Emergencies Do Happen...Be Prepared!

This is a "re-post" from an email I sent out to the Financial Peace Univeristy participants last night:

In the past 7 days I received my Federal and state tax refunds, paid off a store credit card (and canceled the card!), and made a little extra money babysitting for a co-worker. After much hesitation, I also finally temporarily stopped my 401(k) deferral and just yesterday submitted the $1,000 transfer to savings to fully fund my emergency fund. I was feeling very proud of my progress with the baby steps when this afternoon my “emergency” hit. No it wasn’t a new pair of shoes or a new purse, my washer broke!

I bought my washer and dryer set used for $200 over 6 years ago so I certainly think I got my money’s worth, but is it just me or do you always have to take 3 steps back after taking a few steps forward? Beware: Satan is going to try to tempt you by telling you that you will never be able to get out of debt. After working (tax season over time), my fun Saturday night was spent shopping for a new washer. I settled on the one that could be delivered TOMORROW! Oh, and I paid CASH (well, debit card)! A few months ago if this emergency came up, my emergency fund would have been my Best Buy credit card but that was the first card I paid off and canceled. Now when emergencies come up I am no longer “married” to one store, and can therefore shop for the best deal, because cash is accepted everywhere!

I hope my experience will encourage you to stick to the plan! When you have a fully funded emergency fund and an emergency comes up, thank and praise God for providing for your needs. Spending cash on a new washer or tires or whatever your emergency may be is not fun, but going into debt for it is a whole lot worse!

For many, step two is going to take some time, but the debt snowball really does work. Don’t let Satan tell you it’s never going to end. Paying off the lowest balance really gives you momentum. I have paid off two store cards with high interest rates already! I added up how much interest I paid in 2009 and it was close to $10,000 (including my mortgage and student loans). How many of us would actually choose to throw away that much money on INTEREST in a year? When we choose to spend money that we don’t have that is exactly what we are doing. Do you know how many chldren Compassion International could have fed for the whole year? 22!

.........I am washing clothes right now and washing clothes has never felt so good! However, the dryer is looking pretty ugly right next to the new washer! I will wait till it breaks to replace, though, no sense is replacing something that isn't broke just because it's not "pretty."