Banking 
14
comments

Never Be Without an Emergency Fund

Squirrels do something funny in the fall, they collect up acorns and seeds for the winter. They know that the pickings will be slim come the snow and so they save up now to help them weather the leaner times. While we can’t time emergencies as well as squirrels can time winter, we have to know that emergencies lurk around every corner. Whether it’s the loss of a job, a car accident, or just an emergency trip to the hospital for a deep cut – we know emergencies happen.

That’s why a quote like this surprised me about the recent furloughing of FAA workers (which ended earlier this month):

“It really is scary,” said Michael MacDonald, a 54-year-old Federal Aviation Administration engineer who lives outside of Boston. “For one week, you think OK, we can handle one week. But now the reality is starting to set in — this is going to take six weeks or more.”


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 Personal Finance 
6
comments

Finances in 55 Seconds: Create a Short-Term Savings Plan

StopwatchWe are often intimidated by financial projects. It seems like we should need hours to plan savings, or organize our finances. However, you might be surprised at what you can accomplish if you set aside some time to tackle one task. Too often we make things harder than they need to be. Creating a short-term savings plan is one of those projects that can quickly seem daunting.

Short-term savings, though, are important. It’s a good idea to have some small savings in a relatively liquid account. Short-term emergency savings can be used for items like unexpected car repairs, appliance repairs and other unexpected expenses that crop up. It’s not exactly the same thing as planning for months of unemployment, but it is way to give you a little extra padding that is accessible — and doesn’t require you to raid your long-term savings. This fund is usually between $1,000 and $3,000.

The best part: You can create your short-term savings plan in 55 seconds or less.

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 Your Take 
60
comments

Your Take: How Is Your Emergency Fund?

20% of Americans “suffered a significant economic loss” last year, according to a report two weeks ago, the highest level in the last 25 years. The Economic Security Index has been tracking data on income loss, medical expenses, and debt since 1985 and it has shown economic insecurity has risen across all groups. What’s economic insecurity? When they’ve lost 25% or more of their available gross income within a year and not enough of an emergency fund or reserves to make up the difference.

Here’s the shocker (at least to me) – “48% of Americans said last year they only had enough resources to carry them for two months before experiencing any economic hardship.”

That’s scary. I’m curious to know how many months you have saved up in your emergency fund as well as how that level has changed in the last two years. We used to have an emergency fund of only around six months until two years ago, when I left my job to pursue blogging full-time. Back then, we decided to up the level to around twelve months of expenses in order to handle the fluctuations in income. It’s maintained that level ever since, in a CD ladders, and I haven’t increased, or decreased it, during the recession. I consider myself lucky, a lot of folks have had to dip into that fund.

How about you?


 Personal Finance 
28
comments

5 Lessons from the DC/Baltimore Snowpocalypse

Not sure if you heard about the snow in the Baltimore/DC area but we got a slammed with over 40 inches of snow on two different occasions over the course of a week. Schools were closed for the entire week, mail service was spotty, and the area came to a grinding halt for about a week. Grocery store shelves were bare even before the initial snowfall and stayed that way for about a week!

For those keeping score at home, we had about 30″ of snow come down February 5th-6th and then another heavy dose (8-10″) mid-week last week. It was hard for us to measure the exact amount of the mid-week snow because the wind was absolutely ferocious.

However, we escaped unscathed and we learned a little bit in the process.

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 Personal Finance 
14
comments

Conduct a Financial Fire Drill

Station Fire over La Canada FlintridgeThink back to elementary school, can you remember how many times your school had a fire drill? They were never announced ahead of time, the bells just rang, everyone got up, lined up, and left the building in an orderly fashion. Everyone knew what they were supposed to do because it was scripted ahead of time. No one panicked because we always assumed it was a drill, even when it wasn’t. (which puzzles me why all of my employers pre-announced rare fire drills)

When was the last time you had a financial fire? Maybe the car broke down or you broke a window in your house. Maybe you were one of the many millions who lost your job last year. I bet, in most cases, you weren’t sure what to do afterwards.

That’s why I’m recommending that you conduct a financial fire drill.

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 Banking 
22
comments

What To Do When Your CD Matures

We put our emergency fund into a CD ladder and every month one of those certificates of deposit matures and is automatically renewed. As an added bonus, ING Direct, where our CDs live, gives us a CD rollover bonus whenever we renew (currently the bonus is 0.15% on CDs of at least 12-months long). For us, the decision is simple. It’s a CD ladder and you simply renew the CD each month for the 12 month term.

What if you’re money isn’t in a CD because it’s part of a CD ladder, what should you do?

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 Personal Finance 
66
comments

Four Rules of Thumb In Need of Refreshing

Thumbs Up!Rules of thumb are great. They teach you a little nugget of wisdom and have been vetted by generations of experience. Don’t swim thirty minutes after eating, don’t mix hard liquor and beer, and don’t date your relatives. Follow those rules of thumb and you’ll live a happy and healthy life.

The same can be said about financial rules of thumb. Don’t spend more than you earn, save 10% of your salary, and always buy a used car. You don’t have to always follow those rules of thumb, but if you want to achieve financial prosperity, it’s best to heed them.

However, over the years, some rules of thumb are in need of a refresher. Times change. A rule that made sense ten or twenty, or even a hundred, years ago may not make sense. Let’s have a look.

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 Personal Finance 
7
comments

Take Control of Your Financial Situation

This article is part of the series, The Summer of George- The Most Productive Summer a College Student Will Ever Have.

Do you think that you don’t earn enough money have to worry about managing your finances? If so you are dead wrong. If you get into the habit of properly managing your finances at an early age then these habits will hopefully follow you into your 30s and so on. Let this summer be known as the time where you finally took control of your financial situation.

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