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It’s Time


I have been dragging my feet when it comes to stashing money away for a rainy day. It’s been hard for me to think about saving money earning less in interest than what we are paying towards our credit cards. But there is something to be said about having some cash stashed away if you need it. We have $122 currently in a savings account but that really isn’t enough.

Since we’ve hit the debt hard this past year, the beginning of the second year I am focusing on stashing some money away. Not a whole lot, but I think a good amount for us to start with is enough to cover all of our expenses for a month. I ran a report of our spending last year and it looks like $2,500 should be enough to cover a month of necessities and debt payments. I’m comfortable with that amount and it would provide a sense of security.

My husband’s temporary job has been extended for a while longer and he also received a raise the other day, so I figure we should be able to save $2,500 within a few months. I look at that amount and I realize that if we paid that amount towards our credit card debt we would be under the $20,000 mark. I really want to hit that milestone, but I feel at this point in our journey we have to get some cash stashed away.

It’s time. I’m ready to starting saving.


  • Reply Beth |

    The peace of mind that comes from having an emergency fund (even $500) makes it well worth whatever sacrifice or trade-off is required to have it. Living without the (conscious or sub-conscious) fear of an unforeseen problem like a car breakdown and the impact it would have on financial goals (requiring you to use a credit card, for example) is priceless! I strongly believe that you will not regret your decision one bit — it will give you a wonderful sense of freedom and security.

  • Reply Kim L. |

    I 100% agree with Beth. A few months set back on the debt payoff is going to be well worth knowing that you have that money handy. You will definitely not regret it!

  • Reply Mark B |

    I agree completely with the first two posts from Beth and Kim. My wife and I just saved up one month of expenses using the “You Need A Budget” system, and it has been such a weight lifted from our shoulders. We live in Southeast Michigan and I work for an auto company, so the threat of unemployment is certainly a concern right now. We are now focused on eliminating the rest of our debt, then we plan to build that emergency fund to 3 months of expenses before aggressively saving for other goals. Good luck with the $2500 savings goal, you will have it in no time.

  • Reply Sara |

    I am following the Dave Ramsey plan and have (or had) an emergency fund of $1000 (this is a baby emergency fund). One of our cars just broke down, and we are using the money to fix it. It’s nice not to rely on credit cards for things like this, and my commitment to getting out of debt made the decision to fix my old beater rather than finance a shiny new car a lot easier.

  • Reply Matt |

    Having money set aside for a rainy day is very important; you can’t predict what will come up. Not paying your debt down as hast as possible might slow you down a little bit but it won’t help you out if something arises that will require extra ‘rainy day’ cash.

  • Reply CPA1298 |

    I was at a financial planning seminar recently, and the speaker said the average emergency that comes up is $1,000 attributable to car repair. Unfortunately it often gets placed on plastic, and never seems to go away.

  • Reply Tim |

    The worst thing when you are in debt is having to go more in debt, because you do not have savings. $2500 is a good idea as a start. Although it is very tempting to want to pay off all your debt right away and makes sense interest wise, it isn’t the best solution. You need to have patience in getting out of debt. Many people are in debt because of compulsive spending, so being compulsive about paying off debt too quickly is setting yourself up for failure once you are out of debt. You will pay off your $20k in debt, just set yourself up for success as you are planning on doing by socking away $2500.

    However, although you’ve evaluated $2500 as a good start, you might rework the numbers to cover insurance deductibles, medical copays, and a major repair on the auto and/or house (like a water heater). Continue to add monthly to this fund as you pay your debt off.

  • Reply Nancy Burns |

    I too was beginning to get “compulive” about paying off my debt. I think the decision to build up a ” contingency fund” is very wise. I will follow your example, even though it will delay my debt reduction. In the long run it will be a wonderful feeling to be able to stop living paycheck to paycheck.

  • Reply Michael Penrow |

    I agree with Sara that a “baby” emergency fund is invaluable. When my wife and I were getting out of debt there were several times when we used some of our emergency fund which kept us from using our credit cards. Now we have been out of debt for five years and the peace of mind is “priceless”. Just keep up the good work and you will get there.

  • Reply Chris |

    I feel you should do both, split your savings and debt repayments. Start small, not with a dollar amount but with a % of your check and deduct it each paycheck and put it directly into the savings account before you can spend it. Here’s how we did it:

    We started saving 5% into a savings account. When we got used to that, we started saving 10%. When we got used to that, we started saving another 5% into our long term retirement accounts. When we got used to that, we started funding %5 to other investment accounts. Our goal is to live off 60-70% of our income, saving the rest in short and long term investments and splurge funds.

    We also started a separate checking account as a cushion. Basically it consists of all our irregular payments (insurance due twice a year, oil changes for the cars and other maintenance statistically estimated, recurring bills that come up every few months, etc…) added up to a full year, divided by 12 months, divided by 4 weeks. We then take that dollar amount out of our check every week and put it into the separate checking. The pool can only be used for something that the account is earmarked for. BUT, if we have a shortage we can borrow from it one week and pay it back the next – so no more credit card use, and it keeps our sticky fingers off of that savings account.

    Plus when those big bills come in, like the crazy $600 car insurance payment, the money is there and we just write the check with no stress on our budget whatsoever. We also average out our utility bills and draw money from the account during the high months and put extra into it during the low months, so our utility bills are always the same every month.

    We’ve been using this system for over a year now and it works great and keeps our savings account safe.

    You NEED savings because there will always be something unexpected.

  • Reply home business |

    that’s a great method to take Chris! I’ve been struggling with living paycheck to paycheck for the last couple of years due to quite simply not making enough money, but hopefully very soon I’ll be in a position to take the same tact with my finances, I’ve always kept multiple accounts, if for no other reason than to separate my expenses with my play funds

So, what do you think ?