You never know when you're going to need an emergency fund. Often you think everything will go on as always....until it doesn't. My sister is a case in point. She's been at her job for over 20 years, since she was 24, and making $50,000 a year. Right after her vacation a few weeks ago, she was called into her supervisor's office and told that she "wasn't coordinator material", even though she'd been doing the job for over 7 years. It wasn't a huge surprise, as her manager has a history of personality conflicts with staff, and should not be managing people to begin with. (I also worked for the company and when I gave three months notice to say I was moving across the country, she stopped talking to me because she was hurt that I didn't tell her sooner.) Anyway, my sister is now getting unemployment, but it's a fraction of what she was making. Her husband is working, but they own three houses -- the one they live in, the one her in-laws live-in, and one they're fixing up, plus her husband just bought a new truck, so they have car payments, too. They are living paycheck to paycheck, and though my sister's usually very level-headed and practical, she was in tears and frantic about how she was going to pay her bills. I don't have a huge emergency fund (yet), but if I lost my job tomorrow I'd like to think I'd have enough to hold me over until I got another one. That's why it's so important to have an emergency fund -- you never know if you're going to be laid off or get injured. I know it' s really hard to have a huge chunk of money just sitting in a savings account, when you're thinking about all the cool ways to spend it -- a great Hawaiian vacation, a flat screen TV, or that full-body tattoo you've been wanting. But knowing you have that emergency savings can give you a peace of mind that the tattooed grizzly on your back will never give you.
Friday, June 15, 2007
The Importance of an Emergency Fund
You never know when you're going to need an emergency fund. Often you think everything will go on as always....until it doesn't. My sister is a case in point. She's been at her job for over 20 years, since she was 24, and making $50,000 a year. Right after her vacation a few weeks ago, she was called into her supervisor's office and told that she "wasn't coordinator material", even though she'd been doing the job for over 7 years. It wasn't a huge surprise, as her manager has a history of personality conflicts with staff, and should not be managing people to begin with. (I also worked for the company and when I gave three months notice to say I was moving across the country, she stopped talking to me because she was hurt that I didn't tell her sooner.) Anyway, my sister is now getting unemployment, but it's a fraction of what she was making. Her husband is working, but they own three houses -- the one they live in, the one her in-laws live-in, and one they're fixing up, plus her husband just bought a new truck, so they have car payments, too. They are living paycheck to paycheck, and though my sister's usually very level-headed and practical, she was in tears and frantic about how she was going to pay her bills. I don't have a huge emergency fund (yet), but if I lost my job tomorrow I'd like to think I'd have enough to hold me over until I got another one. That's why it's so important to have an emergency fund -- you never know if you're going to be laid off or get injured. I know it' s really hard to have a huge chunk of money just sitting in a savings account, when you're thinking about all the cool ways to spend it -- a great Hawaiian vacation, a flat screen TV, or that full-body tattoo you've been wanting. But knowing you have that emergency savings can give you a peace of mind that the tattooed grizzly on your back will never give you.
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I agree. This is why we are trying to pay down our credit card debt at the same time as building up our emergency fund(s). I read one blogger who wrote that the biggest mistake was just paying down debt w/out working on an emergency fund. I need to do more research into that.
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