Mortgage Land Prosperity

Archive for November, 2009

An Emergency fund is money that you have set aside for only emergencies. You don’t use it for anything other than serious emergencies and if you ever use it or even a portion of it, you repay everything you take from it as soon as possible.

The size of the fund depends on your family and the expenses your family has. No family has the same fund as no family has the same expenses or needs. When I was talking with a family about credit and building an emergency fund I would sit down with them and explain how this works. You setup an Emergency Fund to help you pay for unexpected emergencies. Those emergencies can include the loss of a job by either a one or two income family. You want to plan on worse case scenarios such as both of you losing your job at the same time.

It may include a major car repair such as the need for a replacement engine or transmission (or both). Another type of emergency is life changing medical issues (which is what happened to me). Have a major hospital stay along with health issues that may or may not allow you to go back to work. These are the true emergencies that can and will change your financial future.

So when you are planning your Emergency Fund starts with 6 months as your guideline. You need to sit down with your family and build a list of your monthly expenses. You need to write down everything that you need to spend money on each month. That is right everything you spend money on each month. Now that does not mean that you don’t want to weed out what your spending money on to determine what you can leave out each month if an emergency arises but you really want to see what your spending money on each month.

After you have a clear list of what you spend your money on each month, go through that list to see if you need to budget any of those expenses. Additionally, now you can literally see what your family spends each month.

Now take that figure and multiply it by 6. That is your figure for your Emergency Fund. Now you don’t have to have it immediately but you want to be aware that each month you don’t have it you are gambling with your financial future. You want to make a decision about one of two things.

Monitor your spending:

Make a habit of taking out the list of all the goods and services on which you have spent your money; perform this activity daily. It is just like a daily workout plan. If you find it difficult to perform this activity on a daily basis, try doing it weekly. Make a list of items that you have bought. This list can be classified in the categories of essential outgoings, everyday spending and occasional spending. After monitoring, check whether you are spending less than your income or not. Monitor the areas in which savings can be improved.

Know your worth:

Your net worth is equal to the difference between what you own and what you owe. You should prioritize your spending in accordance with your worth.

Always use cash:

Using cash to buy stuff is one of the most definite ways to stay out of debt and easily control your unrestricted spending. The items that you must buy using cash instead of any other payment method include groceries, eating out, clothing, health and other personal spending. Saving money and getting out of debt is quicker by using cash for spending instead of any other process.

Manage your debts:

The best practice is to avoid it at the first place. Take a debt only when it is necessary. Before taking a debt, always be careful about the interest conditions. Plan out the payback and start applying it on your daily savings. Try your best to eliminate all your debt as soon as possible; the more the debt you pay off, the lesser is the interest, and it opens windows for future savings and investments.

Stash some cash:

You should always have a cash backup for emergencies. Create a savings account and, every now and then, deposit your savings in that account so that it can be your saviour in time of need.

It is really very frustrating to wake up one day and find that your salary is not enough to pay the bills and those past dues. At the same time if your kids come and remind you of the school fee that is due and your wife says that the land lady has sent a word to get the account straight, it really pains somewhere. No, you still need not worry. There is a way out. Yes get money deposited in your checking or savings account through payday advance. It is so fast and so easy. No time-taking paper work or unnecessary checks or investigations are involved. Just get the money and solve all your problems. For more details go to payday advance

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