I really enjoy putting money into our emergency fund. When we started out, we had a clear, tangible goal: To have six months of expenses that will help us if we lose our income, a car breaks down, we need an insurance deductible, or emergency travel, etc.
We aren’t quite to our goal yet–we’d like to have $10k in our emergency fund before we start saving for other goals. But, I thought I’d tell you a little about how saving has worked out for us so far.
With each dollar added, I gain a little more peace of mind. It’s so comforting to know that anything short of a major catastrophe, we should be fine financially. I can’t tell you how incredible this feels.
That $7k in the bank is the most money Shane and I have ever had at one time combined–by far. Last June, if you told me that we’d have all of our credit cards paid off and $7k in the bank in a year’s time, I’d think you were crazy.
In the beginning
At the end of 2007, we had eliminated all of our credit card debt (which at its highest, was several thousand dollars). We had our $1,000 starter emergency fund, but we didn’t have a big enough cushion in our checking account, so we weren’t making progress building it up. That was so frustrating! It felt like we were walking uphill in sand.
That starter fund stayed in our main bank for the longest time, because I wasn’t sure if we could part with it. I was worried that we’d need it–and sometimes we did! Not for emergencies either, but because we were still sort of going paycheck to paycheck for one reason or another. Since we’re still banking with a brick & mortar bank, and keeping our emergency fund in ING Direct, it takes about a week for the money to clear and be usable. I was worried about needing that money in the lag time.
We finally transferred that $1,000 into ING around the end of February, and haven’t looked back.
We added my husband’s annual bonus, our tax refunds and economic stimulus money. We added all my snowflakes (extra income/discovered money) all my freelance earnings, and whatever was leftover from Shane’s paycheck. We chipped away at our expenses, and tried to get them as low as we could without depriving ourselves.
This month, our electric bill will be $43. At its highest in the winter, it was at $89. That’s an extra $50ish I had budgeted for, and now we can throw that into our fund, rather than spend it.
The key is to be focused, and really dedicate yourself to putting money into your emergency fund, and not touching it once it’s there (unless a true emergency arises).
At the beginning, it was a slow start. Seeing $1,000 in our emergency fund, and knowing that we wanted to save $9,000 more was daunting. It felt so out of reach.
But you know what? Once we got our momentum going, and really focused on our goal, it got easier, and we really started to see that fund grow. Here’s a breakdown of our monthly progress:
Feb 2008: $1,000
Beginning of March: $2011 (Increase of $1,011 since Feb.)
End March: $3578 (Increase of $1567 since beg. of month)
End April: $4441 (Increase of $863 since March)
End May: $7005 (Increase of $2564 since April)
You can see that we have decent months and then we have incredible months. It depended a lot on what else we had to spend our money on that month, and how much we were able to scrounge up.
Telling others about our goal
At first, I was reluctant to put a savings goal progress bar on my blog. I thought maybe it wouldn’t be good for the people I know personally to know how much money I have. Then, I realized, whatever. As a society, we’d rather talk with our friends about embarrassing pregnant bodily functions than about money.
I’d rather have a meaningful dialogue about finance with my friends and family, if they’d like to talk about it. Plus, seeing that bar grow really excites me!
Nobody said it would be easy
Thus far, we have had some small financial setbacks. We went to Florida for a wedding, setting us back about $1,000. We bought a $500 laptop when Shane’s finally bit the dust. We spent money on a replacement wedding band for Shane, after he lost his in the Gulf of Mexico on our anniversary. We had an unexpected trip to Indiana for a funeral. But all of these things are important to us, and we’re glad we’re in a position to spend money in those areas.
We haven’t given up eating at restaurants. We try to save money by eating at more affordable places, using coupons, or gift cards. It’s important not to feel deprived.
I’m hoping that by the end of June, we can have it up to $8,500 and get that last $1,500 by the end of July or mid-August.
From there, we’ll evaluate our savings goals and redirect our focus to other projects.
Even though this hasn’t been easy, it hasn’t actually been that hard. It’s all about focus and momentum, honestly. Now that we’re close enough to the finish line that we can practically see it, we’re going to keep on chugging away, knowing that we’re going to make it.
Coming up next, I’m going to share some ideas on how you can save for emergencies, too.