WHY YOU NEED AN EMERGENCY SAVINGS ACCOUNT

 

 Period.  End of Post.  OK, Let me explain....

Today my son who had surgery on his eye about 2 months ago woke up in extreme pain.  He could not open his eye for me to get a good look at it.  

Once he had some Tylenol I was able to look and see that it was angry, red, swollen little eyeball.

I called the children's hospital where he had his surgery to see if they could get him in.  Luckily the doctor said he had time.  

I had to take the day off work (lost income). The hospital is an hour away from our house so I had to fill the van with more gas.(extra gas $50)

Once we arrived at the hospital we paid for parking ($8.00).  The doctor prescribed medicine. ($20).  My son was in a ton of pain but was so brave so I bought him a treat for the way home. (8.00)

I am so grateful that I was able to get my son to see the doctor.  This was not something that I could have put off until later.  It was also something that I did not plan for.  The total of the day cost $86 not including lost wages.  Since we are on a very tight budget this would have blown the budget.

Luckily we have a $2000 savings set aside for times just like this.  Having that savings account means that we are able to worry about the emergency at hand without worrying about how to pay for it.  Or at least some if it.

I suggest you start an emergency savings account right now!  If it means that you set aside $5 this week and take some bottles back for refund then that is how you start.  Having a savings account is one of the most important things you can do BEFORE you start paying off your debt.  

If you do not have an emergency savings account, every little emergency or forgotten payment will send you back to using the credit...creating more debt.

Now that I have used some of my savings account, I need to top it back up!  I will reduce my debt payments until the savings account is back at $2000.  At that point I will put all the money back towards the debt.

Crisis adverted

Do you have an emergency savings account?  Why not?  Get started now... I am sure the couch you are sitting on has some change in it.

Going into Debt Every Month!

To start with our journey of getting out of debt, first we have to know where we stand.

We found ourselves over $40,000 in debt and into the negative every month in the bank account.

I pulled three months of expenses to see where we were using all our money.

In total we spent over $2000 over our budget every month.  This would be why we are always under on our account every month.  This would explain why we are always having to dig into our credit to make ends meet.  This would be why the debt gets bigger all the time!

We spent the following on our variable spending average each month for the last 3 months.  This is all our spending that is not automatic and essential such as mortgage or life insurance payments.

Groceries           $1363.36
Cash                   $49.25
House/ Car         $835.24
Everything Else $985.75

So I planned, and researched, and played with the numbers.  This is going to be our weekly budget for the following 4 weeks.  I am going to look back at the spending and the budget to see if it works and change it where necessary.

Gas                       $100
Groceries              $187.50
Kids                      $17.50
Extra                     $25
Entertainment       $25
Total Week Spend $355


Debt Countdown!
Start:                       June 13, 2016   $ 43 756.20
Predicted End Date: July 2019        $0

Year One Debt Plan

My husband and I have 2 kids, 2 dogs, 2 cats and over $43,756.20 in debt.  That last part is not a typo.  We have find ourselves over $40 K in Debt!

We are starting our year one plan of getting out of debt.  Follow along while we do everything possible to get ourselves out of debt.  All while sticking to our budget and raising 2 boys.

Most of the debt blogs I read and stories I hear are single people or dinks ( double income no kids) paying off huge amounts of debt quickly.  What about the people with kids?  The people that live outside of town... the people with large payments that need to be paid?

Below are a list of a few restrictions that we have to work within as we dig ourselves out.

We are not able to have second (outside) the home jobs due to taking care of the kids.  Also added daycare costs more then we would make.

We are not able to reduce our 2 car household due to the fact that we live 15 km out of town.  There is no public transport here.

We are not able to move.  We own our house which was bought before the market went crazy over 8 years ago.  There are no rentals available that are less then our mortgage or that would take our animals.  We have 2 cats and 2 dogs.

We live in a very expensive area of Canada.  In a financial bubble,  Most of the industry is tourism.  This causes low paying jobs with high living expenses.

I am going to plan our Budget Debt Plan Year One by month.  Stay tuned for next post.  I am going to pull our bank statement and analyze what we are spending our money on now and create a budget to get closer to our goal.

Step 1: Spend within our means!