Friday, December 11, 2009

Building an Emergency Fund

How to build an emergency fund while still paying down my debt? Big question. I decided to go back to my list of things to do.
1. Stop making more debt
2. Cut my expenses
3. Save up an emergency fund
4. Pay down the debt I have faster
5. Make more money
Even though stop making more debt is #1 on the list, that's going to be hard unless I do #2 and #3 first.
We have a lot of expenses, but at first glance, there seems nowhere to cut. We have pretty large utility bills. Gas, electric, water and trash collection. Our phone bill is tied in with our cable tv and internet. One big expense is the cell phone bill, over $200 a month for 2 phones. It would seem that cable tv could go, but that is pretty much our only entertainment. We really don't go out to movies, and we are getting the bundle price for all 3, and I can't give up the internet. Where to start?
During this hot summer, my son and grandson were here all day, and our electric bill topped $700 for one month because of the air conditioning. I was jumping mad. I spent $50 for a programmable thermostat, and set the temperature at 78 degrees F. May seem mean, but when it's over 100 degrees outside, it felt pretty comfortable. I also went on a kick about turning off lights, tvs and anything else that sucks electricity. The next bill went down to about $280, still a lot, but much better. We have been able to keep it at an average now of about $200 a month, which I figure is about a 10% reduction over all, so $20 for my emergency fund. (ef)
I did pretty much the same type of thing with the other utilities. We water the grass once a week, and have a rain guage on the sprinkler timer which shuts them off when it rains. We have cut our water bill by about 10%. $10 for the ef. We cut our gas bill by using the same thermostat to keep the house at about 68 degrees during the day, and turn it up to 70 degrees at night. Another $20 for the ef. Hey, these are adding up!
I called the cable company and threatened to move my service to satellite tv, their only competitor. It took some doing, but by threatening to cancel, I was directed to the "retention department". They have offers that the regular reps don't. I was able to cut the cable bill by $25 a month.
Then I went to work on the cell phone bill. I had an unlimited plan that cost $100 a month. In the past I needed it, but I don't use the phone as much anymore. Staying with this plan has really cost me, but I liked all the extras like internet, GPS and traffic information. My husband barely used his at all for calls, but he also likes the internet and traffic. There are lots of companies out there, but we are in a contract, which means early termination fee (etf) and some of the cheapest companies like Boost Mobile or Metro PCS require that you buy a new phone. Everything is relative. They are month to month and have no etf. I have called to cancel in the past and have gotten pretty good deals from the retention department, but this time I really needed to reevaluate the plans. We decided to stay with our current carrier, but change to lower minute plans with free cell to cell and free internet and GPS Navigation. We didn't have to extend the contract, so I still have the freedom to shop when the contract is up in March of next year. This saved us $75.00 a month.
So adding up the savings, let's see where I am at.
$20 off the electric bill
$10 off the water bill
$20 off the gas bill
$25 off the cable bill
$75 off the cell phone bill
The grand total is $150 a month. Better than I thought. Of course I would rather spend that money, but I am going to put it to my ef.
What do you think of my ideas? What would you do differently?

1 comment:

  1. Great post. According to me there is a great possibility of unexpected expenses for which we should keep some money as emergency fund. For more details refer building an emergency fund

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