Surviving Dystopia: Emergency Funds

By Tim Gamble

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Here is one extremely important step in getting your finances ready to survive dystopia:  Have an Emergency Fund. 

Money experts say that you should have an emergency fund of at least three to six months of living expenses. That is okay for a start, but I say more is even better. For most families, I would set the goal at one to two years of living expenses. That is a lot, I know. But it can be done, with time, effort, determination, discipline, and a willingness to sacrifice now so you and your family will be safer later. As Dave Ramsey says, “If you will live like no one else, later you can live like no one else.”

Living expenses are your mortgage or rent, power, phone, and other utility bills, regular payments such as credit card bills and car payments, as well as food, gas, and other necessities. Not included are luxury items like entertainment, eating out, and vacations. 
Once you figure out what your living expenses for a month are, then it will be easy to determine your goals. For example, if your living expenses are $2,000 a month, then your three-month emergency fund goal would be $6,000. A six-month goal is $12,000. A one-year goal is $24,000. A two-year goal is $48,000.

Those are some daunting numbers, but don't let numbers intimidate you from achieving this goal. Start with a smaller goal, such as saving an initial $1,000. Then move on to the three-month goal, of which you now have $1,000 and therefore only need another $5,000. Then move on to the six-month, one-year, and two-year goals. No one expects you to quickly achieve the two-year goal. It is going to take time and effort, but the best things in life are worth it. 

If you become debt-free, you lower your living expenses, making your goals smaller and easier to achieve. Let's say that $300 of that $2,000 living expenses example is a car payment. By getting out of that payment, perhaps by trading down, your living expenses drop to $1,700 a month. This makes your 3 month goal $5,100 instead of $6,000, and so forth. See how much easier your life will be if you get debt-free? Or maybe you are too worried about what your neighbors will think if you aren't driving a brand new car?

Your emergency fund should be kept in a a separate account (savings or money market) from your other financial accounts and ONLY used for emergencies. You may need to wait until you can meet the minimum balance requirement to avoid fees, but move the money into a separate account as soon as possible. You should also keep a small amount in cash at home in a safe, hidden place that only you and your spouse know about, in case the ATM system goes down due to a power outage (a few hundred dollars or so depending on your circumstances). 

Again, I understand these are big numbers and an intimidating task, especially for folks struggling to get by paycheck to paycheck. Rarely is anyone's situation truly hopeless, just really difficult. But you need to do this to survive and prosper in our emerging dystopian future. It is up to YOU to figure out how to do this. That is part of taking responsibility for your own life, also known as self-reliance. Here are some ideas to get you started:

Ideas For Raising Cash For You Emergency Fund

Some folks get a end-of-year or end-of-quarter bonuses. If you do, then use that bonus to build your emergency fund. If you are getting a raise in the new year, then earmark a portion of that raise towards your emergency fund. Do your taxes ASAP after the new year, and use your tax refund for your emergency fund. 

If you loaned money to a friend or relative, it is time to collect. Asking a friend or family member to pay back money you've lent them is uncomfortable, and may lead to some icy Sunday dinners at Grandma's, but it is your money after all. And you need it.

Do odd jobs. Can you sew, tutor, mow lawns, bake, babysit, or do "handyman" jobs? Do you have crafting skills? Post or handout fliers around your community. 

Consider starting your own "Man-and-a-Truck" business. If you have a pick-up truck or van, you can rent it & yourself out for a lot of odd jobs involving moving or hauling. Most people don't have a truck, yet most people will need to haul something somewhere at some point. And they probably need an extra pair of hands (or two). If you also have a dolly or hand-truck, you'll be especially popular. Posting flyers around town and word-of-mouth are great ways to promote your business.

Get in the habit of spending less than you make, and make savings a regular part of your life. This will mean making some personal sacrifices. This may mean brown-bagging your lunches, eating out less often, avoiding impulse purchases, downsizing your cable TV package, cancelling Netflix...

Do whatever else it takes to build your emergency fund - hold a yard sale, sell that exercise machine you don't use, sell that ATV or other expensive toy,  work extra hours or even get a second job.

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