How do you build an emergency fund when you can't even pay off your bills?

[JLP]

Re: How do you build an emergency fund when you can't even pay off your bills?

Can someone explain to me how the snowball method works?

First, you gather up all your credit card and other debt bills. Then you organize them according to size, smallest to biggest. Figure out your minimum payments on each of the debts. Any money extra you throw at the smallest debt first, knocking it out as quickly as you can. Then, once it is paid off, you apply that amount to the next debt and so on and so forth until all the debts are paid off.

Make sense?

JLP

[Russell]

Re: How do you build an emergency fund when you can't even pay off your bills?

the only advice I have to offer is to save something ... it's better than saving nothing.

That's absolutely true.

If you save $1 a day that adds up to $365 a year which could easily pay for a unexpected $300 car repair bill. Can you save $1 a day ? maybe $2 a day ? add a little bit of compounding interest + $25 from INGdirect.com and you just built yourself a small emergency fund.

If you can't save $1 a day, post your expenses here and let's see where you can possibly cut back.

One thing though, savings needs lots of patience...it takes a while to build them up but don't let that discourage you. Just stay focused by setting a goal for 1 yr and then dividing that by 12 to see how much you need to save each month to realize that goal. Then divide that up to see your weekley and daily savings goal.

[PRICEPLUS]

Re: How do you build an emergency fund when you can't even pay off your bills?

There are always ways to squeeze a little more money out of the budget. When I was first married the wife and I ate a lot of beans and rice. Lentils are also good. Squeeze five bucks a week out of the food budget and you have saved 260 dollars over the course of the year.

A dollar here and a dollar there don't seem like much but over the course of a year it adds up. Russell was spot on in his message.

Getting out from under is a bear and I know about it first hand. You must persevere in order to obtain your goals. This site is full of good stuff you can use in order to get there.

[Armywife]

Re: How do you build an emergency fund when you can't even pay off your bills?

That's absolutely true.

If you save $1 a day that adds up to $365 a year which could easily pay for a unexpected $300 car repair bill. Can you save $1 a day ? maybe $2 a day ? add a little bit of compounding interest + $25 from INGdirect.com and you just built yourself a small emergency fund.

Russell has a good point. We all splurge silently at some point during the day. Whether it's that extra large cup o joe that you only drink half of... that extra donut or bagel you think you'll eat but wind up leaving more than half behind... perhaps it's the extra impulse items you buy at the supermarket which wind up expiring on your shelf (I still have Hamburger Helper boxes from my single days LOL).

There's also habit cutting. Even if you cut back on habits (instead of smoking a pack of cigarettes a day, trim it to three packs a week etc) you can manage a few bucks here and there. Where there's a will there's a way... bankruptcy may seem a good thing but it takes YEARS to get your credit back to normal (trust me).