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Predicaments and Precautions

December 23rd, 2014 at 11:32 pm

Originally I had hoped to create a 1k EF this month, but I likely will not make that. Some of my household bills were higher than I thought and there were fewer hours at my second job than expected. Considering everything else I have accomplished before the end of 2014 I am ok with this. Hopefully I will be able to put something in my EF to at least get it started, but I am not sure how much I can contribute yet since I still have one more paycheck on the way and I am hoping to knock out that title loan. Regardless having the idea of a 1k EF floating in my mind solidified an EF as something important that I have no choice but to create.

After pondering my own expenses and reading On My Own Two Feet 2nd Edition by Kedar and Thakor I have decided that my EF needs to be a minimum of 2k, so that will be my starting point for 2015. When I think back to the financial emergencies I have had over the last 10 years most of them were under 2k so having that amount on hand would be great. I also realized that I can raise my insurance deductibles, therefore saving on the premium, and put more money toward debt repayment. No longer am I the gal that can barely scrounge up $500, because I am becoming the gal who planned ahead and had her deductibles waiting in the wings. Of course I realize emergencies are not just insurance deductibles so my long term goal in 2015 will be to get 5k in my EF.

I am going to try to keep it simple and just pick an amount each pay day to transfer into it after I have covered bills and debt repayments. Since I am avalanching my debts the amount I contribute to my EF will likely go up later in 2015 and I want to add part of my tax returns as well. For now I am going to put my EF in my general savings account, but at a later time I might be able to move it to a money market account and get a better interest rate.

5 Responses to “Predicaments and Precautions”

  1. creditcardfree Says:

    Only raise your deductible once you have at least that amount in the EF and can maintain it. How much do you usually get for a tax refund? You might be withholding too much. You could adjust the number higher to get more in your paycheck now instead of waiting a whole year to get that money back. The IRS has a withholding calculator you can use on their website.

  2. LittleMissSplendid Says:

    I always get a decent sized refund which I understand is like loaning your money interest free, but the challenge I have is working multiple jobs. I'm always the person with 2-3 jobs at a time and often only one of them has consistent hours/pay so by the end of the year I often have 8-12 W2s. Those withholding calculators are probably very helpful if you just have 1 or 2 jobs in a given year with consistent hours/pay, but I have never had a year like that in all the years I have been working. Whenever I have tried to use them the estimates have ended up way off and then I owe money at the end of the year which is a huge pain the rear so I decided not to bother with them anymore. A too large refund is much easier to deal with since I generally use it for bills anyway.

  3. Petunia 100 Says:

    Money market accounts are mostly paying .01% right now. Did you have a particular one in mind which is doing better?

    Online savings accounts pay comparatively high rates, and most have no minimums to boot. GE Capital is paying 1.05% right now. That is the best rate of which I am aware.

    Why not open an online savings account with $1 today, just to get it set up?

    You've made a lot of progress already, I predict 2015 is going to be a great year for your finances. Smile

  4. FrugalTexan75 Says:

    Check out Barclay's also - regular savings is at 1% and the Dream Account is at 1.05%

  5. LittleMissSplendid Says:

    I didn't have a particular money market account in mind, but it was an option floating around in my head. I'd also considered just opening a savings account at a different bank instead of my primary one. I know an EF needs to be in account that isn't a huge pain to access, but at the same time isn't so easy to access I'll get distracted and forget its purpose lol.

    I'll admit I hadn't considered an online savings account since I'm not really into online banking. Is it just me or do they not seem like real entities somehow? Then again I wonder the same thing about amazon. How can a business be an actual business without a location I can just go into? I find it very comforting to go into a branch and do something or handle issues/complaints rather than getting lost in some email blackhole or be on hold on the phone forever.

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