You hear this all the time. G-d only knows the future. Well you know what? We believe that as well. Why not be prepared… with a ‘G-d Forbid’ fund. G-d forbid something unforeseen happens and you need cash right away.
Benefits of a Short-Term Emergency Fund
A short-term emergency fund is a smaller savings account that’s designed to be used when you need to cover something that’s relatively inexpensive, like a new set of tires or a leaky faucet. This is money that you can get to quickly if something unexpected comes up and it should be enough to tide you over until you can tap your long-term savings if need be.
The amount of money you keep in a short-term emergency fund is really up to you. For example, if you’re single, have a steady income and your expenses are relatively low, you might be comfortable with as little as $1,000. On the other hand, you might feel safer having at least one month of expenses to fall back on if you’re married and have children.
The main point of short-term savings is to keep you from having to turn to credit in a pinch. It’s especially important to have some kind of a cushion if you’re in debt payoff mode so you don’t add to your balances. Once you’ve got your short-term account fully funded, you can then move on to building some cash reserves for bigger emergencies. Ideally you should have 6 months’ rent (or mortgage)and other fixed expenses. One step at a time.
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LMF Credit Services, Inc.