Have you ever had the small misfortune to wake up, take a shower, but have no hot water, or where you’re driving to work, only to get a flat. You hope these problems are just a quick fix. But when they’re not, you know it’s going to cost more than you want to spend. The good news is you have an emergency fund set aside just for these situations, right.
When these unplanned problems show up, it’s easy to turn to a credit card and slowly pay it off each month until the next big surprise happens. Of course paying off the extra debt won’t be fun and if it piles up too high, credit cards no longer become an option when the water heater craps out or worse, there’s a job loss.
How Much Should Be Save?
Financial experts give a wide range for how much should be saved for an emergency fund. A starting point is 4 to 6 months of basic expenses. With the recent recession, some experts go as far out as 9 to 12 months. Which may be a bit excessive. Continue Reading…