What happens when you have an unexpected expense that has to be paid for immediately? Do you have a way of covering the bill? In this episode we talk about where we put extra money from our budget and how to plan for the unexpected.
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Emergency fund: 3-6 months of expenses. Ours is $15,000 which gives us about 4-5 months worth.
Emergency fund is also known as a rainy day fund or a crash fund depending on who you are talking to. The point of it is to have money set aside for emergencies that need to be dealt with quickly.
Danielle on what happens when you have to use an emergency fund:
“It’s not falling on concrete, but a pillow”
Refund your emergency account if you use it with any extra money each month until it is back to its proper level.
We are working on getting our budget to account for expected yearly expenses like car insurance, maintenance, and other known expenses the “pop-up” from time to time. Our goal is to make a list of all of these expenses, find out the total and divide by 12. Whatever that number is, we will put that much away each month so that we can absorb the blows as they come.
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