I don't have an emergency fund, do you? We all know we need one but many of us don't have one. Can I call my 'mad money' stock account an emergency fund? This is the problem I have and so do soooo many others. There is an insurance survey out there that says 50 percent of us have less than one month's expenses saved for an emergency. That's what I have; one month. How do we fix it?
First you need to know how much you need in that emergency fund. I have $3k a month in expenses, more or less. Some say you need 6 months saved ($18k) and others say you need to have a year ($36k.) I'm in big trouble. I have $5k. I guess my emergency plan would be to move back in with my mother after I lose my house or get a roomate before I lose it, and use my credit cards. That's my emergency plan; keep my credit card balances low, collect returnable bottles, and get a roomate. I have no problem with that right now.
I do, and so do you, need to start building an emergency fund. If you have not started getting into the stock market, this is another thing you're supposed to do before you start. I know what you're thinking. I'm never going to get into the stock market. I know, I feel that way too. As you can see, I'm doing this all wrong. I opened my stock account last year and am now just trying to get together a realistic budget and emergency fund together. But how does someone do that? Coupons.
I am starting to only spend money on entertainment if I have a coupon. When I go to the grocery store; coupons. And all the money I save with coupons I promise I will put into a savings account. Here's how I plan to do it for August.
In August I have budgeted $300 dollars for school clothes, shoes, and items. (I am a teacher.) I have a coupon for DSW, Kohl's, Bob's Stores, and Macy's. After I'm done spending, whatever I saved with the coupons I will save.
For entertainment, if I want to go to a restaurant I will use restaurant.com and buy a half-priced gift certificate and save the money. I will use my AFT union card to buy discount movie tickets and save the money. And I will look at groupon for cheap entertainment ideas.
I am a teacher with a second job. After taxes and all the other stuff they take out of my checks I make $3k a month as a teacher and $1200 a month at my second job. I know I don't make a lot of money, but there are lots of people who make less than I do. How will they ever put enough money away to retire? Are we going to have a society that works until they drop dead?
1 comment:
From what I have read, I have good news and bad news. The good news is that you have a fair amount of time to take advantage of compound interest to accumulate a fair nest egg and develop income to supplement your teacher retirement. You also appear to have learned quite a bit about investing The bad news is that you may need to work longer than you might want.
You have a lot of options between now and retirement time. You might want to look into an extra job that would allow you to get the 10 quarters necessary to participate in social security. At the low end, social security pays a relatively high percentage of what you put in. Of course there is some doubt about what will happen to the program between now and the time you retire so you have to stay current with the efforts underway to save the program. Anyway, don't get discouraged.
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