Don’t Think You Need a New Transmission . . . Think Again!

emergency fund

New transmission . . . a phrase I did not want to hear.  I had better ideas to spend that money I’ve been saving, but suddenly there was another need.

There is not a lot you can do to prepare for things like your transmission going out.  It just happens.  But, what you can do is prepare financially to make the blow less of a punch to the stomach and avoid having to use a credit card to fix the problem.

If you are wondering how to go about saving for an emergency fund, here are the answers to four questions you might have.

What is An Emergency Fund?

Car problems, medical expenses, family emergencies, unemployment, all of these different experiences require you to have money to cover the expenses.  Like it or not, these unexpected events are going to come up.

The Simple Dollar defines an emergency fund as money you have saved for the sole purpose to maintain your day to day life in the event of an emergency.  You emergency might be unemployment where you will need to rely on using the money to survive until another job is found, or it could be a large onetime expense.

We had the transmission go out twice in six months on one of our older vehicles.  The first time, we were fortunate enough to have the money set aside to fix the problem.  The second time, we decided to cut our losses and just get rid of the car and look into a newer car.

How Big Should Your Fund Be?

Experts agree that a safe amount to have set aside in an emergency fund is three to six months of your income.  This amount means you will have the necessary amount needed to make your payments and have what you need to survive in the event of a job loss.  That being said, setting aside three to six months of an emergency fund is not an easy thing to do.

Dave Ramsey suggests starting out planning to have $1,000 saved.  He suggests getting that money saved as quickly as you can.  Do what you need to get that first $1,000 saved – stop eating out, sell some unused items, get rid of cable or get rid of your expensive habit of smoking or drinking coffee and soda.

If $1,000 seems daunting to you, start smaller.  Find an amount that is large enough you have to work to save it, but small enough that it won’t take you a year to reach your goal.  Whatever your number, start today!

Where Should You Keep Your Fund?

Once you have the $1,000–or the target amount you wanted to have saved–find a bank, open an account and put the money in the account.  Don’t put it in your sock drawer or under your mattress; put it somewhere you can’t get your hands on unless the emergency comes.  Eating out or buying that new shirt is not the “emergency” you want to be spending this money on.

When you are choosing an account, be sure to find an account that has competitive interest rates, but one that you won’t get penalized for if you need to withdraw the money.  The idea for an emergency fund is to be able to access the money exactly when you need it without being hit with fees.

Set up automatic withdrawals so money is continually being added to your emergency fund without you even having to think about it.  Even if the amount is just $50 a month, when an emergency comes, you will be glad to have some money saved.

Should You Use a Credit Card to Cover the Costs?

When an emergency comes up, we are all tempted to put the amount on the credit card and forget about it.  If I had used the credit card to pay to fix our transmission, there is a good chance I could have still been working to pay that off.  With credit card interest around 18%, just making the minimum payments, I would have paid the $2,500 for the transmission and almost $700 in interest.  Instead, I used our emergency fund and paid that $700 back into our emergency fund not on credit card interest.

The Simple Dollar says the biggest mistake you can make is putting things on a credit card that you don’t have money in your account to cover.  Obviously, there are times when you might have to use your credit card, but having some money in a fund set up specifically for emergencies will make it easier to cover the unexpected expenses.

Start Small, But Start Now!

There are numerous ways to spend or invest your money.  Forbes says that your first priority before you start paying off debt is have that $1,000 saved and to find a way to add a little to the account each month.  If you don’t have an emergency fund, when the emergency comes, you will be forced to go even deeper in debt.  Set some money aside today to help weaken the blow when the emergency comes.  Don’t think in terms of “if,” instead think in terms of “when” and start working today to be prepared.

Gardens: Save Money While Enjoying Delicious, Healthy Food

Planting a Garden: Save Money, Eat Healthy

The bleak winter months are coming to an end and spring is fast approaching.  As spring gets closer, the idea of planting a garden should be in the fore front of your mind.  Planting a garden is a good way to eat healthy vegetables and a great way to save money in the summer months.

Why Should You Consider Planting a Garden?

A garden isn’t just a way to help you save money on produce.  There are many other benefits from growing a garden.  Here are some from extension.org:

  • Fresh fruits and vegetables are higher in nutrients than those bought at the store. They don’t have to travel thousands of miles to make it to the supermarket shelf.
  • Working in your garden is a great form of physical exercise.
  • Teaching your children to garden and having them help can increase the chance that they will eat more fruits and vegetables.
  • The amount of pesticide is reduced making the produce healthier to you.

The benefits of planting a garden aren’t just nutritious, but also help foster a new appreciation for hard work and help teach your children about nature.  It also creates memories and bonding for your family.

Don’t Spend too Much Money Up Front

Since the most obvious benefit of gardening is saving money on your grocery bill, be aware when planning your garden that you don’t go overboard.  The costs of a garden can add up quick.  Horticulturist Cindy Haynes explains that when planting a garden you must find ways to limit the cost you put into your garden and maximize the yield produced.  Haynes suggests a variety of ways to help optimize your gardening experience.

  • Only plant vegetables you like to eat
  • Choose vegetables that can be easily stored or preserved
  • Plant vegetables that are expensive to buy at the store
  • Have a plan in mind before you start planting

If you aren’t careful, your tomatoes coming from your garden could end up costing you a fortune.  Start small, with what you can handle and watch for ways to increase your garden without the extra cost.

Anyone Can Have a Garden – No Matter The Space

You don’t have to have acres and acres of land to have a garden.  Anyone, in any situation, can have a garden if they want it bad enough.  Using containers to plant your garden is one way to enjoy fresh produce if space is limited.  The University of Maryland extension explains container gardening has its own benefits.  There is no tilling or digging, it is essentially weed free and it is inexpensive to get started.  Using containers to garden allows for any location to be used – from window boxes, balconies, concrete pads or any part of the yard.  Gardening in containers also allows you to be in better control of the elements.  If your backyard is too shady or too sunny, or the elements where you live are too dry or wet, using a container can help ensure you reap the benefits of your garden by moving the container around when needed.

Planting a Garden Is a Growing Trend

You are not alone if you want to plant a garden.  According to the Garden Writing Association, in 2014 there were among 75 million US households doing some type of gardening.  Of those households, 44% grew their edible plants in the ground, while another 15% used containers.  Another 32% of the households did both container gardening and ground gardening.  GWA forecasted that 58% of consumers plan to plant a garden in 2015.

There is a benefit of saving money on your grocery bill, but gardening is one way to ensure your food is less chemically enhanced and healthier for you and your family.  Planting a garden doesn’t have to be hard or a lot of work.  Make a plan of what type of garden works best for you and enjoy the benefits of fresh produce.