You’ve heard all the pundits in personal finance extol on the fact that you need to have a emergency fund. I’m not going to preach to you about how much you should have, or where to put it. Instead, I want to give you some food for thought on why you need one, and maybe you will consider it.
1. Your Car Breaks Down
You never know when this could happen – you cruisin’ down the freeway and all of the sudden you lose power. You have to get a tow to your local shop, and find out your transmission is shot and it’s going to cost you $1,000! I hope you have it.
2. You Lose Your Job
While the economy has gotten a bit better, it is still a tough job market and companies are struggling. If you lost your job, it may take you months to get another. Can you pay the bills?
3. Your Spouse Loses Her Job
If you have a two income family, could you make it on one income alone if your spouse lost her job? If not, I hope you have some savings.
4. Your Dog Eats a Rock
We all love our pets, but sometimes they do some stupid things. If your dog ate a rock and you had to take it to the emergency vet, could you afford the obligatory $2,500 vet bill?
5. Your A/C or Heater Dies
Right now, for most of the country, we are blasting our air conditioners because it is hot and humid. A/C repairs can easily cost $100s of dollars, so if yours doesn’t work, are you going to fix it or suffer through. And now is the time to start thinking about winter…is your heater going to make it through?
6. You Get Sick
The cost of medical care keeps going up. Even if you have insurance, have you looked at what your potential out of pocket maximum is each year? You could afford the potential $5,000 medical bill if necessary?
7. You Don’t Want to Ask Your Parents for Money
If you find yourself short on cash, do you want to go back to your parents and beg for money or a loan? Maybe if you are 2 months out of college, but for most, the answer is no!
8. You Don’t Want to get a Payday Loan
If you’re short on cash, do you want to turn to a payday lender? Does the thought of walking up to a random store in a strip mall for cash bother you? Then this may encourage you to build up a savings.
9. You Don’t Want to Pawn Your Stuff
Have you watched an episode of Pawn Stars? You’re probably not going to get that much money for your stuff, so it may be a better investment to not buy stuff, and save instead.
10. You Want to Ignore The Pundits
Do you never want to have to listen to Suze Orman’s advice again? Then just build an emergency fund already!
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The articles are written by personal finance enthusiasts (not certified professionals) based on their personal experience. What works for them may or may not work for you, and you should always consult a financial advisor before making important financial decisions.
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