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Speaker 1: Welcome to How to Money. I'm Joel and I'm Matt,

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Speaker 1: and today we're discussing everything you need to know about

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Speaker 1: emergency funds. Oh, I'll tell you about my free water heater. No,

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Speaker 1: please tell me. Are you really interested? You don't sound

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Speaker 1: interested at all. I love free and I'm actually curious

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Speaker 1: a water heater. Is that we talked about the asking

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Speaker 1: for a discount episode, we talked about your electric water

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Speaker 1: heater a couple years ago. That's right, asking for the

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Speaker 1: discount on the instant, but so getting an actual free

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Speaker 1: water heater, yeah, man, free it's electric as well. As

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Speaker 1: soon as I said that, like damn, I know, I

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Speaker 1: knew you were gonna say that. Yeah, electric high efficiency

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Speaker 1: water heater. It's like six months old. I got that

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Speaker 1: jang for free. So a plumber I know that we've

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Speaker 1: we've used them before. Basically was ripping out redoing the

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Speaker 1: plumbing on a on a renovation nearby and they were

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Speaker 1: just told to get rid of this water heater, uh

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Speaker 1: and not you know, basically all the plumbing and they

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Speaker 1: were looking at it and they realized literally it was

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Speaker 1: only six months old, and they just felt so bad

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Speaker 1: getting rid of it. So he thought of who might

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Speaker 1: would want who likes free stuff that I know? The

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Speaker 1: host of the Cheapo podcasts. Long story short, thought of

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Speaker 1: me came by dropped it off in my driveway for me,

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Speaker 1: and yeah, literally, yes, I know. He's literally. I wasn't

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Speaker 1: even home and I got I came home and there's

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Speaker 1: like basically a bran new water heater sitting there waiting

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Speaker 1: on me for me to use, and one of our

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Speaker 1: properties coming up here pretty soon. Dude, I love it.

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Speaker 1: That's awesome. And guess what I'm gonna call when it

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Speaker 1: comes time to hook up all the hook up all

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Speaker 1: the pipes that guy. Yeah, exactly, So dude, when when

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Speaker 1: he's he's happy. Plus they do awesome work. So yeah, man,

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Speaker 1: pretty sweet deal. Huh you're jealous? Uh? Yeah, so just

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Speaker 1: putting this up to leave me? I know, you get

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Speaker 1: plenty of deals that I don't get to partake in.

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Speaker 1: So well, there any plumbers out there that want to

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Speaker 1: give me any water heaters, I'm certainly open to it.

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Speaker 1: I welcome free stuff on my on my doorstep. Yeah.

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Speaker 1: Speaking of free stuff, we're going to our neighborhood beer fests. Yeah,

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Speaker 1: I'm so stoked, dude. It's pretty much the best weekend,

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Speaker 1: one of the best weekends of the year. I'm so

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Speaker 1: excited about it, and I think this is my seventh

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Speaker 1: year doing it. Really Yeah, and you're an old man,

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Speaker 1: I know. The great thing about our neighborhood beer fest

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Speaker 1: is that we volunteer, right, and so every year you

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Speaker 1: and I we pour beer for the patrons, the people

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Speaker 1: that actually pay money to go to our neighborhood beer festival.

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Speaker 1: The best things are that we raise a ton of

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Speaker 1: money for our neighborhood, right, for a neighborhood organization, which

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Speaker 1: is then able to deploy it in ways to beautify

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Speaker 1: the neighborhood. And exactly the beer fest falls under the nonprofit,

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Speaker 1: and so the nonprofit supports local neighborhood organizations. And I'm

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Speaker 1: pretty sure one of the recent emails they sent out

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Speaker 1: said they've raised over a million dollars in the past

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Speaker 1: ten years. That's incredible, Yeah, which is huge for nonprofit,

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Speaker 1: especially a nonprofit where the majority where the majority of

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Speaker 1: their funds are coming from people drinking beer making the

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Speaker 1: world a better place. Man. Yeah, and so, and the

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Speaker 1: other beautiful thing is you and I get to drink

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Speaker 1: beer for free all day, which is awesome because if

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Speaker 1: you're pouring beer, you you still get to take a

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Speaker 1: little on the side, take some take some SIPs. And

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Speaker 1: so that's really fun to get to take some beers,

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Speaker 1: a good way to try a lot of new beers. Yeah,

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Speaker 1: some someones that we've had before too. Yeah. So uh,

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Speaker 1: if you guys follow us on tap, you might see

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Speaker 1: that we blow it up at the beer fest uh

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Speaker 1: this weekend. Oh and so Matt, I'm also really pumped

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Speaker 1: because we ordered some coozies to distribute there. Oh yeah,

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Speaker 1: with our logo on it. I'm really pumped to handles

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Speaker 1: out and kind of let people know what we're what

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Speaker 1: we're doing here over poor not poor. You know, a

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Speaker 1: lot of different neighborhoods have beer fest now as well.

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Speaker 1: And so that's the other thing to consider volunteering your

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Speaker 1: own local beer fest. Instead of forking out the money

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Speaker 1: and coming over and seeing us, which would you know,

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Speaker 1: that would be awesome, consider pouring and volunteering with your

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Speaker 1: own local beer fest. Yeah. And the great thing is

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Speaker 1: it's a blast, it's a fun day, it supports neighborhood

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Speaker 1: and on top of that, you save some money to

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Speaker 1: drink beer. Speaking of drinking beer today on the show,

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Speaker 1: we're drinking a beer by Avery Brewing Company out of Boulder, Colorado,

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Speaker 1: a really, really, really good brewery. You already know Colorado

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Speaker 1: makes awesome beers and Avery is one of the best

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Speaker 1: producers even in the state. And today we're drinking a

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Speaker 1: beer called Lily Koi Cupolo, and it's a Belgian style

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Speaker 1: white ale brewed with spices and passion fruit. Man, that's

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Speaker 1: pouring that nice kind of cloudy golden almost like a

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Speaker 1: little bit of ruby kind of color there to it. Yeah,

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Speaker 1: and a nice nice ruby and orange. It's got kind

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Speaker 1: of kind of a grapefruit look to it. Yeah. Yeah,

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Speaker 1: it's got that fade. So I've had this before, like

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Speaker 1: once or twice before. You love this beer. I love

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Speaker 1: this beer. I am curious to taste it again because

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Speaker 1: the last time I had it, I was like, I

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Speaker 1: don't know about this. Guy comes in six packs and

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Speaker 1: you can get this because Avery is distributed in most

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Speaker 1: states now, I think, so you can probably find this

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Speaker 1: in your local package store. I love the passion fruit.

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Speaker 1: It almost has kind of a smoothie issue kind of

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Speaker 1: vibe to it with the with the passion fruit kind

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Speaker 1: of blended up in there. It's tropical tart a juicy

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Speaker 1: and delicious. You know, it does taste a little better

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Speaker 1: than I remember it. It does have those tropical fruits.

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Speaker 1: It kind of remind makes me think of like a

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Speaker 1: little tropical fruit cup, you know, like, oh yeah as

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Speaker 1: a kid, you don't you're not talking about most totally. Yeah,

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Speaker 1: you feel that, Yeah, like one of the like the

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Speaker 1: dull pineapples cup things. Yeah, a little sugar. I mean

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Speaker 1: certainly this isn't crazy sweet like that, but it's got

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Speaker 1: like the token cherry, like just like that one cherry

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Speaker 1: that you're allowed to have in it. Yeah, it kind

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Speaker 1: of tastes like sliced pineapples that you kind of get

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Speaker 1: as well. Yeah, it's totally get The pineapple got a

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Speaker 1: lot of throwback flavors from my childhood. I love the

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Speaker 1: can too. It's a cool color blue with a ticky

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Speaker 1: man on the front. This is a great summer beer because, yeah,

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Speaker 1: it's light, it's refreshing, it's easy to find. What's the

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Speaker 1: add on this? Five point four easy? Yeah, you can

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Speaker 1: drink a couple. I totally recommend the Avery Brewing Company.

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Speaker 1: Little Quoi Cupolo dang tasty. What's up with the tiki man?

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Speaker 1: I feel like tiky bars and sort of tiki theme

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Speaker 1: is making a comeback. Heck, yeah, you think you've noticed

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Speaker 1: that loved me a good tiki bar man. I think

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Speaker 1: in general, themed restaurants might kind of make a comeback

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Speaker 1: from Is that like the seventies or the eighties where

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Speaker 1: there's like the themed restaurants. Yes, and I hope they

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Speaker 1: do Beame restaurants are so fun. I was like right

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Speaker 1: after Alley, Yeah, did you go to Medieval Times as

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Speaker 1: a kid or like in middle school? My parents totally

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Speaker 1: took me in the Medieval Times and oh, in the

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Speaker 1: Dixie stamp Dixie and like near Dollywood in Tennessee, the

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Speaker 1: Ryanstone cowboy jumpsuits, riding around on the horses. I distinctly

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Speaker 1: remember chasing chickens on on the dirt floor in front

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Speaker 1: of a giant crowd with my sisters. Yeah, when we

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Speaker 1: were young at the Dixie Stampede. So what you're saying,

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Speaker 1: that makes me picture your children chasing out And like

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Speaker 1: when you said that, immediately pictured your girls, not you

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Speaker 1: as a child, and we're so awkward, and my girls

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Speaker 1: included and and so I would imagine they would fall

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Speaker 1: faced ch almost immediately. So yeah, it was fun. All right,

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Speaker 1: Matt topic, we're tackling today everything you need to know

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Speaker 1: about emergency funds. Yes, emergency funds. This is something we

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Speaker 1: talked about briefly when we did the Budgets episode forever

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Speaker 1: ago now, um, but we decided it's time to do

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Speaker 1: an entire episode on emergency funds because they're just so clutch.

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Speaker 1: They don't get nearly the the attention I think that

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Speaker 1: they need and that they deserve. And so that's why

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Speaker 1: we're gonna spend an entire episode. We're gonna talk about

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Speaker 1: how to get started on your own if you don't

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Speaker 1: currently have one, and uh yeah, hopefully by the end

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Speaker 1: of this, if you don't already have an emergency fund,

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Speaker 1: you you'll be well on your way to getting yours

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Speaker 1: set up and running. Yeah. And first, really, there's a

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Speaker 1: huge problem in the United States. Stats bear out that

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Speaker 1: the majority of Americans couldn't get their hands on three

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Speaker 1: thousand dollars cash if they had a big car repair

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Speaker 1: that they need to put money towards. And a lot

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Speaker 1: of Americans also couldn't even come up with five dollars

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Speaker 1: cash in the case of a minor emergency. And we

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Speaker 1: live in the one of the richest countries in the world,

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Speaker 1: and those facts are kind of startling when it comes

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Speaker 1: down to it that most people are completely unprepared for

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Speaker 1: an emergency. And that's a huge part of the reason

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Speaker 1: that that this episode and what we're gonna talk about

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Speaker 1: here with emergency funds is crucial, yeah, man, And I

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Speaker 1: mean the problem is then, is if you don't have

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Speaker 1: an emergency fund set up and you you face an emergency,

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Speaker 1: well you're probably gonna have to put that expense on

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Speaker 1: a credit card, and that obviously leads to a downward

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Speaker 1: cycle because then you're making payments on that and then

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Speaker 1: all of a sudden, something that may have only cost

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Speaker 1: seven fifty bucks and like car repair costs, is now

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Speaker 1: costing you, you know, a thousand bucks twelve hundred bucks

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Speaker 1: over over time. Yeah, And in large swass of America,

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Speaker 1: that's what tidle loan places do and payday lenders. They

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Speaker 1: take advantage of people that are in emergency situations and

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Speaker 1: don't have access to any amount of cash really to

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Speaker 1: get out of it and can't wait till pay day.

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Speaker 1: And so there are a lot of people living their

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Speaker 1: lives on the margins. And it's not just people living

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Speaker 1: in poverty. But there are a huge portion of Americans

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Speaker 1: making good money, right. And there was a New York

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Speaker 1: Times article that you and I both read, oh yeah,

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Speaker 1: about a successful dude who had published books and was

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Speaker 1: still author living paycheck to paycheck and could not seem

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Speaker 1: to get ahead financially. And just because you have a

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Speaker 1: big income, if you're spending just as much or more

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Speaker 1: than you make, you're still living paycheck to paycheck. Yeah,

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Speaker 1: you just live from bigger paycheck to bigger paycheck. So

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Speaker 1: this is a problem across all income levels in America.

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Speaker 1: We spend more than we make, and our emergency funds

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Speaker 1: are nil, and it leads not only to financial hardship,

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Speaker 1: but then emotional and marital and relational stress in our lives.

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Speaker 1: Stresses you out, man. Obviously we're talking about this from

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Speaker 1: a financial angle, right. We don't have enough margin. We

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Speaker 1: don't have enough cushion in our life. Not only that, though,

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Speaker 1: I feel like we just don't have enough margin in

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Speaker 1: our lives when it comes to time, and like the

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Speaker 1: amount of time that we have for other people and

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Speaker 1: those around us in need, just situations where it might

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Speaker 1: take us out of our usual you know, get up,

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Speaker 1: go to work, make money, come home or spend money

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Speaker 1: on the way home, and then go to sleep and

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Speaker 1: you know, nse and repeat. That might be a topic

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Speaker 1: for another episode, but yeah, I don't know. That's just

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Speaker 1: something I wanted to mention. But hopefully while we're discussing

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Speaker 1: the financial aspects of having an emergency fund and what

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Speaker 1: that does to your life, think about two where your

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Speaker 1: time goes? And oh yeah, can you build essentially reservoirs

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Speaker 1: of time that as opposed to go go go busy,

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Speaker 1: busy busy. Uh? Creating those reservoirs of time is crucial

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Speaker 1: And yeah, this podcast, right, we're all about saving money,

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Speaker 1: but we're also about living mindfully and I think it's

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Speaker 1: just a really important thing to discuss, and not many

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Speaker 1: people are discussing that, Like, yeah, it goes hand in hand, right, Yeah,

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Speaker 1: we prop up business and uh and getting stuff done

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Speaker 1: and you know, I'm all about working hard, but there's

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Speaker 1: a downside too, the way our culture treats work and

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Speaker 1: the idea of business in general. Yeah, so obviously that

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Speaker 1: mean what we're gonna talk about is the emergency fund.

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Speaker 1: So Joel, do you have an emergency fund? I sure do. Man.

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Speaker 1: Do you remember always having an emergency fund. I remember

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Speaker 1: always prioritizing savings, right, so always building the savings up,

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Speaker 1: and I didn't always call it an emergency fund, you know,

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Speaker 1: when I was in my early twenties, but I was

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Speaker 1: always building my savings level. So I was always prioritizing

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Speaker 1: putting money in my savings account every month and watching

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Speaker 1: it grow. I just wasn't calling it an emergency fund

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Speaker 1: at that point in time. Yeah, that was kind of

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Speaker 1: my approach. Honestly. That's basically what I did up until

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Speaker 1: I became like a Dave Ramsey junkie. When I was

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Speaker 1: like in my early in my early years, like shooting

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Speaker 1: them into your veins, what are you doing? Basically, that's

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Speaker 1: weird man. Early on, you know I was, I was

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Speaker 1: pretty hardcore, and that's when I was like, no, it's

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Speaker 1: called an emergency fund. This is what we're calling it,

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Speaker 1: and it's got to be you know, this exact length,

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Speaker 1: it must be this exact dollar amounts, and you know

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Speaker 1: other rules associated with sort of his approach to things.

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Speaker 1: And you've kind of calmed down on that a little

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Speaker 1: bit now. And and I think that's why this is

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Speaker 1: interesting too, because I think there are some hardcore personal

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Speaker 1: finance people that would be like, this is what you

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Speaker 1: need to have and and I think there's some good

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Speaker 1: rules of thumb in what they're saying, but I think

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Speaker 1: there's also a lot of caveats that will that will

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Speaker 1: hitting this episode as well. Yeah, there's a lot of

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Speaker 1: room for flexibility, and a lot of it depends on

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Speaker 1: the individual. It depends on sort of their life stage,

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Speaker 1: where they are in life, and overall how sort of

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Speaker 1: financially prepared they are for financial events in their life.

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Speaker 1: So quick tip to people that don't have one at

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Speaker 1: all right now, and they do find themselves in that

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Speaker 1: boat that man, if my transmission went out tomorrow or

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Speaker 1: if I lost my job next week, I have no

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Speaker 1: idea where I'm gonna get money. I'm gonna be using

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Speaker 1: high interest rate debt right I'm gonna be going to

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Speaker 1: the payday lender or using my credit card, tapping my

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Speaker 1: credit card right. Really, for people like that, their first goal,

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Speaker 1: the necessity right now is to start saving little by

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Speaker 1: little and accruing an emergency fund of five two thousand dollars.

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Speaker 1: That's a goal that's that's feasible, that's reachable if you

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Speaker 1: have income, and and that's Ultimately, the first goal that

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Speaker 1: needs to be set reaching a level like that where

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Speaker 1: at least you could meet some sort of financial distress

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Speaker 1: without having to tap into some sort of high interest

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Speaker 1: rate revolving debt. That's a really good first goal to

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Speaker 1: have in mind. Yeah, if you don't hear anything else,

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Speaker 1: just go do that. Like if you gotta cut the

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Speaker 1: episode off, now, go ahead and just make sure you

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Speaker 1: write that down and yeah, wait, I have lots more

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Speaker 1: to say, and well, yeah, we'll say there's a lot

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Speaker 1: more to cover because it varies, but but yeah, that's

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Speaker 1: that's the first thing. So most definitely, so juel first off,

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Speaker 1: So essentially what is an emergency fund? So an emergency

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Speaker 1: fund is essentially the savings account that's separate money only

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Speaker 1: used for major financial emergencies. And typically the amount that

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Speaker 1: you would want stored in an emergency fund would be

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Speaker 1: three to six months of your core expenses. And ultimately

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Speaker 1: what that means is, let's say you did lose your job.

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Speaker 1: You could pay the mortgage, you can put food on

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Speaker 1: the table, you could keep the lights on four three

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Speaker 1: to six months while you're looking for work. Yeah, so

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Speaker 1: it's important to point out there though, is that that's

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Speaker 1: like the emergency, right. So what the emergency was in

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Speaker 1: that situation wasn't paying for groceries. It was the job

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Speaker 1: loss right to cover the regular expenses. And some other

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Speaker 1: situations where it might call for the emergency fund, right,

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Speaker 1: say you've got to hide it higher deductible on your

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Speaker 1: car insurance, which we would recommend to keep your monthly

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Speaker 1: expenses down because it's not likely that you're going to

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Speaker 1: get in an accident. But if you do and you

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Speaker 1: have a higher deductible, say a thousand bucks is totally

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Speaker 1: reasonable to have, you're gonna need to find a thousand

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Speaker 1: bucks to put towards your vehicle if you you know,

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Speaker 1: if it's totaled. Yeah, and you'll save big money every

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Speaker 1: year by having a higher deductible in your homeowners insurance

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Speaker 1: and hopefully you know, the goal is never to have

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Speaker 1: to use it. But if a tree falls on the

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Speaker 1: corner of your house, causes major damage and you know,

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Speaker 1: goes through the bathroom and you gotta have you gotta

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Speaker 1: have a new roof put on in a whole new bathroom,

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Speaker 1: uh installed, then five thousand dollar deductible is that's a

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Speaker 1: lot of money, man, That's an emergency right there, right,

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Speaker 1: And so an emergency fund is great for something like that,

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Speaker 1: whether it's a small fix that you that you can

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Speaker 1: do yourself without insurance, or whether it's just a high

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Speaker 1: deductible that you have to meet. Having that emergency fund

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Speaker 1: for situations like that, of these extenuating circumstances that you

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Speaker 1: know can happen but are unlikely and you're hoping and

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Speaker 1: praying don't happen. I mean, that's exactly what emergency fund

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Speaker 1: is for the things that you want to stay away from.

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Speaker 1: The what an emergency fund is not for. It's not

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Speaker 1: for putting new tires on your car, it's not for

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Speaker 1: routine bills, it's it's not for paying for groceries when

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Speaker 1: you currently are employed. Right, So the emergency fund, you

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Speaker 1: want to kind of keep that separate and you don't

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Speaker 1: want to use it for some of these things that

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Speaker 1: you really should be budgeting for. It's for that unexpected really, yeah,

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Speaker 1: all those things you should be budgeting for. There's things

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Speaker 1: even if it happens not even just once a year,

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Speaker 1: but say once every few years, there are certain expenses

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Speaker 1: that you just need to be looking ahead to and

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Speaker 1: planning not only every year, how much to set aside

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Speaker 1: for but literally every month to break that down and

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Speaker 1: to know how much you need to set aside. I mean,

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Speaker 1: that's that's what it takes. That's what it takes planning

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Speaker 1: that way. When the bill comes due, you're prepared and

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Speaker 1: it's not an emergency at that point because it's something

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Speaker 1: that you can plan on, all right, And so by

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Speaker 1: the very definition of emergency, it's an urgent need, right,

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Speaker 1: And so emergency funds do need to be accessible and

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Speaker 1: fairly liquid. So if that's the case, Matt, that means

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Speaker 1: that your emergency fund and we'll get into some caveats later,

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Speaker 1: but then it should probably be in a savings account

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Speaker 1: earning a decent rate of interest, and preferably even a

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Speaker 1: savings account that is separate from the one that you

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Speaker 1: normally use. Yeah, Man, So for us, we actually have

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Speaker 1: our emergency funds set aside in our savings account. So

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Speaker 1: currently we have most of our money in ally bank,

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Speaker 1: where we have our sort of day to day expenses.

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Speaker 1: Monthly expenses come out of our checking account, but then

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Speaker 1: our actual emergency fund chunk is sitting there and the

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Speaker 1: savings account because that's where we're earning the high interest

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Speaker 1: rate and hopefully your emergency fund is going to be

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Speaker 1: a decent chunk, and so you do want to find

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Speaker 1: a high interest rate of savings, that's the best place

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Speaker 1: to store it. Uh. You definitely don't want to put

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Speaker 1: an emergency fund in a four oh one k, right,

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Speaker 1: because then you're you're subject to the womens of the

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Speaker 1: stock market, and it's not liquid cash you want to

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Speaker 1: have in a bank account. And by the way, I

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Speaker 1: recently opened a new account with a bank called c

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Speaker 1: I T and they pay a lot more than what

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Speaker 1: my bank Capital one was paying, and so I went

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Speaker 1: from one percent to one point seven. Uh. And so yeah,

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Speaker 1: for a large chunk of change, right, earning a little

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Speaker 1: bit more every month is where it's at. And there's

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Speaker 1: an article on on the website just kind of comparing

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Speaker 1: and talking about my experience switching, if you want to

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Speaker 1: check that out. So that being said too, if you're

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Speaker 1: just more of a nerd, it's not necessary that you

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Speaker 1: have your emergency fund in a completely separate account. If

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Speaker 1: you're able to create a floor, you know, or like

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Speaker 1: a blind that you never kind of dip down into.

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Speaker 1: I mean, that's your emergency fund. It doesn't necessarily have

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Speaker 1: to be a completely separate thing, because a lot of

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Speaker 1: times it just gets complicated. And so and that's the

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Speaker 1: last thing we want is for your listeners to not

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Speaker 1: do this because you're like, I don't want to have

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Speaker 1: to open up another account. I'm just happy with whoever

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Speaker 1: I have. Yeah, and I completely you know what I'm saying. Yeah,

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Speaker 1: that's kind of how I approach it. I can keep

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Speaker 1: everything in the same fund. I think it's important probably

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Speaker 1: for a lot of people to have a second fund

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Speaker 1: just it helps mentally, but more barriers and sort of walls. Yeah, yeah,

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Speaker 1: and then you know, it's like kind of untouchable or whatever.

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Speaker 1: But for people that you know, do have like their

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Speaker 1: financial act together, uh, creating a separate account certainly isn't necessary.

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Speaker 1: And just knowing that there's a floor that you don't

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Speaker 1: go beneath is like a really helpful way of doing it. Cool,

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Speaker 1: So that's the first thing. Consider opening a separate account,

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Speaker 1: or if you know that you're an ultra nerd, create

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Speaker 1: that blind start sacking that money away that you know

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Speaker 1: you're not going to touch. Yeah. The next thing to

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Speaker 1: do is, let's say you don't have one or you're

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Speaker 1: kind of a nube, right, at at starting this emergency fund. Well, first,

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Speaker 1: know that anybody can do it, and then we'll kind

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Speaker 1: of give you a couple of tips to get started.

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Speaker 1: My favorite way to actually big time jump start electrify

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Speaker 1: your emergency fund is to use a tax refund to

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Speaker 1: do that. And so a lot of people probably just

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Speaker 1: recently got their tax refunds. We talked about in an

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Speaker 1: earlier episode what to do with a tax refund, and

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Speaker 1: that was one of the things we mentioned. Using that

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Speaker 1: refund to jump start your emergency savings is an awesome

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Speaker 1: way to handle that money. So if you have your

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Speaker 1: still lingering around, you haven't blown it all on you know,

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Speaker 1: fancy craft beer or a trip to Fiji, consider putting

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Speaker 1: some of that money aside into an emergency fund, save

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Speaker 1: for the future, safe for a rainy day, create some

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Speaker 1: of that margin in your life and reduce some of

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Speaker 1: that stress that comes along with the stress and headaches

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Speaker 1: that come along with not having an emergency fund set up. Yeah,

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Speaker 1: I see no better way to spend that tax refund

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Speaker 1: than to relieve stress. You know, what better way than

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Speaker 1: just to simplify things and to just take stuff off

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Speaker 1: of your mind that you don't have to worry about

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Speaker 1: nearly as much. Yeah, I mean, if you've got your

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Speaker 1: financial act together, an infusion of cash like a tax

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Speaker 1: refund can be used for a lot of great things.

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Speaker 1: But if you don't, in your emergency funds starved right now,

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Speaker 1: that's the perfect place to put that chunk of money.

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Speaker 1: And another thing to consider, consider selling some things, maybe

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Speaker 1: have in the eBay a night at your house and

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Speaker 1: list a bunch of stuff that you don't need anymore

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Speaker 1: and that you think is valuable to others. Maybe a

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Speaker 1: yard sale on a Saturday in your neighborhood, or a

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Speaker 1: side gig for just a few months. Whatever it takes

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Speaker 1: really to kind of bolster that and give you a

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Speaker 1: little bit of a financial cushion. It's worth it to

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Speaker 1: do a little bit of extra work in order to

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Speaker 1: kind of create that margin in your life. You know,

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Speaker 1: living life where you have no idea what you would

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Speaker 1: do if an emergency popped up tomorrow. That's just a

428
00:20:02,080 --> 00:20:04,000
Speaker 1: hard way to live. And so those are just a

429
00:20:04,040 --> 00:20:06,600
Speaker 1: few ideas to kind of help you maybe get started

430
00:20:07,040 --> 00:20:10,000
Speaker 1: and prepare yourself for that potential emergency. Yeah. So the

431
00:20:10,040 --> 00:20:11,880
Speaker 1: reason is good to sort of jump start it, right,

432
00:20:12,119 --> 00:20:14,240
Speaker 1: is that it's just hard work. You can take a

433
00:20:14,240 --> 00:20:17,520
Speaker 1: long time to get even that five thousand dollars set

434
00:20:17,560 --> 00:20:20,560
Speaker 1: up set aside, but even longer, Man, if you're looking

435
00:20:20,560 --> 00:20:23,640
Speaker 1: at three to six months worth of living expenses, that

436
00:20:23,840 --> 00:20:26,119
Speaker 1: really can take a long time. So it's especially helpful

437
00:20:26,160 --> 00:20:29,160
Speaker 1: if you can, like you said, get that sort of infusion. Uh,

438
00:20:29,200 --> 00:20:31,320
Speaker 1: tax refunds great for that. It's not free money, but

439
00:20:31,320 --> 00:20:32,600
Speaker 1: it kind of feels like free money. And if you

440
00:20:32,600 --> 00:20:34,639
Speaker 1: can just take that and apply apply that towards your

441
00:20:34,680 --> 00:20:37,679
Speaker 1: emergency fund anyway to sort of jump start that and

442
00:20:37,720 --> 00:20:40,040
Speaker 1: get the ball rolling to where you can kind of

443
00:20:40,040 --> 00:20:41,879
Speaker 1: pile on top of that. Because even if you're setting

444
00:20:41,920 --> 00:20:44,320
Speaker 1: aside a hundred dollars a week, I mean you're looking

445
00:20:44,359 --> 00:20:47,840
Speaker 1: at a little over bucks for the year. For some folks,

446
00:20:47,840 --> 00:20:50,000
Speaker 1: that's only a month or two worth of living expenses.

447
00:20:50,040 --> 00:20:53,000
Speaker 1: You know, like that's doesn't get you very far, and

448
00:20:53,040 --> 00:20:55,840
Speaker 1: a hundred dollars a week is really tough. So yeah,

449
00:20:55,840 --> 00:20:57,320
Speaker 1: I been able to kind of jump started like that,

450
00:20:57,440 --> 00:21:00,000
Speaker 1: it's gonna be huge. Yeah, I mean I think sometimes

451
00:21:00,160 --> 00:21:03,879
Speaker 1: hearing the financial experts say you need six months of

452
00:21:03,920 --> 00:21:07,760
Speaker 1: an emergency fund, for most folks, they they hear that.

453
00:21:08,040 --> 00:21:10,840
Speaker 1: I think they tune out just because that's that seems

454
00:21:10,880 --> 00:21:13,240
Speaker 1: like an insurmountable goal. It's a huge amount of money

455
00:21:13,240 --> 00:21:14,679
Speaker 1: for a lot of it, it's a tough thing. Like

456
00:21:14,760 --> 00:21:16,840
Speaker 1: for dudes like us that have our financial act together,

457
00:21:17,119 --> 00:21:19,560
Speaker 1: six months just feels like, right, this big daunting thing,

458
00:21:19,600 --> 00:21:21,239
Speaker 1: like how long would it take us, you know, from

459
00:21:21,280 --> 00:21:24,080
Speaker 1: scratch right now to save up six months of our income?

460
00:21:24,400 --> 00:21:26,880
Speaker 1: And and I think a lot of people tune that out.

461
00:21:26,920 --> 00:21:29,800
Speaker 1: And so that's why I want to encourage people just

462
00:21:29,840 --> 00:21:32,040
Speaker 1: to start small, you know, take a step in the

463
00:21:32,119 --> 00:21:36,080
Speaker 1: right direction, start saving five dollars a week, whatever it takes,

464
00:21:36,080 --> 00:21:37,879
Speaker 1: Like figure out how you can do that, what you

465
00:21:37,920 --> 00:21:40,280
Speaker 1: can cut out of your life, make sure that if

466
00:21:40,280 --> 00:21:42,600
Speaker 1: you've spent the one for this year, that you save

467
00:21:42,760 --> 00:21:45,879
Speaker 1: next year's tax refund. Whatever it takes. You want to

468
00:21:45,880 --> 00:21:48,560
Speaker 1: start somewhere, because if you just here that six month

469
00:21:48,600 --> 00:21:51,479
Speaker 1: mark and you say screw that, that's not possible for me,

470
00:21:52,200 --> 00:21:55,000
Speaker 1: and you decide to scrap the emergency fund altogether, well,

471
00:21:55,080 --> 00:21:57,160
Speaker 1: ultimately in the end, that's just gonna cause you more

472
00:21:57,160 --> 00:22:00,880
Speaker 1: stress every month. And when the emergency does come along, dude,

473
00:22:00,880 --> 00:22:02,880
Speaker 1: that's gonna be really hard to stomach. And it's gonna

474
00:22:02,960 --> 00:22:05,000
Speaker 1: hurt you even more in the long run. Yeah, man,

475
00:22:05,000 --> 00:22:06,960
Speaker 1: So let's talk about then, how much to set aside?

476
00:22:06,960 --> 00:22:08,800
Speaker 1: All right, we talked about the three to six months.

477
00:22:09,160 --> 00:22:11,120
Speaker 1: That's sort of a general guideline that we hear a lot.

478
00:22:11,720 --> 00:22:13,320
Speaker 1: I think the biggest thing that people need to do

479
00:22:13,359 --> 00:22:16,840
Speaker 1: is consider their life stage. Somebody that's straight out of college,

480
00:22:16,920 --> 00:22:19,000
Speaker 1: that doesn't have a lot of responsibilities, that doesn't have

481
00:22:19,200 --> 00:22:21,119
Speaker 1: a lot of say assets or things that they need

482
00:22:21,160 --> 00:22:23,800
Speaker 1: to keep up with, chances are they don't need quite

483
00:22:23,800 --> 00:22:26,040
Speaker 1: as much money set aside. Yeah, and let's say they

484
00:22:26,080 --> 00:22:28,080
Speaker 1: can move home with mom and dad at a moment's

485
00:22:28,119 --> 00:22:30,480
Speaker 1: notice if something happens, right, they kind of have a

486
00:22:30,480 --> 00:22:33,479
Speaker 1: fallback plane. Yeah exactly. Something like that means, you know what,

487
00:22:33,560 --> 00:22:36,040
Speaker 1: you can point your money a little more towards your

488
00:22:36,040 --> 00:22:39,959
Speaker 1: fur owing k or investing than straight up just saving

489
00:22:40,000 --> 00:22:43,040
Speaker 1: for a rainy day. And while that's still important to do,

490
00:22:43,400 --> 00:22:46,679
Speaker 1: just because of that specific life stage, you can afford

491
00:22:46,680 --> 00:22:49,080
Speaker 1: for that to be less of a priority. Yeah, there's

492
00:22:49,080 --> 00:22:50,600
Speaker 1: just less pressure on you. Right, Like, you don't and

493
00:22:50,600 --> 00:22:52,879
Speaker 1: if you don't have kids, you don't have a spouse,

494
00:22:52,960 --> 00:22:54,680
Speaker 1: if you don't have a home where where there's things

495
00:22:54,720 --> 00:22:57,399
Speaker 1: that you need to fix or a place. There's just

496
00:22:57,440 --> 00:22:59,840
Speaker 1: less pressure on you financially. And you look at that

497
00:23:00,000 --> 00:23:02,360
Speaker 1: on the other side of the coin, say you're like us.

498
00:23:02,560 --> 00:23:05,480
Speaker 1: You know, we've we've got houses, we've got a family,

499
00:23:05,480 --> 00:23:08,080
Speaker 1: we've got kids, we've got vehicles. There's a lot that

500
00:23:08,080 --> 00:23:10,919
Speaker 1: can break. There's a lot that can you know, go wrong,

501
00:23:10,960 --> 00:23:12,880
Speaker 1: and things that might need to be repaired, like your

502
00:23:12,880 --> 00:23:16,840
Speaker 1: car or a kid's arm exactly, both can break. Both

503
00:23:16,840 --> 00:23:20,159
Speaker 1: of those things will cost money. Uh, when you're spread

504
00:23:20,160 --> 00:23:22,680
Speaker 1: out like that, it's helpful to have I think maybe

505
00:23:22,720 --> 00:23:26,159
Speaker 1: more set aside. Essentially, the more responsibility you have, I

506
00:23:26,200 --> 00:23:28,400
Speaker 1: think you might need to look at maybe considering being

507
00:23:28,440 --> 00:23:31,359
Speaker 1: closer to that six month worth of expenses set aside.

508
00:23:31,920 --> 00:23:33,840
Speaker 1: That's still a lot of money. And you also want

509
00:23:33,840 --> 00:23:35,960
Speaker 1: to consider how much of us like safety net you

510
00:23:35,960 --> 00:23:38,440
Speaker 1: want to sort of create for yourself, because essentially that's

511
00:23:38,440 --> 00:23:40,480
Speaker 1: what this is. You're you're sort of setting this thing

512
00:23:40,560 --> 00:23:43,280
Speaker 1: up in case something were to happen. Ye. I think

513
00:23:43,280 --> 00:23:46,960
Speaker 1: another important consideration is are you a dual income household

514
00:23:47,000 --> 00:23:49,199
Speaker 1: or a single income household? So if you are the

515
00:23:49,240 --> 00:23:53,879
Speaker 1: only worker in your home, there is definitely a higher

516
00:23:53,880 --> 00:23:56,760
Speaker 1: necessity for having an emergency fund. If you're a two

517
00:23:56,840 --> 00:23:59,679
Speaker 1: income household and one of you loses your job and

518
00:23:59,760 --> 00:24:02,760
Speaker 1: you and still pay the basic necessities on that one income,

519
00:24:03,080 --> 00:24:05,679
Speaker 1: curting an emergency fund is still a really good idea,

520
00:24:05,960 --> 00:24:09,439
Speaker 1: but not nearly as as much of a necessity. And

521
00:24:09,440 --> 00:24:12,080
Speaker 1: so another option to consider too is once you essentially

522
00:24:12,119 --> 00:24:14,919
Speaker 1: have like a portfolio built up, and specifically you've been

523
00:24:14,920 --> 00:24:17,520
Speaker 1: contributing to a roth ira, a that's something you can

524
00:24:17,600 --> 00:24:20,200
Speaker 1: draw on. You can withdraw contributions to your roth ira

525
00:24:20,520 --> 00:24:23,679
Speaker 1: without penalty, without paying tax, and that's something that you

526
00:24:23,720 --> 00:24:25,840
Speaker 1: can sort of draw on, like you can of tap

527
00:24:25,920 --> 00:24:29,800
Speaker 1: that in case there's emergencies. So I wouldn't use that

528
00:24:29,840 --> 00:24:33,119
Speaker 1: completely and solely as like your emergency fund, but to

529
00:24:33,160 --> 00:24:35,120
Speaker 1: be able to know that that's sort of there as

530
00:24:35,200 --> 00:24:38,040
Speaker 1: a backup provide some peace of mind as well. I agree,

531
00:24:38,040 --> 00:24:40,840
Speaker 1: if you've been investing in a roth ira up to

532
00:24:40,880 --> 00:24:43,600
Speaker 1: the limit for the last eight, ten, twelve years, and

533
00:24:43,600 --> 00:24:45,920
Speaker 1: you've built up a sizeable amountain there, I think it's

534
00:24:45,960 --> 00:24:49,640
Speaker 1: okay to carry a much smaller emergency fund of let's

535
00:24:49,680 --> 00:24:53,280
Speaker 1: say one month's expenses, because let's say the one month's

536
00:24:53,320 --> 00:24:55,760
Speaker 1: gonna lean. It is lean, but but let's say you

537
00:24:55,800 --> 00:24:58,199
Speaker 1: know something does happen at job loss or you know

538
00:24:58,440 --> 00:25:00,479
Speaker 1: which is probably you know one of them as difficult

539
00:25:00,480 --> 00:25:02,560
Speaker 1: things that can happen or are a huge medical issue.

540
00:25:02,840 --> 00:25:04,800
Speaker 1: If you have six figures in a roth ira A,

541
00:25:05,359 --> 00:25:08,359
Speaker 1: you of course can still only withdraw the money that

542
00:25:08,400 --> 00:25:10,719
Speaker 1: you've contributed over the years. But if you've been maxing

543
00:25:10,760 --> 00:25:13,919
Speaker 1: that out over a decade, that's over fifty dollars that

544
00:25:14,000 --> 00:25:16,560
Speaker 1: you have access to that you can pull out tax

545
00:25:16,560 --> 00:25:19,720
Speaker 1: and penalty free, and that essentially works as a really

546
00:25:19,800 --> 00:25:22,359
Speaker 1: nice emergency fund, and so you can have less of

547
00:25:22,400 --> 00:25:25,200
Speaker 1: your money sitting there in a savings account, earning less

548
00:25:25,200 --> 00:25:27,639
Speaker 1: than two percent and hopefully working for you for the

549
00:25:27,680 --> 00:25:30,360
Speaker 1: long run, especially if you're in a two income household

550
00:25:30,680 --> 00:25:34,000
Speaker 1: and you have substantial investments built up in something like

551
00:25:34,040 --> 00:25:36,960
Speaker 1: a wrath where it is partially liquid. In that way,

552
00:25:37,359 --> 00:25:40,440
Speaker 1: I think it's completely reasonable to have only one month

553
00:25:40,760 --> 00:25:44,200
Speaker 1: of emergency fund in an actual savings account and put

554
00:25:44,280 --> 00:25:46,400
Speaker 1: most of your money there. And so I don't know

555
00:25:46,680 --> 00:25:49,200
Speaker 1: what percentage of our listeners are in a position like that,

556
00:25:49,400 --> 00:25:51,160
Speaker 1: but I think that's something to strive for as well,

557
00:25:51,200 --> 00:25:54,000
Speaker 1: that over time, as your investments built up, as you're

558
00:25:54,040 --> 00:25:57,280
Speaker 1: maxing out a wrath and contributing to your retirement in

559
00:25:57,280 --> 00:26:00,280
Speaker 1: that way that you know what, you don't necessary really

560
00:26:00,320 --> 00:26:02,760
Speaker 1: have to when you're forty five, fifty years old and

561
00:26:02,760 --> 00:26:05,119
Speaker 1: you get this substantial amount and builds up, but you

562
00:26:05,160 --> 00:26:07,679
Speaker 1: still have to have six months of your expenses in

563
00:26:08,119 --> 00:26:11,080
Speaker 1: a savings account. Yeah, that's worth considering, man. My biggest

564
00:26:11,080 --> 00:26:14,399
Speaker 1: concern with that is pulling, like the potential of pulling

565
00:26:14,400 --> 00:26:16,600
Speaker 1: that money out if you need it. Obviously, yes, during

566
00:26:16,640 --> 00:26:18,800
Speaker 1: only during an emergency, but if you pull that out

567
00:26:18,880 --> 00:26:21,560
Speaker 1: during a downturn in the market, you're losing money essentially

568
00:26:21,640 --> 00:26:23,200
Speaker 1: at that point because you're pulling money out of the

569
00:26:23,240 --> 00:26:25,760
Speaker 1: market that instead, if you know where you to leave

570
00:26:25,760 --> 00:26:29,000
Speaker 1: in would turn around and continue growing down the road. Yeah,

571
00:26:29,040 --> 00:26:32,200
Speaker 1: And that's why I think the roth Ira strategy is

572
00:26:32,320 --> 00:26:36,720
Speaker 1: really important to consider only if you are financially stable,

573
00:26:36,800 --> 00:26:39,120
Speaker 1: only if you have your financial ducks in a row.

574
00:26:39,560 --> 00:26:42,159
Speaker 1: If you have been investing in a roth ira up

575
00:26:42,160 --> 00:26:43,800
Speaker 1: to the you know, up to or close to the

576
00:26:43,840 --> 00:26:46,680
Speaker 1: max for at least a decade, to where you've really

577
00:26:46,680 --> 00:26:49,480
Speaker 1: built up a substantial amount of savings in there where

578
00:26:49,480 --> 00:26:51,199
Speaker 1: you would only need to tap a small portion of

579
00:26:51,200 --> 00:26:53,760
Speaker 1: it and then Also it's best suited for people that

580
00:26:53,920 --> 00:26:56,400
Speaker 1: probably live in a dual income household where let's say

581
00:26:56,400 --> 00:26:58,800
Speaker 1: they were to lose one income, they wouldn't need to

582
00:26:58,800 --> 00:27:02,360
Speaker 1: tap the emergency fund right away. So it's this good strategy,

583
00:27:02,440 --> 00:27:05,440
Speaker 1: it's this good reserve to have and to know that's

584
00:27:05,480 --> 00:27:07,359
Speaker 1: there so that you can have more of your money

585
00:27:07,440 --> 00:27:10,560
Speaker 1: working for you as opposed to just in traditional savings

586
00:27:10,640 --> 00:27:12,639
Speaker 1: that isn't earning all that much right now, but you

587
00:27:12,640 --> 00:27:14,119
Speaker 1: certainly don't want to put all your eggs in that

588
00:27:14,160 --> 00:27:18,240
Speaker 1: basket and making sure that it's almost like a secondary emergency,

589
00:27:18,359 --> 00:27:20,520
Speaker 1: right So, so if you are a dual income family,

590
00:27:20,560 --> 00:27:22,600
Speaker 1: will you lose one job, it has to almost be

591
00:27:22,720 --> 00:27:25,760
Speaker 1: another emergency on top of that that forces you to

592
00:27:25,800 --> 00:27:27,639
Speaker 1: tap into that. So that that's where I think the

593
00:27:27,680 --> 00:27:30,880
Speaker 1: roth IRA can come in and you can actually, hopefully

594
00:27:30,960 --> 00:27:33,960
Speaker 1: over the long term, earn more on your emergency fund

595
00:27:34,119 --> 00:27:38,000
Speaker 1: in a RATH. And again that's not an exclusion to

596
00:27:38,160 --> 00:27:40,959
Speaker 1: a savings account with an emergency fund in it, but

597
00:27:41,040 --> 00:27:42,639
Speaker 1: I think at that point, if you've been doing it

598
00:27:42,640 --> 00:27:45,760
Speaker 1: over the long term, you can really consider having a

599
00:27:45,920 --> 00:27:48,800
Speaker 1: smaller amount in a savings account, probably more like one

600
00:27:48,840 --> 00:27:51,199
Speaker 1: to two months of expenses in a savings account as

601
00:27:51,240 --> 00:27:53,879
Speaker 1: opposed to that traditional three to six number that the

602
00:27:54,000 --> 00:27:57,160
Speaker 1: personal finance people throw around. So I'll mission to that.

603
00:27:57,280 --> 00:28:00,640
Speaker 1: Having invested in I guess for that ten year, you're

604
00:28:00,640 --> 00:28:02,960
Speaker 1: also investing at ups and downs in the market, so

605
00:28:03,040 --> 00:28:05,400
Speaker 1: essentially you get a kind of dollar cost average over

606
00:28:05,440 --> 00:28:07,919
Speaker 1: that entire period. So you're not only going in at

607
00:28:07,920 --> 00:28:10,240
Speaker 1: the bottom or only going into the top. It's not

608
00:28:10,280 --> 00:28:12,560
Speaker 1: a huge deal because you're you're averaging out all of

609
00:28:12,600 --> 00:28:15,720
Speaker 1: your investment purchases. And that's something you want to see

610
00:28:15,720 --> 00:28:17,800
Speaker 1: as well, because yeah, if you were just going all

611
00:28:17,840 --> 00:28:21,000
Speaker 1: at once, if if you're even able to with with

612
00:28:21,119 --> 00:28:24,000
Speaker 1: you know, with your wrath, it could be more detrimental

613
00:28:24,040 --> 00:28:25,800
Speaker 1: where you to pull it all out at a single

614
00:28:25,840 --> 00:28:28,280
Speaker 1: point in time. Yeah, I agree, And to say one

615
00:28:28,280 --> 00:28:31,360
Speaker 1: more time, it is an emergency fund, right, so your

616
00:28:31,400 --> 00:28:33,879
Speaker 1: goal is to never tap it, and if you are

617
00:28:33,880 --> 00:28:36,080
Speaker 1: in a strong financial position, a wrath can be a

618
00:28:36,119 --> 00:28:38,400
Speaker 1: great kind of side plans that you don't have to

619
00:28:38,440 --> 00:28:41,800
Speaker 1: have quite as much in just traditional savings. But ultimately

620
00:28:41,960 --> 00:28:44,680
Speaker 1: your goal is to never ever ever tap that money

621
00:28:44,720 --> 00:28:47,600
Speaker 1: and just let it grow tax free for retirement. It's

622
00:28:47,600 --> 00:28:49,640
Speaker 1: this emergency fund that you hope you never have to

623
00:28:49,760 --> 00:29:01,640
Speaker 1: use and you desperately try to never tap a man.

624
00:29:01,800 --> 00:29:03,320
Speaker 1: So those are a lot of the steps on like

625
00:29:03,400 --> 00:29:06,520
Speaker 1: what to do right, so how to basically create your

626
00:29:06,720 --> 00:29:09,360
Speaker 1: emergency fund. A question that kind of comes up often

627
00:29:09,800 --> 00:29:12,960
Speaker 1: is when do I fully fund that emergency fund, Like

628
00:29:12,960 --> 00:29:15,000
Speaker 1: when do I start really setting aside the money and

629
00:29:15,480 --> 00:29:19,040
Speaker 1: rereading that chunk of money. Specifically, do I do that

630
00:29:19,080 --> 00:29:22,000
Speaker 1: before I pay off debt? And the answer to that,

631
00:29:22,080 --> 00:29:24,520
Speaker 1: I think comes down to what kind of debt it is.

632
00:29:24,600 --> 00:29:26,600
Speaker 1: And so if you're looking at something that is a

633
00:29:26,680 --> 00:29:30,920
Speaker 1: higher interest rate, like specifically credit cards, or you know

634
00:29:30,960 --> 00:29:33,440
Speaker 1: something maybe worse like a paid a loan or something

635
00:29:33,480 --> 00:29:37,600
Speaker 1: like that, you wants to pay that off first. So

636
00:29:37,680 --> 00:29:39,920
Speaker 1: let's say you've got ten thousand dollars in your savings

637
00:29:39,960 --> 00:29:44,520
Speaker 1: account and you've got a credit card at a interest rate. Well,

638
00:29:44,800 --> 00:29:47,720
Speaker 1: I don't want to deplete my emergency fund. But here's

639
00:29:47,720 --> 00:29:50,160
Speaker 1: the thing. You put that ten thousand dollars to paying

640
00:29:50,200 --> 00:29:53,240
Speaker 1: off your interest rate debt. Well, if a two thousand

641
00:29:53,280 --> 00:29:56,040
Speaker 1: dollar emergency comes along, well it sucks, but you use

642
00:29:56,120 --> 00:29:58,040
Speaker 1: the credit card that you already had money on, right

643
00:29:58,080 --> 00:30:00,040
Speaker 1: like that you already had a balance on it's just

644
00:30:00,080 --> 00:30:02,680
Speaker 1: too smaller balance at that point. So while you never

645
00:30:02,760 --> 00:30:04,720
Speaker 1: want to have to put money on a credit card

646
00:30:04,760 --> 00:30:07,560
Speaker 1: in case of an emergency, it only makes sense that

647
00:30:07,600 --> 00:30:10,640
Speaker 1: you would eliminate debt that's at an incredibly high rate

648
00:30:10,640 --> 00:30:14,640
Speaker 1: of interest before you really start putting money away in

649
00:30:14,680 --> 00:30:16,959
Speaker 1: your emergency fund. And keep in mind too, that we

650
00:30:16,960 --> 00:30:20,280
Speaker 1: were talking about high interest rate products here. We're not

651
00:30:20,320 --> 00:30:23,840
Speaker 1: talking about your mortgage that has a nice thirty year

652
00:30:23,920 --> 00:30:27,480
Speaker 1: fixed rates, and we're not talking about low interest rate

653
00:30:27,520 --> 00:30:30,400
Speaker 1: car loans. Hopefully you don't have a car loan, but

654
00:30:30,440 --> 00:30:32,480
Speaker 1: if you already do, that's not that's not what we're

655
00:30:32,480 --> 00:30:35,440
Speaker 1: talking about. If you've got something that's in the single digits,

656
00:30:35,680 --> 00:30:38,400
Speaker 1: something that's close to five or six percent, that's not terrible.

657
00:30:38,560 --> 00:30:40,640
Speaker 1: And so you definitely want to pay off balances that

658
00:30:40,760 --> 00:30:44,040
Speaker 1: have rates above that. But otherwise, the emergency fund, that's

659
00:30:44,040 --> 00:30:46,240
Speaker 1: your priority. That's what you want to focus on building up.

660
00:30:46,880 --> 00:30:49,120
Speaker 1: At the very least, like we said earlier, that five

661
00:30:49,240 --> 00:30:51,880
Speaker 1: hundred to a thousand bucks, but ultimately you want to

662
00:30:51,880 --> 00:30:53,959
Speaker 1: consider more than that. You know, you want to consider

663
00:30:54,000 --> 00:30:56,640
Speaker 1: one to three. If you like to be a little

664
00:30:56,680 --> 00:30:59,360
Speaker 1: more conservative, like we're even six months, that might be

665
00:30:59,400 --> 00:31:01,480
Speaker 1: the point I would you feel comfortable. And if that's

666
00:31:01,520 --> 00:31:03,920
Speaker 1: the case, then that's fine, that's great. You're gonna be

667
00:31:03,960 --> 00:31:07,440
Speaker 1: well prepared for for any potential financial hardships that come along.

668
00:31:07,800 --> 00:31:10,440
Speaker 1: Just because you heard us say six months doesn't mean

669
00:31:10,520 --> 00:31:12,640
Speaker 1: that you shouldn't start at all because it seems like

670
00:31:12,960 --> 00:31:15,120
Speaker 1: too big, too lofty of a goal. That's why we're

671
00:31:15,160 --> 00:31:17,200
Speaker 1: kind of trying to show you these tears that exist,

672
00:31:17,320 --> 00:31:18,960
Speaker 1: and you don't have to do it all at once,

673
00:31:19,040 --> 00:31:20,800
Speaker 1: you don't have to do it all with any a

674
00:31:20,880 --> 00:31:23,480
Speaker 1: year's time, but attempt first to get the five and

675
00:31:23,520 --> 00:31:25,400
Speaker 1: then the thousand and then the one month of your

676
00:31:25,400 --> 00:31:28,160
Speaker 1: expense is Just because you can't get to six months

677
00:31:28,360 --> 00:31:30,520
Speaker 1: in a short period of time doesn't mean you shouldn't

678
00:31:30,520 --> 00:31:33,800
Speaker 1: start at all. Yeah, this isn't something that's gonna happen overnight,

679
00:31:33,840 --> 00:31:35,640
Speaker 1: you know. This is something that might take a year

680
00:31:35,720 --> 00:31:37,160
Speaker 1: or even two years to kind of get to the

681
00:31:37,160 --> 00:31:40,440
Speaker 1: point at which you feel comfortable. And again, this is

682
00:31:40,480 --> 00:31:43,400
Speaker 1: personal finance, so this varies from personal person to varies

683
00:31:43,440 --> 00:31:45,800
Speaker 1: from family to family. It's something that you might need

684
00:31:45,840 --> 00:31:48,480
Speaker 1: to talk about with your spouse or your significant other.

685
00:31:49,040 --> 00:31:51,120
Speaker 1: It's gonna vary, and it's just it's up to you

686
00:31:51,200 --> 00:31:54,320
Speaker 1: to decide at what point you feel comfortable. But ultimately

687
00:31:54,360 --> 00:31:57,520
Speaker 1: the major goal is to create some margin in your life.

688
00:31:57,720 --> 00:31:59,880
Speaker 1: There are so many people living on the edge with

689
00:32:00,160 --> 00:32:03,360
Speaker 1: no access to almost any emergency fund at all, and

690
00:32:03,440 --> 00:32:06,640
Speaker 1: the slightest hardship comes along and they don't know what

691
00:32:06,720 --> 00:32:09,840
Speaker 1: to do, And so an emergency fund is really important

692
00:32:10,320 --> 00:32:12,840
Speaker 1: for dealing with those emergencies that pop up, but even

693
00:32:12,840 --> 00:32:15,800
Speaker 1: more than that, for eliminating stress in your life. Having

694
00:32:15,840 --> 00:32:17,760
Speaker 1: a little bit of cash in the bank that's sitting

695
00:32:17,840 --> 00:32:22,040
Speaker 1: there and that you know can help you should something arise. Man,

696
00:32:22,120 --> 00:32:24,840
Speaker 1: that provides a lot of peace of mind. And peace

697
00:32:24,840 --> 00:32:27,360
Speaker 1: of mind isn't really something that money can buy. But

698
00:32:27,840 --> 00:32:30,080
Speaker 1: in this regard when it comes to emergency funds, boy,

699
00:32:30,120 --> 00:32:32,760
Speaker 1: having that small chunk at least that base really can

700
00:32:32,840 --> 00:32:35,479
Speaker 1: alleviate a lot of that financial stress that the majority

701
00:32:35,520 --> 00:32:39,040
Speaker 1: of Americans feel. Okay, Man, beer time, I do like

702
00:32:39,120 --> 00:32:41,120
Speaker 1: this better than the first time I had it, It's

703
00:32:41,120 --> 00:32:42,880
Speaker 1: still not like my favorite. I think, if I'm going

704
00:32:42,920 --> 00:32:44,560
Speaker 1: to have a Belgian like this, I either want it

705
00:32:44,680 --> 00:32:47,160
Speaker 1: kind of nice and white, just real clean and fresh

706
00:32:47,760 --> 00:32:51,040
Speaker 1: without the the sort of the fruit flavor's attitude or

707
00:32:51,320 --> 00:32:53,520
Speaker 1: like the curio like we had last week. If it's

708
00:32:53,600 --> 00:32:57,280
Speaker 1: barrel aged, where it adds like a layer of richness

709
00:32:57,280 --> 00:32:59,760
Speaker 1: and complexity to it, I think I'm more into that.

710
00:33:00,120 --> 00:33:02,200
Speaker 1: I was hoping I could convert you today to loving

711
00:33:02,200 --> 00:33:03,840
Speaker 1: this beer as much as I do. But you know what,

712
00:33:03,960 --> 00:33:05,680
Speaker 1: it wasn't in the cards. Yeah, I mean, I'm not

713
00:33:05,760 --> 00:33:08,040
Speaker 1: knocking this at all. I do like this beer. I

714
00:33:08,040 --> 00:33:10,000
Speaker 1: will drink this one percent at the beach. You know.

715
00:33:10,120 --> 00:33:12,320
Speaker 1: It's it's that kind of beer, just not my kind

716
00:33:12,320 --> 00:33:14,840
Speaker 1: of like my every day go to I feel you well.

717
00:33:14,920 --> 00:33:18,600
Speaker 1: Lilliquois Cupolo from Avery Brewing Company. Apparently there are mixed

718
00:33:18,600 --> 00:33:22,560
Speaker 1: reviews on Poor Poor All right, man, let's wrap this up.

719
00:33:22,640 --> 00:33:25,040
Speaker 1: Let's do a quick recap. The biggest reason why an

720
00:33:25,040 --> 00:33:28,320
Speaker 1: emergency fund is necessary is because we have very little

721
00:33:28,400 --> 00:33:31,840
Speaker 1: financial margin in our lives. Most people live paycheck to paycheck,

722
00:33:32,320 --> 00:33:35,080
Speaker 1: and when that's the case, literally, once that paycheck stops,

723
00:33:35,120 --> 00:33:37,480
Speaker 1: you have an entire month of expenses coming up that

724
00:33:37,520 --> 00:33:40,120
Speaker 1: you are not prepared for. Yeah, so you might need

725
00:33:40,160 --> 00:33:43,320
Speaker 1: to start small. Saving up just five hundred or a

726
00:33:43,360 --> 00:33:46,600
Speaker 1: thousand dollars in the beginning can really help alleviate some

727
00:33:46,600 --> 00:33:48,840
Speaker 1: of that pressure. Don't let that three to six month

728
00:33:48,920 --> 00:33:53,120
Speaker 1: figure throw you and keep you from starting an emergency

729
00:33:53,120 --> 00:33:55,640
Speaker 1: fund at all. Even though that's a good goal to

730
00:33:55,720 --> 00:33:58,920
Speaker 1: have over the long term, know that it takes time. Yeah,

731
00:33:58,920 --> 00:34:00,680
Speaker 1: It's important to keep in mind is that this is

732
00:34:00,720 --> 00:34:03,400
Speaker 1: a personal decision, right, It's going to vary from person

733
00:34:03,400 --> 00:34:06,240
Speaker 1: to person, and it just depends on what dollar amount

734
00:34:06,240 --> 00:34:09,120
Speaker 1: you feel comfortable having in the bank sitting there ready

735
00:34:09,160 --> 00:34:11,480
Speaker 1: to go where there to be an emergency. Yeah, So

736
00:34:11,520 --> 00:34:13,719
Speaker 1: the biggest thing is to make sure that you don't

737
00:34:13,760 --> 00:34:15,920
Speaker 1: have it with one of the big banks. We're talking

738
00:34:15,960 --> 00:34:20,040
Speaker 1: specifically about Wells Fargo, Bank of America, Chase, the guys

739
00:34:20,080 --> 00:34:23,000
Speaker 1: that don't pay anything. That's not where you want your

740
00:34:23,000 --> 00:34:25,279
Speaker 1: emergency fund. Hopefully, it's a big chunk of money that

741
00:34:25,280 --> 00:34:28,240
Speaker 1: you're setting aside over time, and you want it actually

742
00:34:28,239 --> 00:34:29,839
Speaker 1: to be earning something for you. And at the big

743
00:34:29,840 --> 00:34:33,799
Speaker 1: banks it's point zero one percent interest insane, which is

744
00:34:33,960 --> 00:34:37,160
Speaker 1: pennies every month. Yeah, the banks that we use currently

745
00:34:37,640 --> 00:34:39,879
Speaker 1: we're earning close to two percent, you know these days,

746
00:34:40,040 --> 00:34:43,280
Speaker 1: which is awesome. All right, Matt. That's it for emergency funds.

747
00:34:43,280 --> 00:34:45,880
Speaker 1: Our home on the web is how to Money dot Com.

748
00:34:45,920 --> 00:34:47,959
Speaker 1: As always will have show notes up there for you

749
00:34:48,440 --> 00:34:51,640
Speaker 1: for this episode. Cheers, Buddy, yeah Man, best Friends out,

750
00:34:51,840 --> 00:35:00,120
Speaker 1: best Friends Out, m