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Tuesday, August 24, 2010

10 Cuts You Can Make In Order to Bulk Up Your Emergency Fund

Image representing Virgin Mobile USA as depict...Image via CrunchBase
If you don't have an emergency fund, you need one. If you "just can't find any spare money to put into your emergency fund", here's ten cuts you can make that will allow you to build up your emergency fund in record time:
  1. Stop eating out. A $50 restaurant meal is a high price to pay when that same $50 could buy you food for a week.
  2. Cut cable. If you have every cable station know to man, consider cutting cable all together, a $10 NetFlix subscription or watching TV shows online can save many hundreds of dollars per year. If you really can't part with your cable TV, consider cutting back to the most basic plan available.
  3. Stop shopping. Unless you need a very specific item (ie: toilet paper, shampoo, or something else you absolutely can't do without) don't go shopping. You won't be tempted to spend your money and you can bank it instead.
  4. Cut your cell phone bill. Virgin Mobile has a $25 per month plan which includes unlimited text messages, unlimited web, and 300 minutes a month. p.s. An iPhone is NOT a necessity. Either is a $100+ per month calling plan.
  5. Cut your transportation costs in half. That might mean driving half as much as you do now, buying a monthly pass and taking public transportation, car pooling, riding your bike to work, or a mix of all of these.
  6. Cut out (or cut down) a vice. Whenever I look at the price of cigarettes, I am thankful I don't smoke. I also don't drink which saves not only the cost of alcohol, but the cost of DUIs, marriage counseling, rehab, etc.
  7. Don't do things that cause added expense (ie: take out a PayDay loan which has outrageous fees, use credit cards which charge interest, break the law which causes fines and court fees, etc).
  8. Don't buy stuff you don't need. A jet ski is nice, a big emergency fund is nicer. An H & K 45 Compact is nice (really nice), but a big emergency fund is nicer. You get the idea...
  9. Sell a car. This could save you thousands in a matter of month. A family only usually needs one good car. The second car can be a cheap beater until you get the emergency fund bulked up AND you have saved enough to pay cash for a better secondary car.
  10. Spend like a maniac on your kids. The kids won't suffer permanent psychological damage if you decide that they won't get ANYTHING from you (besides food, shampoo, etc) until the emergency fund is completed. They may, however, be motivated to help you bulk up the fund via garage sales, eBaying stuff, etc. if they realize that the Bank of Mom and Dad will reopen sooner that way.
Bottom line, you need an emergency fund because, even though I don't know you personally, I do know that you will be facing an emergency of some sort in the future. It's a very nice feeling to have the cash on hand to deal with these random emergencies.