THE FINANCIAL STRESS RELIEVER

Can I be honest with you?  One thing I don’t like to have a lot of is stress especially financial stress.  Back in 2014 that is just what I and my wife were facing.  We had a credit card that was maxed out, a maxed out Home Equity Line of Credit, and a Thrift Savings Plan (TSP) Loan I was personally paying off.   What we did not have was anything saved if an emergency where to occur.  Life happens and I knew we were treading financially on thin ice.  If one “little” emergency were to occur we would go under financially.  We had to make a decision and in April of that year we decided to right our financial ship. That meant we had to live on a budget, get out of debt, and save for emergencies.

We both went through Dave Ramsey’s Financial Peace University where we learned practical ways to take control of our finances.  Dave Ramsey explains those ways in what are called The Seven Baby Steps.  They are as follows:

1. Save $1000 in a Baby Emergency Fund

2. Pay off Debt

3. Complete the Emergency Fund by saving 3-6 months of expenses

4. Invest 15% into Retirement

5. College Savings for Kids

6. Pay off Home early

7. Give

What I and my wife found peculiar was that the first step was not to pay off debt but to save up $1,000 for emergencies.  You would think paying off debt would be the number one thing instead of saving up money especially $1000.  When you look at it, if you don’t have funds saved up for an emergency what often happens is that you often go into more debt to cover that emergency!  Unfortunately that was the state I and my wife were in.  Saving up the first $1000 was a task but we did it.  Saving up $1000 meant we had to start living on a monthly written budget, do a yard sale (my very first….my wife was a vet at this), and become intentional with our money.

Immediately we began to see the benefits of having an emergency fund.  A couple of months into our journey both toilets in both bathrooms broke down on the same day!! Can you image that?  The wonderful thing was because of our emergency fund we were able to pay the plumber cash out of that fund.  That stress was relieved!!! It felt weird.  We were never able to do that before.  We experienced other life events on our journey such as the A.C. going out and we needing a new fan, having to buy four new tires on one of our cars because the old ones were dangerously old and rotting, and the big one-an emergency trip to California to see both of my parents because of health issues.  It makes me shudder to think that just three years ago we could not have managed these events. The important principle in all this is life happens.  When it does you need to be prepared.  Unfortunately many people are not.  Check out these statistics.

62% Percentage of Americans have less than $1,000 in savings

83% Percentage of Americans don't have enough to cover an emergency

26% Percentage of Americans have no savings at all.

These are very sobering and more importantly stressful statistics.  No wonder finances are among the top 10 things people stress over.  I am not saying that money alone relieves one of stress.  I am saying that financially a very practical thing to have in place to relieve the stress of a financial emergency is money saved in an emergency fund.  The Emergency Fund—The Financial Stress Reliever.