Reflecting on a Year with an Emergency Fund
As the end of April approaches, my emergency fund is reaching its first birthday. It may seem crazy that I’m reflecting on something like an emergency fund, but its something that deserves a little attention. See, last year was my first year out of debt (as an adult). I wasn’t in too deep (only $25,000), but it felt like a big amount when I was underneath it. I was very weary of paying my debt off once I had the money because, like many people do, I really liked that cash cushion in the bank. Following Dave Ramsey‘s advice, I bit the bullet as soon as I had the full amount of both my car and student loans and wrote those checks out, leaving my bank accounts empty.
Building My Emergency Fund
Once out of debt, I kept focused. I was able to pile up a 6 month emergency fund in 5 months. I was very blessed to have been able to do that. Accomplishing it was due to the fact that I had lowered my expenses almost as low as I could and managed to get my income up in the meantime. Being recently out of debt tempted me to relax a little bit but I made myself keep my head down and not look up until my bank account had a cushion again. And it happened, in 5 months. That goal was achieved almost exactly one year ago.
My Year with an Emergency Fund
It’s been a crazy year. It’s been one of my toughest years ever personally as I dealt, and continue to deal, with some very tough personal family problems. They are very challenging but thankfully, I’ve learned how to better handle them as time has went on. It was a learning process that was very painful, stressful and full of anxiety. I’m on the other side of that though, even though the issues aren’t yet over.
On the flip side, this past year has been my most successful ever professionally and personally. I managed to increase my income, develop more professionally, move up in my company, lower my expenses, quit smoking, start running, start cooking more, eat healthier and start a blog. I saved over half of my income. I did some pretty awesome things. I’m proud of it.
How could an emergency fund have played a part in any of that? I’m not sure, but I bet that achieving the back to back goals of getting my butt out of debt and piling up a 6 month emergency fund had something to do with it. That journey of sacrifice, persistence, success and reflection made me feel like I could change anything. It made me want to continue changing myself for the better. Since I was out of debt and had an emergency fund, I now needed to quit smoking. I needed to start running. It motivated me.
The Options and the Dreaming
Having an emergency fund (and additional savings for that matter) gives you options. When you have options, you can’t help but dream. These dreams are really about your passion. For me they’re about being able to travel, see all the beautiful sights, starting a blog, buying a house, having a family someday, retiring young (if I want to), owning my own business someday and just being free from all that people get tied down to in life.
This year has been a year of dreaming. It’s been a year of contemplating all the possibilities for my future. It’s been a year of action, taking action to change my future. Most importantly, it’s been a year of progress. Here’s to the next year being a year of progress for all of us. I hope all of you and I can look back next year and point to the things we did this year and be proud of them!
Category: Doing What You Love
Sounds like you had a great financial year!
I certainly did. My best yet, anyway.
Congrats on being debt free and getting your emergency fund in place. Not very many people can boast the accomplishments you have. And on the same token, not make people can truly understand and appreciate just how hard it is to do what you have done. Kudos! Keep it up!
Thanks for stopping by and for the very kind words. You make me feel so accomplished. Thanks for that!
Wow, 6 month cushion in 5 months, that’s AMAZING! Congrats on your success. I agree that an emergency fund as you have is essential for becoming financially flexible, giving you options. Most people forget (or just don’t realize) the importance of having such a cushion or safety net. On top of the 6 month cushion, we also have an extra emergency fund for use for random things, so that we don’t have to dip into our safety net. We keep about $2000 in our emergency fund to cover things like the water heater, washer/dryer, emergency car repairs and even insurance deductibles.
Great post and you ‘should’ be proud of your accomplishments this year, we’ll pray that your personal problems clear up nicely.
Hi Jeremiah. I really kicked it with that whole 5 month thing, huh. Yeah, I have built my savings up to be above my emergency fund too and I have enjoyed that so much this past year. Thanks for the kind words!
I definitely think reflecting on a year of an emergency fund is worth a celebration! I can’t wait until I hit some of those milestones. I feel like I’m in a very similar situation, my career and income are going up, while my personal life seems to be tanking downward. But I’m trying to stay optimistic. Congrats on such an awesome accomplishment Kraig!
Thanks for the kind words, Carrie. I’m sorry to hear that your personal life seems to be tanking. I hope things get better for you there. Keep up the good work professionally!
I am on baby step 3. This weekend I had the brakes done on my car (planned, saved for expense) and then yesterday I needed 4 new tires (was hoping for another month to save for that). Just when you think you’re getting ahead…
But I was so glad I at least had the emergency fund. I’m not sure that car maintenance is an emergency. I suppose I should have a separate car expense fund. But anyway, it was nice to be able to just pay the bill knowing the ER fund could be tapped. I looked at the sign on the counter “short on cash? 0% for 3 months” and thought thank goodness I didn’t have to consider a credit card application to get tires.
Just knowing I didn’t have to incur debt was a great feeling and gives me incentive to get that ER fund replenished asap.
Congrats on your emergency fund. I can’t believe how quickly you’ve made the progress from 0 to six month. Your dedication is inspiring… must remember that the next time I am eyeing a new dress.