I’m having some professional difficulty right now and I feel like quitting and finding a new job. Unfortunately, I don’t have an emergency fund to float me during a period of unemployment. I have the windfall from the sale of my car and my tax refund which won’t be coming for a while since I haven’t filed for them yet.
This will teach me to keep a razor thin savings account.
Because I am consulting, I can hop to another project. Therefore I don’t really have to walk away from my job. But it does sharpen the heck out of my mind and motivate saving.
A few weeks ago people asked me what I was going to do with the money from selling the car. I really thought I was going to use it to pay off my credit cards, but I’m happier to save it now that I realize where I’m at. It may cost me more money in interest, but I feel like the smarter move is to build that emergency fund up.
I’m already meeting my Save-O-Meter goal then so it feels good to cross that one off this year.
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Some cash in the bank is never a bad idea. It is especially good now, since the credit markets are still pretty tight. I also have a cheap line of credit open even though I could pay it off, but I rather hold on to more cash right now. As you say, cash at hand gives you luxuries like looking for a different job or starting a business.
I recommend having 1 months of expenses before going and paying extra on credit card debt. Murphy is going to come visit and you need to be prepared.