#3 Emergency Fund
He who fails to plan, plans to fail. Winston Churchill
If you have money, you don’t have to borrow money. Shocker, right? The point is to stay out of debt. One of the first (and best) strategies we employed at the onset of our Debt Slaying Journey (DSJ) was to save $1,000.00. $1,000.00 provided quite the cushion. If you have a cushion, you don’t need the Dragon (may it not rest in peace) here’s a few ways it helped us:
1. Emergencies Happen. We had expensive car repairs. We had to replace the royal water heater. The dishwasher and washer and dryer both needed fixed. You’re going to have emergencies. A credit card is not an emergency fund – it is a debt instrument. Don’t rely on a tool of enslavement to bail you out of a tough financial situation, it will only lead to another one.
2. Unexpected Medical Costs are . . . Unexpected. Princess Eldest needed braces (we confirmed with a second opinion). Princess Youngest needed tubes in her ears (after 7 or so different antibiotics). Technically, these weren’t emergencies. Princess Eldest could have had major surgery someday and Princess Youngest (and the Queen) could have continued not to sleep. Glad we had the emergency fund because we had options at our disposal.
3. The Dragon Wants you to Fail. Even in what we thought was the last 35 or so days before we would be debt free, the Dragon (may it rot in a fiery grave) made its last stand. Both cars limped into the shop with expensive repairs. The Dragon will attack. Partly because of the emergency fund, instead of there being 35 days left to pay off the final debt when our cars went into the shop – it only took about a week longer to drop the deathblow on the Dragon.
4 It Keeps You From Borrowing Money. While it’s admittedly speculative, we probably would have went further in debt without an emergency fund. An emergency fund is a confidence builder and an emotional first step in a long battle with the Dragon. We depleted ours on several occasions and subsequently refilled it as soon as we could. The good news is that as you get deeper into your own DSJ, you’ll be able to cash flow emergencies.
READ THIS: The Principle of the Path by Andy Stanley
