I have been working on building up a well-funded emergency fund for quite some time. Some issues have come up (such as car problems) that have slowed this process down a little bit, but for the most part, I am on track.[no_toc]
Before I leave for Chicago. I want to have a fully funded EF for multiple reasons. I don't have a whole lot saved, but I do have a few months of expenses saved. They are very important, as I've detailed below.Related links:
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Emergency funds can give you peace of mind.
Does anyone actually prefer to live paycheck to paycheck? An emergency fund can help you live a little bit more comfortability because you don't have to worry about an expense that you may not be able to afford. You don't have to worry about something completely ruining your budget.
Having an emergency fund can help you sleep at night.
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Emergency funds can help cover job loss.
If you've ever experienced job loss, then you truly know how tough it is. You could create an emergency fund to cover possible job loss because let's are honest, most jobs are not stable.
Emergency funds can also help cover months where you may not have made as much money. Many self-employed people have emergency funds because an EF can help cover months where your income is not as high.
Emergency funds can help cover car problems.
Lately, I have been having a few car problems. My emergency fund has helped cover these car problems so that I am not super stressed to try to come up with the money.
Car problems are never fun, but having an emergency fund helps me deal with it a little bit better.
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Emergency funds can help prevent debt.
If you didn't have an emergency fund, then you might accrue debt if any of the above situations came into play in your life.
Some people come across the situations above and just put the expense on their credit card, which is usually not a good idea unless you plan on paying it immediately with cash before the credit card month is over.