Tips For Your Emergency Fund + 3 Ways To Pay Off Debt

I love talking about emergency funds. Something about them and feeling protected just makes me happy. I’m pretty sure I can trace it back to the day we woke up in the middle of the summer to our refrigerator having gone out in the night. Of course, it all happened right after I had bought groceries and it was miserably hot so my food was going to go bad within hours.

I was furious! Not only was all the money we had just spent wasted, but now we had to go out and spend even MORE money to replace our fridge.

Luckily we had just hit a pretty big milestone – $1,000 in our emergency fund. It had taken us months to get there and it felt so good to have it. Honestly, I thought it was going to last longer than just a few weeks, but that’s how life goes sometimes.

We decided to go appliance shopping and went to a few different stores in our town, but weren’t happy with any of our choices. We really felt they were too expensive for what we were getting and I really didn’t want to drain all of our savings account the first time we needed it. So we decided to make a 2 hour drive to a bigger city to check out a scratch-and-dent store. We ended up finding the perfect fridge (for us) on discount because it had a scratch on the side, which was fine with us because that was the side that was going to be hidden by a wall.

We purchased our new fridge, paid cash and still had money left over in our emergency fund. It was a good day!

Over on my IGTV, I’m sharing how we ended up making our emergency fund successful – it’s all about the location of the account and our solution might surprise you! Plus, I’m spilling details on three different ways you can tackle your debt – debt snowball, highest interest rate first, and one more that could be the answer you need to make progress. Hop on over to IGTV to check it out!

As you can tell making your emergency fund harder to get to is key when it comes to self-control. I love the idea of using a bank across town so that I can still get to it within minutes if I really needed it, but I can’t easily transfer money into my checking.

You should be able to easily setup a portion of your paycheck to go directly into your new bank. Just check with your HR department on adding a second checking or savings account to your direct deposit. The system we use at our office allows me to specify a different bank account and a percentage of each paycheck to deposit. I recommend starting with only 5% at the beginning to make sure you won’t miss it, but slowly increase it until you reach 10% or an amount you’re comfortable with.

If you’re employer doesn’t allow for that then you could easily write yourself a check each month to deposit into your separate savings account.

In the video, I also talked about three different approaches to paying down your debt. Most everyone has heard of the debt snowball technique – starting with your smallest balance and working your way from smallest to largest. A second method is starting with your debt that has the highest interest rate. By knocking that one out first you end up saving more money in the long run because you will end up paying less in interest. The final way we mention was all about using what motivates you the most – picking the one that annoys you the most and just getting it over with. That way you can use that motivation to kick start you and keep you moving forward.