Every day millions of people wake up, head to Starbucks, grab a coffee and go to work. It feels good to get a day jumpstarted on $2.75 cappuccino. You feel more alive and energetic as you drive to work with that cup of coffee, but then your car starts to smoke.
You pull over and you realize that there’s something majorly wrong with your engine.
When the mechanic shows up to take a look at it, he notices that your water pump busted and estimates that the cost to repair your car will be $756.00.
Your head now starts to spin as you wonder how you going to pay for the repair.
It’s at this point where you wish you had a cushy bag of cash – or in other words an emergency fund.
What is an emergency fund?
An emergency fund is a cushion in your bank account or cash under the mattress where you can use that money to get you out of a financial jam.
Since no one really knows when you’re going to be in a financial jam, that’s why it’s important to always have a little piggy bank on the side that you know a sitting there when you get in trouble.
What kind of trouble can an emergency fund get you out of?
Depending on the size of your emergency fund, there’s a lot of unexpected problems an emergency fund can get you out of for example:
- A dental crown that’s necessary where insurance doesn’t cover it
- A broken car that is needed for you to get to work
- You lost your job and bills are coming in like clockwork
When it comes to using your emergency fund you should ask yourself:
- Do I need this?
- Can I live without it?
- Do I need it NOW?
If something happens unexpectedly and it’s necessary for you to take care of the problem immediately then it may be wise to tap into your emergency fund. The issue is most people don’t have one! But there is one little trick to building your emergency fund.
The secret to building your emergency fund
Most people don’t know it, but there is a simple solution to build your emergency fund…
It’s not going to be easy to do, but it’s very simple. You ready for the secret?
Cut something out in your life.
That’s it. It’s that simple.
I’m not going to share with you 45+ different things that you can do to make money on the side. I have plenty of posts about that.
This is about getting an emergency fund. If you want an emergency fund badly, if you really crave it, and you want that security – especially if you have kids or a family then you would be willing to do what it takes to get that emergency fund.
What are you willing to do to have an emergency fund?
If you were lost in a jungle and there was a river that had hundreds of fish in it – all easy to grab, spear, or block off the river with rocks to catch one would you catch one and eat it? Of course, you would!
What if you hate fish, you never ate fish, you were a vegan, but you were starving… would you still be willing to what is necessary to survive? I think the answer is an obvious yes! – because your desire to live is so strong!
To build an emergency fund is no different.
How big is your desire to have that emergency fund?
All you have to do is cut out one major thing in your life that’s costing you money to build an emergency fund.
Are you willing to cut out a Starbucks coffee every day to build that emergency fund?
Here are a few ideas for you that can get you to your $1,000 emergency fund quickly:
- Starbucks coffee at $2.75/day = $715 per year!
- Average cable TV bill at $99/month = $1,188 per year!
- Average American loses $400/per year gambling! – Stop going to Vegas and playing Poker!
- Are you a smoker? That costs you $5,000 per year!
- Do you like playing the lottery? Average American spends $206.69 on lottery tickets/scratch-offs.
- Do you drink beer or wine? The average household spends $435 per year on alcohol.
- How about your trading in your $60/month cell phone for a landline? Ohhh no… ! Now that’s pushing it.
As you can see cutting out one or two of these things can easily get you to your $1,000 emergency fund!
I never said that it would be easy but you can see that it’s doable if you really want it. The problem is most people don’t want it bad enough and then they have a disaster that strikes them later.
They get stranded on the side of the road talking to their mechanic about their broken water pump while sipping their expensive cup of coffee.
The additional stress that’s to follow over the next month is absolutely free – but at least they had a nice cup of coffee on the side of the road.