Start Building an Emergency Fund and Say No to Debt
If you want to put a stop in acquiring debt, you have to set boundaries and say no to debt once and for all. Somehow, as you borrow money to compensate your obligations, you’re just merely adding up another kind of debt in your path. It’s time that you manage your resources and finances better and make sure you’re using your money wisely to pay your debt before it swallows you.
Moreover, while your situation is still an easy fix, you might consider starting up an emergency fund. You do not need a one time bug time amount on your emergency fund. Starting with just $500 to $1,000is already doable. This is helpful when certain circumstances may need you to draw money that’s not included in your budget. So, instead of relying on installment loans or credit cards, you can use the money in your emergency fund. As you use the money, you must as well refill your emergency fund just in case you need some funds again on certain occasions.
What is the Purpose of the Emergency Fund?
Your emergency fund should only be intended for cases that are considered emergencies. Hence, it doesn’t mean that you can use it to buy gadgets on sale or perhaps a birthday present for a special someone.
For instance, you don’t have funds allocated for your car repairs, and it might cause you to lose your employment without it, this scenario can be considered an emergency; so, using your emergency funds is okay. However, if it’s feasible for you to commute to your job through a bus, you can instead, until you get to have allocated funds for your car to be fixed. Hence, emergency funds can be used for medical expenses or any cases where the money is badly needed as it may jeopardize a person well being and source of living.
Why is it Important to Have an Emergency Fund?
It is important for someone to realize that saving for rainy days can prevent you from getting into debt. At times when you need the money and you don’t have any means where to get it, you will likely resort to borrowing. However, if you have an emergency fund, you can easily respond to your needs without getting into any sort of debt.
Moreover, whether you are currently in debt, it is somehow motivating that you still have certain funds allocated at times of emergency. In most cases, it can affect how you think as it can give you an empowering line of thinking to say no to debt and yes to saving.
For those who have been in debt, an emergency fund might not be an instant fix to your problem, but taking its baby steps can eventually result in acquiring huge heights in the long run.
Increasing Your Emergency Funds
As you get the momentum in refiling your emergency fund, you might as well entertain the idea of continuously putting some money on it each month. By doing so, whatever shortcomings may arise, may it be a lack of employment, you always have a back up on your finances while trying to seek new employment. Advancing your emergency fund to the next level will yield significant results that you can perceive later on.
What If I Can’t Save Little Amount?
On the contrary, when your income is insufficient to pay off your debts and other obligations each month, putting at least $500 in your emergency fund may already be huge money for you. This calls for an intervention that can increase your earnings. You might be open to getting a second job or any sideline that can add up to your monthly income.
However, in situations where your struggles are too much to bear, professional help is what you might need. You can explore several debt relief options that are available for you. This would mean you might seek aid in qualifying for a consumer proposal or bankruptcy as your last resort.
CONSUMER PROPOSAL EXAMPLE
Example Unsecured Debts
|2||Credit card 1||$6,812|
Your Monthly Repayments Would Be
a Consumer proposal $748
(total contractual repayments)
a Consumer proposal $295
(total contractual repayments)
* Subject to creditor acceptance
* Payment subject to individual circumstances
* Credit rating may be affected
* Fees apply, subject to individual's circumstances.