Tuesday, 9 September 2008

When Things Go Bad - The Importance Of An Emergency Fund

I have an eleven year relationship behind me that was great to start with but gradually went bad. Really bad. I was scared of the man - scared of what he’d do to me, my children, my pets… everything. He was very unbalanced and prone to lose his temper for the least thing, often something totally irrational and unexpected, and was really not a nice person to be around when that happened.

I knew I had to get out of the relationship but I had no idea how I’d do it. I had no money, nowhere to go, and no local support network. It took me several years to pluck up the courage to walk away, regardless of the threats that he’d kill us all if I did, and start afresh in another town with nothing to my name.

I managed to get some old furniture (and I don’t mean old as in antique but old as in ready for the tip!), a clapped out cooker, a fridge and other basic essentials. Home was far from cosy and comfy, but it was at least safe and that’s what mattered most. I went on benefits in order to survive and we muddled by.

Looking back, if I’d had a decent sized emergency fund, things would have been so much easier. I would have been able to get out earlier and been able to equip the house with decent essentials (I still wouldn’t have minded second-hand, but a little better than what I had - proper beds instead of mattresses on the floor, for example, a fridge that was cold enough and perhaps even a TV that didn’t switch itself off every half an hour) and most of all, I’d had the peace of mind in knowing that, if things got dangerous again, I could take the kids and leave there and then.

Unfortunately, I was still rather naïve when I met him and hadn’t built up an emergency fund. I also allowed myself to be suckered into having joint accounts. Never again.

By the time I met Richard I’d built up a reasonable emergency fund and that was just as well. When I became seriously ill, both Richard and I had to give up work and our income was slashed drastically. For a while we lived on some money that he had, then my emergency fund, then my credit cards. Now I’m once again in the position where I have no back-up funds, and a whole lot of debt. But I’ll get out of debt, and I’ll build up that emergency fund again. It’s important to me because no matter how well you think life’s treating you, things can so easily go bad. Nobody knows what’s around the corner.

Do you have an emergency fund? If you don’t, I really do suggest you start one. About 3 times your monthly income should be enough, although the more you have, the safer you are, obviously.

It may seem like a daunting prospect, but by saving a little each month, it will gradually build up and the peace of mind it brings with it makes the little sacrifices made so worthwhile.

Sharon J


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wombat064 said...

Sharon , once again thanks for a wonderfull blog and some very good advice.. Most of us have big buttons like the one in your pic but they are coloured red and have in big words on them "PANIC !!!!"

Richard said...

I have 13p, an old zloty and 1 US cent in my emergency fund.


Jack said...

I've heard 6 months is the standard. I guess on my end, the whole Plan is essentially a big emergency fund plan. Glad things worked out in the end.



Sharon J said...

@ Wombat064. My button still has 'panic' written on it only not in quite such big letters. The wording will change as my emergency fund grows though.

@ Richard. Well I'm a little further down the road than you and I do have a bag of pennies you can have. I think a wet weekend in Blackpool would be more like it ;)

@ Jack. They say 6 months but for most people on a low income (I'm one) saving up that much can seem far too daunting. When there's no light to be seen, it's much easier to give up. Three months can see most people through most situations and is achievable by far more of us.

Kirsty said...

6 months does sound really daunting. I've known about emergency funds most of my adult life and have always wanted one, but really it's always been so huge an amount I've never felt I could do it.

I'm going to make a start with one month income as the first goal, then 3, then 6. MIght be a bit easier that way.

Love the blog btw!

Sharon J said...

Hi Kirsty. A month is definitely better than nothing and as you say, you can always expand it later. Baby steps are so much easier than taking one big leap :)

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