One Paycheck Away From Disaster?

ProfMoneyWise

ProfMoneyWise

Member
Surviving the recession: One family's story -- chicagotribune.com

Minimum of 3 to 6 months of living expenses set aside in a separate account is a must. Recommend a separate financial institution and an account where your money is not immediately accessible. example would be ING DIRECT - Save Your Money! or a money market fund with a check writing feature. No ATM access.

This is savings, not investing. Do not get hung up on the interest rate you are earning in this account.

This is money to be used in dire emergencies only. Vacation is not an emergency. Christmas is not an emergency.

If you live on a single income you need a minimum of 6 months.

Not having this level of preparedness is a disservice to yourself and your family. Do not turn a blind eye to this requirement.
 
GWguy

GWguy

*
ProfMoneyWise said:
Surviving the recession: One family's story -- chicagotribune.com

Minimum of 3 to 6 months of living expenses set aside in a separate account is a must. Recommend a separate financial institution and an account where your money is not immediately accessible. example would be ING DIRECT - Save Your Money! or a money market fund with a check writing feature. No ATM access.

This is savings, not investing. Do not get hung up on the interest rate you are earning in this account.

This is money to be used in dire emergencies only. Vacation is not an emergency. Christmas is not an emergency.

If you live on a single income you need a minimum of 6 months.

Not having this level of preparedness is a disservice to yourself and your family. Do not turn a blind eye to this requirement.
Click to expand...

The Today show was talking about this a while back. The analyst they had on recommended a minimum of 1 year of backup funds in today's economy.
 
Cowgirl

Cowgirl

Well-Known Member
terbear1225 said:
what's more important, saving or paying off debt quickly?
Click to expand...

I think it's better to keep paying steadily on your bills and save money. Say you get a Christmas bonus of $500. If you have a credit card bill of $1000, you could only pay half of it off and you'd still owe the amount each month until it gets paid off. If you put that $500 in savings instead, it's there if you have an emergency and it gains interest (even if it's only a little).

:shrug: At least that's my take on it.
 
ProfMoneyWise

ProfMoneyWise

Member
terbear1225 said:
what's more important, saving or paying off debt quickly?
Click to expand...

If you are in a situation where you see storm clouds on the horizon (job loss, medical expense, etc) you stop paying off the debt and build up your emergency fund. this would be the prudent thing to do.

Once the storm passes you can then use the extra money to pay off debt.

A great guide on this, and related subjects, that I recommend highly is The Total Money Makeover by Dave Ramsey.

I have a saying. "Once cannot argue intelligently against being debt free, having an emergency fund, budgeting and financial preparedness. Note, I did not say it cannot be argued."
 
ProfMoneyWise

ProfMoneyWise

Member
GWguy said:
The Today show was talking about this a while back. The analyst they had on recommended a minimum of 1 year of backup funds in today's economy.
Click to expand...

Three to six months is the minimum and depends on your situation which way you lean. Example:

Single income from sales: 6 months minimum

Singe income, stable employment: Again 6 months.

Dual income, one stable the other not: 3 to 6 months. you pick.

Having more than six months is smart as well when you see storm clouds on the horizon.

Sad thing is the majority live check to check and do not have any.
 
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