Beating Broke

Personal Finance from the Broke Perspective

Do You Have a Rainy Day Cash Fund?

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Everyone should have a rainy day cash fund.  Not an emergency fund.  Although, you should have one of those as well.  No, a rainy day cash fund should be exactly that.  Cash.  Easily accessible, and easily spendable. Ahhh!  Did he just say “easily spendable”?  Yes.  I did.  Why would I say something like that?  Common advice is that you should put your money in an account where it isn’t easily spendable.  Especially your emergency fund.  You don’t want any everyday “emergency” to drain your emergency fund dry.  It’s for real emergencies.  An engine in a car that stops working and needs repairs.  Although, some would argue that’s what a car repair fund is for. Those quasi “emergencies” aren’t what a rainy day cash fund is for either.  Sorry.  I’m sure some of you wanted me to tell you that it was smart to have a little stash of cash that you could hide away for those tools you really, really, “needed”.  But, it’s not for that.

What is a Rainy Day Cash Fund for?

Rainy Day Cash FundIt’s still for real emergencies.  Just not the kind that your emergency fund is for. Consider.  A major power outage happens.  You really, really, need a tank of propane to light up to heat your house until the power comes back on.  You get to the gas station, or wherever you buy the propane from, except they don’t have any power either.  Their credit card reader isn’t going to take your debit card.  In fact, they’re writing down transactions and calculating change with a calculator.  Without power, it’s a cash only transaction.  If you don’t have any cash, you’re headed back to your cold house without any propane to heat the house with. Taken to an even farther extreme (a Prepper extreme, you might say) you could find yourself in a situation where regional or national economies fail entirely.  Of course, having cash in that regional or national currency probably isn’t going to do you much good.  That’s why you hear all the stories about preppers stockpiling gold and silver.  They believe that in a situation of economic collapse, everyone will revert back to gold and silver for bartering with each other.  In the show, Revolution, which is about the total loss of the power grid and the destabilization that follows, you’ll often see people paying each other in diamonds. I’m not saying that you’ve got to have a couple of coffee cans full of gold coins out under the tree in the backyard.  For most of the situations you’ll find yourself in, a little of ol’ greenback will do you just fine.

How Much Cash in a Rainy Day Cash Fund?

Thousands.  Then, please send me a note with your address, and the exact location where the cash is stored. I’m only kidding.  Much like anything else, your rainy day cash fund is a bit variable.  It will depend on what you can afford to just put away in cash.  Although, for most, the rainy day cash fund is well within budgetary limits.  Really, what we’re talking about is having enough cash available that you can afford a tank of gas, or a loaf of bread should you be unable to use a debit card. In almost every case, something like $100 should be plenty.

Where to Put the Rainy Day Cash Fund?

The short answer is, wherever you want.  Just make sure that it’s reasonably secure, and easily accessible.  Buried in a can in the back yard is probably not the best idea.  Your wallet isn’t a very good idea either.  If you’re creative enough, you can find plenty of places to hide that small stash in your house.  If you’re not so creative, there are plenty of pre-devised ways to stealthily hide your money.  Here’s a few easy ones:

  • Tape the bills lightly (you don’t want to rip them taking them off) to the back of a framed picture in your house.  Most people won’t look there, and you’ve only got to take the picture off the wall to reach them.  Just don’t forget they’re there if you decide you don’t want the picture anymore.
  • Under your mattress.  Yes, really.  It’s an old joke, but it’s also a convenient place that’s easily reachable and that most people aren’t going to casually look in if they’re being nosy.
  • In a book.  Pick your favorite book, and your favorite page and place the bills in the books there.  Again, easily reachable, and less likely to be found.  Just make sure that if you ever decide that you don’t need that book around, that you take the money out first.
  • In the freezer.  This is another old one.  Throw the bills into an envelope and place it at the back of the freezer.  Easy enough to get to if you really, really need it, but not so easy that guests (welcome or not) will easily find it.
  • Behind the furnace.  Put the bills in an envelope, along with a decently strong kitchen magnet.  Attach the envelope to the back of your furnace or any metal surfaced appliance so long as they won’t be exposed to flame or extreme heat.  Easily accessible, but who’s gonna go poking around your furnace (or the back of your fridge) looking for loot?

That’s just a few ideas.  What it really boils down to is putting a little cash away for a rainy day when you need it, and placing it somewhere where it won’t easily be found by prying eyes. What do you think?  Should you have a little rainy day cash fund?  How much would you put in it?  Where are some other good places to put the cash?

All Is Not Lost

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I can’t tell you the number of times that, in our seemingly never-ending struggle with debt, that I’ve seriously contemplated just giving up.  Just throwing in the towel and saying f-it.  You know it’s bad when you catch yourself fantasizing about it.  About how much easier your life would be without the struggle.  Just declaring bankruptcy, taking the hit on your credit score, and moving on with your life.

Even now, after having written about personal finance for over five years, I still find myself in that place occasionally.  We let our budgeting lapse, and inevitably our spending gets out of whack again.  Something happens, and the emergency fund just doesn’t seem to cover it all.  Or, worse, doesn’t seem to replenish itself as quickly as it should.

someecards.com - I can't believe I work this hard to be this poor.I can try and lay the blame somewhere.  That always helps, right?  If it isn’t my fault, then I can’t be blamed for it.  I can’t be the one that everyone points to as the failure.  I can deflect that attention to someone or something else.  That helps.  Until it doesn’t.

Every single time, it’s really me that deserves the blame.  It wasn’t the boss that refused to give me a raise.  It wasn’t the heater in the car that needed to be fixed.  And it certainly wasn’t the kids that needed to eat.  It was me.  Every.  Single. Time.

I failed to negotiate the raise.  I failed to have enough saved up to make that repair.  I failed to budget properly to make sure that we wouldn’t have to cut corners at the grocery store.  Me.  I did that.

I could just give up.  I could miss having to work harder to be paid appropriately.  I could miss having to pay attention to my budget to save money for car repairs, or to pay for groceries.  I could do that.  Giving up would be so easy.

Until it isn’t.

Need Money Quick? Have a Flash Savings Challenge

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The last few months have not been kind to my family.  As Dave Ramsey says, “Murphy came to visit.”  Within the last few months, I have had several medical tests run, my computer broke so I had to buy a new one, my husband’s pay was docked $750 for two months in a row because his employer didn’t take out enough taxes, and my husband had to pay $1,700 out of pocket for a conference for work and we are waiting for reimbursement.

IOU Piggy BankBecause we were trying to pay off as much as possible as quickly as possible on our debt, we had very little in emergency savings (only about $1,000).  All of our unexpected expenses cost much more than that, so we not only used most of our emergency fund, we also added to our credit card debt.

Because we had paid down our credit card debt for 10 straight months, having to add to it for the last two months was difficult.  Even though we didn’t come close to erasing all of our progress from the last year of gazelle intensity, we definitely knew we were moving in the wrong direction.

Righting Our Situation:  A Flash Savings Challenge

My natural urge, now that everything has settled down, was to once again try to throw as much on debt as possible.  While it might have made me feel better in the short term, I realize that the next time Murphy comes to visit (and I know he’ll be back some time), we would end up in the same situation.

Instead, my husband and I decided to focus on growing our emergency fund, and quickly, before hitting the debt hard again.

Paying the minimum on our debt for the next few months so we can grow our emergency fund is almost as difficult as watching our credit card balance increase the last two months, but we both know a healthy emergency fund is necessary.  Since I am self-employed and bring in 1/3 to 1/2 of our income and work can sometimes be sporadic, we decided not to follow Dave Ramsey’s advice of a $1,000 emergency fund (because clearly that was not enough last time); instead we are aiming for $5,000.

To get started, we challenged ourselves to have $3,000 in our emergency fund by December 9th.  We started with $611 in the emergency fund, so that meant we had to come up with $2,389 in 4 weeks.

How We Are Earning $2,389 Extra in 4 Weeks

We are only one week into the challenge, but here is what we have earned so far:

  • Sold my 8 year old breast pump: $60 (Yes, it has been sitting in the basement for 7 years.  Why didn’t I sell sooner?!)
  • Sold 2 window guards to protect kids from falling:  $40
  • Listed my kids outgrown clothes on eBay:  $124 so far, but the auctions won’t end for 2 more days, so I imagine it will be more
  • 3 unexpected jobs I got as a freelancer:  $64.67
  • Turned in our change in a jar:  $62.67
  • Returned unopened vitamins I didn’t need:  $32
  • Redeemed 10,000 Swagbucks for PayPal cash:  $100

Our total so far, one week in is $483.34

Over the next few weeks, we intend to do more things to raise the additional money:

  • Put my husband’s reimbursement check in savings
  • Cash out reward points from our credit card and use them as a credit card payment.  Put the same amount in our savings since we won’t have to pay that money on the credit card
  • Put more stuff on Craigslist and eBay (We have kids’ clothes, toys, and equipment to list as well as some of my husband’s tools he hasn’t used for years.)

Why  a Flash Savings Challenge Is Working for Us

I have known that I have a lot of stuff to sell around the house, but I just never got to it.  Now, because we have set a short goal of just 4 weeks and also an ambitious goal of over $2,300 to raise, I am motivated.  Yes, listing all of this stuff is time consuming, but it is nice to get some money in the emergency fund to make us feel more secure, and I also like getting rid of our “stuff”.

If you have extra stuff around the house, especially toys and holiday clothes, now is the perfect time to sell it and make some cash.

Have you had a flash savings challenge like this?  What were your results?

img credit:Images_of_Money, on Flickr