crisis Fund - How Much Is Enough?

How much should I save for an accident fund, you ask? Well, that's a very debated topic. The respond is, it Depends. Before I get into how much is enough, let's back track and talk a miniature about the purpose of an accident fund. Webster's dictionary says that an accident fund is "an unforeseen combination of circumstances or the resulting state that calls for immediate action." That "call for action" is the second part of this topic, Fund.

So, what kind of emergencies are we talking about? Here are four coarse emergencies that come to mind:

1-You lose your income. This one is all too well-known to Americans in this economy. When you lose your job, what do you do? Most take out unemployment benefits. Unfortunately, the government's unemployment check will barely cover the food bill. To make up the difference, an accident fund would help ease the strain of unemployment while you search for a new job.

2-Unexpected car repairs. How many times have you hard of habitancy complaining about unexpected auto repairs? Things like transmission failures, blown head gaskets, and serious engine damage. These problems can cost a pretty penny and most families don't factor this into their monthly budget. So when a car repair is needed, where does the money come from? An accident fund would be helpful. You could use accident funds for the car repair and your monthly house allocation would be unscathed.

3-Home repairs. Having lived with my parents for 22 years, I'm all too well-known with home repairs. Septic tanks, water heater, plumbing leaks, upgrading windows, and air handler units come to mind. These are not cheap to replace by any means. And what if your house floods? And what if a fire burns all things you own? These are issues you need to plan in progress for. Part of planning in progress is having an adequate accident fund.

4-Medical problems. We all know how costly condition guarnatee is. And even then, approximately all guarnatee plans don't cover 100% of major procedures and rehabilitation prescriptions. Oh, have I mentioned curative bills are one of the top reasons why Americans file for bankruptcy? Step one is to have great condition insurance. Step two is to have an accident fund on hand.

Now, how much is adequate for an accident fund? This will be up to the individual and unique circumstances. Many of you know of Dave Ramsey. He created Financial Peace University. His schedule recommends a 6 month accident fund. I tend to agree with him. Some financial experts advise more than that but most agree that 6 months is a nice cushion to have if an accident arises. A 6 month accident fund should include all typical expenses for a six month period of time. These things include but are not miniature to: groceries, rent, gas, insurance, etc...

Currently, I'm in the process of construction my 6 month accident fund. Along with salvage for getting married someday and salvage for retirement, I make my accident a fund a priority. Once it's fully funded, I will be able to funnel added income towards my retirements accounts.

I also want to point out that it's better to pay off your debt before you save for an accident fund. It's as clear cut as that. If you have debt, pay it off immediately. Who wants to be paying a bank interest! I'd rather be development interest off of them!

So, where should you place your accident funds? I like to keep life simple. Some habitancy make things involved and have numerous accounts to make an extra.5% of their accident fund. I like having all my accounts in one location. I'm with a local reputation union and have all my accounts with them. I have a checking account, general savings, and an accident fund account. If you so desire, Ing and Ally have high interest savings accounts. It's leading to title your inventory "emergency." This will ward off any temptation to retrieve funds from that account. The goal is to never touch it unless you desperately have to.

I would like to end this report on a Biblical note. Some Christians believe that you should trust God whole heartedly with finances and to not take it out of his control. I see it a miniature differently. The Bible clearly describes two contrasts, one who is a fool with his money and one who is wise with it. The Bible is as clear as day on this topic. God provides us with tools to be wise with our money. salvage money is not a bad thing. As long as you are giving a quantum of your money away to His kingdom, salvage is a Christian habit. I believe God wants us to have accident funds but he also wants us to trust Him for our daily bread. I'll end with two Bible verses:

Proverbs 21:10- "In the house of the wise are shop of choice food and oil, but a foolish man devours all he has."

Proverbs 27:12- "A thrifty man foresees danger and takes precautions. The simpleton goes blindly on and suffers the consequences."

Now start salvage for that accident fund!

-Je

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