Financial Peace Friday- The Emergency Fund

This note was uploaded to Facebook via the author's blog.

I hereby declare today Financial Peace Friday.

As we as a church have been learning to better handle God's resources he lends to us through following the Bible based principles and teaching of Dave Ramsey I have come to appreciate the importance of the Emergency Fund.

The first step in any Total Money Makeover if to set aside $1,000 for emergencies. How do you get this $1,000? Have a yard sale, spend less than you make for a few months and save the difference, sell something. It doesn't matter, just find a way to put the money aside. Do this before moving on to Baby Step 2- paying off debt. The Emergency Fund of course comes into pay when you have an emergency (this is deep stuff!). The next time the furnace breaks, there is an unexpected car expense, you have to fly across the country for a funeral or whatever, you do not have to use a credit card or skip your car payment to pay for the emergency.

A few other things about the Emergency Fund. Just put it in a savings account, money market or under your mattress. This is not investing money. Put it in a place where you can get to it easily. If you do a great job and get your Emergency Fund and then have to use it then replenish it. Build it back up. Once you complete this step and once you move to paying off all your debt, you can then build a 3-6 month fully funded emergency fund. This fund will cover your expenses for 3-6 months if you lose your job, get sick or have some other calamity that affects your ability to work and earn money.

Let's face it. There will always be emergencies in life. The one thing we can bank on is that emergencies happen! Shouldn't we prepared?