of living on last month’s income. It’s also one of the main reasons we have a larger emergency fund than the $1,000 beginner EF recommended by Dave Ramsey. That’s way too low for my comfort level given the sometimes unexpectedly low income months we have on occasion.

 

Note: My YNAB and CapitalOne360 links are refer a friend links. If you join it doesn’t cost you anything extra but I do get a small compensation for the referral. All opinions are 100% my own and I joined paying my own money so this is not a sponsored post and I received no discount or anything for mentioning them. Particularly for YNAB, I’m just giving them a shout out because their budgeting system really has made a HUGE impact on getting our financial house in order!


Annual Vehicle Registration

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Hi! Happy Saturday! I hope you’re all having a great day and staying warm! We have lots of fun plans today, including a potluck breakfast event (they do these once a month at my husband’s freemason lodge and we love it, as its a great chance to socialize and meet the other wives and kids!), park playdate with some friends, and some well-overdue yard work (think:  trying to get crabgrass out of the regular grass. Yikes!)

In the meantime, I just had to pop in and share a little “win” I had this week!

I got an email letting me know that my vehicle registration (for our 2011 Ford Explorer) would be expiring at the end of the month. Since its a newer car the registration is a bit pricey:  $275.75!! Ouch!!

In the past, this would have been a big deal. Especially this month, as our budget is extremely tight. We would have literally had to borrow money from our EF to pay for the registration, which clearly isn’t a true emergency.

But things were totally different this time around! I started blogging in March of last year and shortly thereafter I started saving for annual expenses ($100/month) just like this one. So instead of freaking out over the nearly $300 bill that popped up “unexpectedly,” I simply hopped online, paid the bill out of my annual expenses savings account, and went on about my day. It felt like a totally different experience to have this pot of money already sitting there ready to use, instead of having anxiety about how we were going to pay for it and where the money would come from!

So there you go. My little preparedness “win” that made spending 300 bucks feel like no-big-deal.

When’s the last time you had a budget win? What was it?


Emergency Fund

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I don’t know why it’s taken me so long to write about our EF. I guess it just seems like a boring topic to me??? Or also because I know the popular opinion is going to be to get rid of it (throw the excess at debt). Probably a little bit of both.

Remember when I first started blogging, we had a pretty decent-sized EF. Although, I hadn’t officially called it an EF. I simply called it “assets.” See here.

At the time (March 2014) we had $11,750 in assets.

  • $4,00o in checking/savings account
  • $1,750 in Capital One 360 Savings
  • $6,000 in a money market account.

Since then there have been a few changes.

First, I ended up shuffling money around a bit.

I started some dedicated savings accounts in my Capital One 360 account and moved all the money from my checking/savings into Capital One 360 (<<that’s a “refer a friend” link). Instead of one general savings, I have lots of savings for separate purposes.

My current savings are:

  • $200/month toward car repairs/new-to-us car fund
  • $125/month to dental/vision/health
  • $100/month to annual expenses
  • $100/month for Roth IRA
  • $25/month for 3-6 month expenses
  • $25/month for travel/Christmas fund
  • $10/month for girls’ birthday expenses

You’ll notice I don’t actually have an account called “Emergency Fund.” I consider my 3-6 month expenses account as an emergency fund account. It should be noted, however, that if there were a true crap-hit-the-fan emergency, I wouldn’t hesitate to dip into my other savings accounts, as well, in order to avoid going into debt. BUT, I like having each separate savings account for its own specific purpose. And in the meantime, I hope we won’t have any true crap-hit-the-fan emergencies! Yikes!

Currently, our 3-6 month savings account has nearly $4,500 in it.

What’s happened to the rest of the money?

Well, it’s been spent!

Way back in April I put $1,000 toward debt. This was an intentional spending of money, as many readers expressed that they thought our current savings were too high.

I’ve also had 2 months where we’ve been over budget. Once was only by about $20, but the other time was by $640! Ouch! Both times I dipped into the EF to cover these expenses.

I still have my money market account, which is separate and has not been touched. And, finally, I’ve been saving $25/month (ever since I first started blogging), which is automatically deposited into my 3-6 month savings every month.

So there you have it. Almost a year after starting to blog, and after having to dip into our EF a couple of times, our net assets are still nearly what they were at the beginning of my blogging journey. Savings has always been a bit of an issue with hubs and I (because we BOTH are natural savers and want to stockpile money like the apocalypse is coming). I know this is a large EF for someone in as much debt as we have and many will say to continue throwing it at our debt. But having this safety net makes us feel…well, safe. Plus, we’ve actually had to dip into it a couple times so I’ve been glad its there. And I haven’t rushed to refill it or anything (just the same old $25/month we’ve always done), so I feel okay with that, particularly since hubs’ income is variable and we have young kiddos.

So there you have it. The deets about our emergency fund.

Do you have an Emergency Fund? If so, how much did you have in it while you were in debt?