As I type this it is actually thunder storming out. Beautiful, wonderful giant raindrops for which I’m thankful. As many would find a rainy Saturday to be a big bummer, I’m thankful for those glorious drops so I don’t have to water my garden. Plus, the excuse to wear pajamas, sip hot tea, and have a relaxed family day. Rainy days, the not so good kind, will come inevitably. We’ve had a lot of “rainy days” around here lately and it’s important to be prepared. A few weeks ago I shared how we put into $2,000 into our savings and I’m so thankful we did, because apparently when it rains it pours around here. So many random extra costs came up this month. If you follow me on Facebook or instagram you may have saw that our sweet dog ran away. She did eventually come back (praise the Lord), but you have to add a dog bath, and flea and tick treatment for both dogs, and all the extra gas we spent searching for her. Plus, our dryer broke, my car window somehow broke and won’t go up anymore, and we got chickens (this we were planning for). Just this morning as I went out to feed the chickens I closed the door and a soffit full of water fell on my head. Seriously, true story. I can’t even make this stuff up. It seems like everything around us is literally breaking and we have to spend extra (a lot extra).
Since going on your debt free journey we’ve taken our finances into our own hands and I’m so grateful. Once you’ve become debt free you’re not done. You will want to continue your hustle so you can fully fund an emergency fund of 3-6 months expenses. That way if something comes up you don’t have to go back into debt. We’ve been working on funding our emergency fund and I’m glad that we were able to put that extra money into our savings account last month so this month we can use it on our very rainy days. I will admit after we payed off the car we were coasting for awhile. I wasn’t trying my hardest to save. But my priorities are better now and I’m working on my side hustles to boost it (and the dream of owning a farm one day).
How to Build Your Emergency Fund
- Calculate how much you will need for an emergency fund. First, you need a budget to figure out how much you spend in a month. Then decide between 3-6 month emergency fund. We chose 3 months as our first goal and as of right now we have over half saved. Should my calculations deem accurate we should be able to completely fund this by the end of December 2016 (aka 4.5 months from now). Depending on your circumstances may determine how much you need to save for your emergency fund. We chose three months for two reasons. First, we have another savings account for taxes (since we are self employed) that we keep well funded so if there was an emergency we could pull from that if needed. Second, we try to live simply and our expenses vs. income reflect that. So there are many times we don’t need to dip into our emergency fund to pay for unexpected things.
- Break that number down to a realistic goal and then try to crush that goal. I have a goal to have our emergency fund completely funded by the end of the year. I took our total emergency fund goal – the amount we already have saved= the amount we still need to save. Then I took that number / the number of months until the goal month= total amount needed to save each month to hit our goal. Make sense. For example: You have a $14,000 emergency fund goal and you currently have $8,000 in there and you want to have it fully funded in 5 months. You take $14,000-$8,000=$6,000. $6,000/5=$1,200 a month you would need to have it fully funded in 5 months.
- My goal is to save at least $500 a month, but my ultimate and somewhat unrealistic goal is to try to save over $1,000 a month. So far the last few months we’ve been able to hit the over $1,000 a month. This month it won’t happen. You have to start somewhere though. Even if it’s $50 a month. It’s a start.
- Find ways to save. There are a few ways we are funding our emergency fund right now.
- Automatic transfer of $250 every month. This is set up automatically so we don’t even need to think about it. We also do this with taxes and Christmas.
- Side hustles: I’m the side hustler here since I stay at home. My few side hustles include: This blog (learn how to start a blog here), working as a self contracted nutritionist, and a few little things such as couponing using Ibotta (you can get a free $10 for signing up under my affiliate link).
- Any extra earning or savings go right into savings. If you get paid anything extra or if your electric bill was lower this month than normal move that right over to savings. That way you’re not tempted to use it.
- Skimp and scrape. Here is a list of 90+ Ways to Save Money.
- Stay motivated until your fully funded. You may have some set backs (I feel ya friend), but keep chugging along. You will get there eventually.
- Celebrate when you accomplish your goal! Go out to dinner or maybe even a little weekend getaway. You deserve it.
- What do you do when you’re all done saving that? Move on to baby step #4- Invest 15% of your income. We are already investing into our retirement so we will move our emergency fund into another account and then start saving for future things we will need/want. Like cars, a farm, you know typical things. 😉
That’s our plan to fully fund our emergency fund. What is your plan?
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