Master Your Budget

Your Starter Emergency Fund – First Step to Mastering Personal Finance

You may be experiencing every other phone call is another creditor seeking payment for something you just had to have. You saw that white mink in the window of Macy’s and knew it would make you look rich and desirous, even make your friends jealous thinking you could afford such an extravagance that they can’t. They don’t know you can’t afford it either.

It doesn’t have to be a mink either, it can be a new home with all the bells and whistles or even a luxury automobile. It is all DEBT unless you were able to pull out real cash and pay for the right of ownership in full. Debt is money owed with a promise to pay for those things with your future earnings. Yet, we hate to realize the reality that the future is uncertain.

No Emergency Fund Creates Feelings of Being Lost

As you continue to build debt to have the things you are putting off the right to full ownership, one experiences feelings of Feeling lostbeing lost in a deep forest with no way out. Every sound around you creeps you out until you cannot take it any longer. Then you realize you started out sprinkling breadcrumbs as you walked the path of life so if you strayed ever you could get back on track only to turn around and find the birds had eaten every single crumb.

Well, having no emergency fund creates feelings of being lost out of our frustration and fears that can seem impossible to ever get out of. Some even give up. However, it is important that we realize everything from the beginning of time to your existence now happens for a reason and it is our purpose to understand and find our way out without harming others by excepting our problems and taking them head-on to find our way back to the path of success.

As you research your own personal assets and list all your income and status; then list all your immediate monthly obligations. These obligations are things you must pay every month to maintain the four elements of life – (1) a roof over your head, (2) being able to stay warm (or cool) to live in your environment, (3) food in your table to feed your family and yourself and (4) staying current with your day to day needs and obligations (true expenses). When you take the total of your monthly expenses and subtract it from your funds available at any time – if your expenses are greater you live outside your means.

Baby Step 1 – Starting An Emergency Fund Lessens Stress

To get back on track you need to start by creating a budget that will enable you to start taking back control of your money instead of continuing to allow it to control YOU. In getting back on track you need to get back to the fundamentals and reach out to God for help – He does listen! Even before you start an emergency fund, make Tithing the top element of your knew expense budget followed by Baby Step 1 – Starting an emergency fund.

This first step in your budget gives you a feeling of renewed control over your life situation. As you continue this new process every month it will become second nature and suddenly you will start to see your stress level abating as you give to God each week or pay period and work on building a strong starting emergency fund.

Keep Shoveling in Funds – First Step to Mastering Personal Finance

Don’t worry about paying off your debt until this has been achieved and mastered. Continue budgeting all your immediate (current) obligations and true expenses for the month and with what left just pay the minimums on all your debt entries. Once you have at least $1000 in your emergency fund, you can then reallocate those funds towards your debt.

However, if you have had to tap into the emergency fund for any reason – you MUST repay that emergency fund FIRST to make sure it stays at $1,000. Then you can apply any excess to your debt starting with the lowest debt owed and working down to the highest over the months. This method is also known as the “snowball method”.

So keep shoveling in funds every month to your emergency account to maintain a healthy $1,000 balance. Once you have that you can move onto your debts and rolling the funds you were applying from your paycheck to the emergency fund over to the accounts that you still owe.

Learn to Recognize Real Emergency vs Nonessential Whims

As new situations arise in your life, and they will start analyzing them to determine if they are a real emergency or something that can be addressed in one of your regular budget lines. You may have to cut going out to dinner one month to reallocate those funds needed to another line to pay that situation that came up off.

As you do this you will gain a deeper appreciation for starting that emergency fund and keeping it no lower than $1000 going forward. You also will start to see a real pride of ownership as you gain control of your finances and make changes for the better – perhaps selling that big old house you grew up in and getting a smaller less costly apartment or manufactured home. Debt wreaks havoc in our lives and causes undue stress levels that need to be eliminated and replaced with true right of ownership. Remember, when you don’t use credit and pay for anything with cash – you own it outright! Your future dollars can be saved and used for future goals.

Your Starter Emergency Fund Is Fully-funded – Go Celebrate!!

YAY! Today you got paid and made your last payment – your starter emergency fund is full-funded at last! If you don’t need to touch in next month, you will have those dollars to start applying to the next area of your budget – YOUR DEBT. But first, before you go any further – today is a big deal and you conquered the first step.

Go celebrate this occasion! You could treat yourself to coffee with a friend or dining out at that new restaurant family has been raving about. The act of celebrating mastering the steps of anything brings positive reinforcement to your psyche – just don’t touch that emergency fund to do it!!

If you found this article helpful, please share with a friend and leave a comment below.  Have you started or completed your starter emergency fund yet?

6 replies on “Your Starter Emergency Fund – First Step to Mastering Personal Finance”

Its interesting that I have read you article.  We have been talking with a financial planner primarily to make sure that we are on track to completely retire in about 6 months.  We have saved almost 6 months of fund for the exact thing you have written about.  This planner told us that as we are going to be on a fixed income, we should have 9-12 months of expenses in the fund.  We are trying.  Thanks for the article.  If I had known this stuff even 10 years ago, we would be very, very comfortable in retirement.

I hear you loud and clear – why is it that it seems the important things in life take us the longest to finally figure out?  Sounds like you have paid off your debt and now are going back to finish funding your emergency fund. Congratulations! 

Many thanks to you for sharing such an essential article with us and for making the article interesting in such detail. I am a business man and I have a family with my husband .I got into a problem 6 months ago when my apartment was about to lose my other accessories. I used to have an emergency fund to remove some savings from the monthly savings of my business for use at any moment. When I was in danger, I could not overcome my hazard, even after my family helped me, I needed a lot of money and I was frustrated with how I would do it now.Then  I was able to solve my problem with money from the savings I had in the Emergency Fund. Now I’m fine with my family husband and I think everyone like me needs a starter  emergency fund and that should save money. I think this is the first step in the process of personal financing .

After reading your article, everyone will be aware of this and everyone will set up a starter emergency fund and share experiences like mine soon.

Hiya Donna

Thank you for your informative article about starting an emergency fund for debt management. I have kind of done that to pay off a huge debt I have been saddled with as a result of bankruptcy. I am unable to get credit so I am shovelling money into a bank account like you said to pay it off. I plan to keep shovelling when the debt is paid so that I can buy a property as soon as possible after the 6 years I will apparently need to wait before I could get a mortgage. 

I never want to be in this situation again and I agree that an emergency fund is one of the best ways to make sure that doesn’t happen. Thank you for underlining that I’m doing the right thing, krs PurpleLioness 

Many thanks to you for sharing such an excellent article with us .Emergency funding is very important in all of our lives.Because no one can tell when someone needs money in their life so if they have emergency funds it will be very helpful.And after reading your article I would like to start trading the Emergency Fund Lessens Stress.And I hope I can succeed and I will share with you new experiences later.

I look forward to following up and hearing about your experiences. I had one unfortunate incident on the road and was glad I had started my emergency fund – of course, it set me back a couple of months but I just caught up and will be completing my starter emergency fund and moving onto rolling next months allotment into finishing paying off debt. Don’t give up, and stay focused!  You can do it!

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