Take the 8 Month Challenge and Create An Emergency Fund

Written by admin on July 16, 2009 – 6:29 pm

Take the 8 Month Challenge and Create An Emergency Fund

Create an Emergency Fund Experts suggest we all have an emergency fund. So, how much should be in an emergency fund? Experts use to suggest 3-6 months worth of expenses. However, they have changed the rule to 8 months worth of expenses. My guess is that the recession has cause the additional 2 months. Therefore your emergency fund should be 8 months worth of expenses — if your expenses are $1500 per month, you should have $12,000 in an emergency fund (your expenses times 8).

Your emergency fund should be place in an account that you have access to. Certificates of Deposits are not a good place to put your emergency fund — Why? CDs usually have restrictions on when you can access your principle balance. Emergency fund cash should be place in a less restricted account like a money market or savings account.

Now, that I have say that — if you are creating an emergency fund a CD may help you get there. Just remember, after you have accumulated your emergency fund put it in an interest accruing account with little to no restrictions. To learn more about CDs go “Why I Purchased Bank Certificates of Deposits”

Here are a few Ways to Create an Emergency Fund:

Increase your passive income — Read more about Passive Income
Take a part time job
Raise your deductible on your insurance policies — Read more about Understanding Insurance
Cancel your long distance on your home phone
Pay with cash
Become an educated shoppers – shop for the discounts
Make your own coffee
Take your own lunch to work – back to the brown bag
Allot a portion of your paycheck to be automatically transferred to your savings account
Wash your own car
Workout at home

Do you have more suggest on how to save money or cut cost? If so, share with our readers in the comment section.

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Steps To Financial Freedom – Fund Your own Freedom | Personal Finance and Money on July 19th, 2009 at 1:00 am:
[...] Funding Freedom Tip – Do you have an emergency fund in place? — If the answer is no, then your first step is to take the 8 month challenge and create an emergency fund [...]