Many people wonder how they
can build an emergency fund when they're trying to pay off my debts. It isn't
as hard as you might think. The strategy is to start small, change a few
habits, and change your mindset.
If you're starting from
scratch with your emergency fund, begin by saving one month's worth of living
expenses while paying the minimum on your credit cards. When you have that
first month of emergency funds started, turn your focus to your credit card
debt and pay more than the monthly minimum. Once the credit card debt is paid
off, go back to building your emergency fund. If your credit card debt is very
high and can't be paid in full within a couple of months, then alternate the
extra payment every other month: The first month, add to your emergency fund
and pay the minimum on your credit cards. The next month, pay more on your
credit cards and skip the deposit to your emergency fund, etc.
Here are five ways to boost
your emergency fund and change savings habits for life:
1. Treat
savings as a bill. Figure out what
you can afford to save each month and stash away $75, $50, $25, or even $10 a
month. No matter the amount, it adds up and can become habit-forming. As your
financial situation improves, increase the amount.
2. Live one
raise behind. When you get a raise,
don't begin spending more. Instead, apply the extra amount to your emergency
fund.
3. Automate it. Set up an automatic transfer to your emergency funds
account. When the credit union receives your direct-deposited pay check, you
can have a portion of it put directly into your savings or emergency account.
Out of sight, out of mind, but you know it's there if you really need it.
4. Give savings
a garage-sale boost. Go from room to
room in your home and purge stuff you no longer want and need. Then schedule a
garage sale. Both your house and your savings will look better.
5. Think of it
as a life jacket. If you can't find
that initial spark to get started, ask yourself how you'd pay your bills if you
lost your job tomorrow. Having an emergency fund will help you keep "your head
above water."
Remember: The professionals at
Coosa Valley Credit Union are ready to help with all your savings needs. Call
us at 706-235-8551 to set up short-term and long-term savings vehicles that fit
your needs.