The point of establishing an emergency fund is to create distance between yourself and your debt. If you haven’t been saving money for a rainy day to shell out when the AC goes out or the car breaks down or the dog goes to the doggy ER(Yes there is a doggy ER, I know), then you are forced to put the bill on plastic. The credit card balance goes up up up.

Save $1000 very fast for emergencies, if that seems like a large amount especially if you have never saved a dime before set a goal reasonable for yourself. Even having $300 set aside to use only when that trip to the dentist arises will be a sigh of relief knowing you didn’t dig your debt grave deeper.

Where do you keep that new money burning a hole in your pocket that you can’t touch?

I’ve found these to work well for me:

1. Cash – most places take plastic but some repairman only deal with cash and if there is electrical outage in your area of the country, cash is still King! Keep it in a separate envelope in a hiding spot from the kids. Offers no interest rate.

2. Savings account linked with checking account – transfers into savings are easy and can be automatic, the less you think about the money, the less you miss the money. Offers very small interest rate.

3. Money Market Mutual Fund – less liquid, but less temptation to be spent frivolously, some accounts offer checking-writing privileges in larger withdrawal amounts. Transfers take longer to complete. Offers very small interest rate.

4. Combination of all methods – based on the size of your emergency fund and your willingness to spread out your monies over different mediums, this method may work best.

Personally – I hedge 1/10th of my emergency fund with silver bullion. So for me every $250 I save, I make sure $25 of that is invested in silver rounds. This helps protect against inflation while my dollars are being stored and waited on for use, if inflation happens I don’t lose as much of my buying power because I go trade in my silver for inflated dollars and buy my $5 loaf of bread with ease and peace of mind.

What strategies do you use when saving for a rainy day?

What works? What doesn’t work?

If the government can spend money they don’t have, why can’t we, the people, live out our dreams, without our money, but with credit cards.

There are many different opinions on credit card usage, smart ideas and dumb ideas. Some are smarter than others based on your financial soundness.

How controlled are you when it comes to using your credit card?

Consider the behaviors you can follow based on your self-control. Where do you see yourself.

No credit card self-control

1. Do not own a credit card- The easiest thing to do is never open up a credit card account, no credit, no problem
2. Own a credit card, then cancel account- Hard to do, reduces credit:debt ratio, finally free from credit card
3. Own, cut up, but do not use a credit card- This keeps the credit line open, but the usage is severely limited
4. Own, but do not use a credit card- You get new cards to replace the old ones, at least you know which one is up to date

Some credit card self-control

1. Use a credit card only in emergencies- Not to be used as an Emergency fund, just for a money pinch when you have option to charge non-check required bills, rather than using a checking account: this is a short-term emergency fix (currently this is where I am at)
2. Pay off card in full every month- Use of plastic traditionally increases overall spending over cash spending
3. Consolidate credit card debt onto one card- Pay a transfer fee to put a card’s balance on a 0% transfer rate, essentially a free loan to pay off that debt before the 0% rate period is expired(6-12 months usually)

Complete credit card self-control

1. Use a credit card to earn rewards- Requires complete control of budget and expenditures, to be used on monthly bills and predictable expenses, rewards are a perk for your self-control
2. Use a credit card as a free line of credit- Buying an engagement ring on credit for 6 months no payment, no interest = free loan of money, as long as it is paid off before this time expires, otherwise you are hit with occurred interest over entire time period