Do You Have Financial Peace - Part 1

July 31, 2015, 12:00 am

 

How Much Money Is in Your Emergency Fund?

As we navigate our way through life, we will surely experience problems. Perhaps it will be a costly unexpected car repair.  After speaking with a woman whose husband suffered a stroke last year, she mentioned the co-pays from his hospital stay are more than they can afford.  After finishing seminary several years ago, I moved my family into a big old farmhouse in the Pennsylvania country-side in July.  Come October when we turned the furnace on, the whole house smelled like fuel oil so we called for repair.

After working on the furnace for thirty minutes, the repairman had me come downstairs only to tell me the furnace was beyond repair and placed a red sticker on it, signaling it for the landfill.  The only solution was to buy a new furnace and, not only was I faced with a ridiculously high replacement cost,  it was expensive to properly remove and dispose of the old furnace because it was so large. This was definitely an expense we were not prepared for.

How do you handle unexpected financial emergencies at your house? Do you have a fund set aside for emergencies? In the book of Proverbs, we are reminded of the ant that puts food in storage after the harvest. That way, it doesn’t run out during the difficult times. What a good lesson for us to bear in mind.  

Dave Ramsey’s Financial Peace program urges class members to establish an emergency fund. He suggests that single adults begin by putting $500 into their emergency fund. For married couples, he recommends they put $1,000  in an account for emergencies. After paying off debt, the ultimate goal is to save the equivalent of three to six months income in the emergency fund.  The main reason for establishing the emergency fund is to protect yourself and your family from being financially destroyed by an emergency.

The average American couple has less than one thousand dollars set aside in savings. What if they need a new furnace? They would have to buy it on credit. Buying on credit  means they will end up spending way more than the original price, especially if they have other credit card debt.  Using this strategy is a plan for financial ruin because pretty soon the emergencies will max them out financially.

Maybe you are feeling the stress of a financial crisis. Would having an emergency fund make it easier to cope? I want to challenge you to begin setting money aside in a fund that is just for emergencies.

It isn’t too late to attend the next Financial Peace class. If you would like to register, call me at 231-218-1042.

Talk to you next week.

Tom

Posted by The Chaplain's Corner at 12:00 am
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