WEBVTT - Everything You Need to Know About Emergency Funds #021 0:00:00.120 --> 0:00:03.000 Welcome to How to Money. I'm Joel and I'm Matt, 0:00:03.080 --> 0:00:06.280 and today we're discussing everything you need to know about 0:00:06.280 --> 0:00:28.280 emergency funds. Oh, I'll tell you about my free water heater. No, 0:00:28.400 --> 0:00:32.560 please tell me. Are you really interested? You don't sound 0:00:32.600 --> 0:00:35.160 interested at all. I love free and I'm actually curious 0:00:36.040 --> 0:00:38.880 a water heater. Is that we talked about the asking 0:00:38.880 --> 0:00:40.599 for a discount episode, we talked about your electric water 0:00:40.640 --> 0:00:42.519 heater a couple years ago. That's right, asking for the 0:00:42.520 --> 0:00:45.680 discount on the instant, but so getting an actual free 0:00:45.680 --> 0:00:51.159 water heater, yeah, man, free it's electric as well. As 0:00:51.200 --> 0:00:53.159 soon as I said that, like damn, I know, I 0:00:53.240 --> 0:00:55.920 knew you were gonna say that. Yeah, electric high efficiency 0:00:56.000 --> 0:00:58.480 water heater. It's like six months old. I got that 0:00:58.560 --> 0:01:01.319 jang for free. So a plumber I know that we've 0:01:01.320 --> 0:01:04.800 we've used them before. Basically was ripping out redoing the 0:01:04.800 --> 0:01:08.720 plumbing on a on a renovation nearby and they were 0:01:08.720 --> 0:01:10.520 just told to get rid of this water heater, uh 0:01:10.520 --> 0:01:13.240 and not you know, basically all the plumbing and they 0:01:13.240 --> 0:01:14.800 were looking at it and they realized literally it was 0:01:14.840 --> 0:01:17.120 only six months old, and they just felt so bad 0:01:17.360 --> 0:01:19.400 getting rid of it. So he thought of who might 0:01:20.080 --> 0:01:23.880 would want who likes free stuff that I know? The 0:01:23.920 --> 0:01:27.520 host of the Cheapo podcasts. Long story short, thought of 0:01:27.560 --> 0:01:30.160 me came by dropped it off in my driveway for me, 0:01:30.200 --> 0:01:33.640 and yeah, literally, yes, I know. He's literally. I wasn't 0:01:33.640 --> 0:01:35.040 even home and I got I came home and there's 0:01:35.040 --> 0:01:37.040 like basically a bran new water heater sitting there waiting 0:01:37.080 --> 0:01:38.840 on me for me to use, and one of our 0:01:38.840 --> 0:01:41.160 properties coming up here pretty soon. Dude, I love it. 0:01:41.600 --> 0:01:43.840 That's awesome. And guess what I'm gonna call when it 0:01:43.840 --> 0:01:45.360 comes time to hook up all the hook up all 0:01:45.400 --> 0:01:48.680 the pipes that guy. Yeah, exactly, So dude, when when 0:01:48.920 --> 0:01:51.600 he's he's happy. Plus they do awesome work. So yeah, man, 0:01:51.640 --> 0:01:55.920 pretty sweet deal. Huh you're jealous? Uh? Yeah, so just 0:01:55.920 --> 0:01:57.320 putting this up to leave me? I know, you get 0:01:57.320 --> 0:01:59.560 plenty of deals that I don't get to partake in. 0:01:59.680 --> 0:02:02.080 So well, there any plumbers out there that want to 0:02:02.080 --> 0:02:05.120 give me any water heaters, I'm certainly open to it. 0:02:05.200 --> 0:02:07.680 I welcome free stuff on my on my doorstep. Yeah. 0:02:07.920 --> 0:02:11.320 Speaking of free stuff, we're going to our neighborhood beer fests. Yeah, 0:02:11.440 --> 0:02:14.920 I'm so stoked, dude. It's pretty much the best weekend, 0:02:14.919 --> 0:02:16.520 one of the best weekends of the year. I'm so 0:02:16.520 --> 0:02:19.200 excited about it, and I think this is my seventh 0:02:19.280 --> 0:02:21.720 year doing it. Really Yeah, and you're an old man, 0:02:21.960 --> 0:02:24.880 I know. The great thing about our neighborhood beer fest 0:02:25.040 --> 0:02:27.840 is that we volunteer, right, and so every year you 0:02:27.919 --> 0:02:30.040 and I we pour beer for the patrons, the people 0:02:30.040 --> 0:02:32.919 that actually pay money to go to our neighborhood beer festival. 0:02:33.240 --> 0:02:35.760 The best things are that we raise a ton of 0:02:35.800 --> 0:02:38.720 money for our neighborhood, right, for a neighborhood organization, which 0:02:38.760 --> 0:02:41.280 is then able to deploy it in ways to beautify 0:02:41.320 --> 0:02:44.839 the neighborhood. And exactly the beer fest falls under the nonprofit, 0:02:45.080 --> 0:02:48.520 and so the nonprofit supports local neighborhood organizations. And I'm 0:02:48.520 --> 0:02:50.280 pretty sure one of the recent emails they sent out 0:02:50.280 --> 0:02:52.480 said they've raised over a million dollars in the past 0:02:52.480 --> 0:02:56.040 ten years. That's incredible, Yeah, which is huge for nonprofit, 0:02:56.120 --> 0:02:59.640 especially a nonprofit where the majority where the majority of 0:02:59.639 --> 0:03:02.800 their funds are coming from people drinking beer making the 0:03:02.800 --> 0:03:05.480 world a better place. Man. Yeah, and so, and the 0:03:05.680 --> 0:03:07.840 other beautiful thing is you and I get to drink 0:03:07.880 --> 0:03:09.840 beer for free all day, which is awesome because if 0:03:09.880 --> 0:03:11.560 you're pouring beer, you you still get to take a 0:03:11.560 --> 0:03:13.880 little on the side, take some take some SIPs. And 0:03:14.120 --> 0:03:16.480 so that's really fun to get to take some beers, 0:03:16.560 --> 0:03:18.560 a good way to try a lot of new beers. Yeah, 0:03:18.800 --> 0:03:21.040 some someones that we've had before too. Yeah. So uh, 0:03:21.200 --> 0:03:23.400 if you guys follow us on tap, you might see 0:03:23.440 --> 0:03:26.480 that we blow it up at the beer fest uh 0:03:26.520 --> 0:03:29.360 this weekend. Oh and so Matt, I'm also really pumped 0:03:29.360 --> 0:03:32.080 because we ordered some coozies to distribute there. Oh yeah, 0:03:32.320 --> 0:03:34.480 with our logo on it. I'm really pumped to handles 0:03:34.480 --> 0:03:36.400 out and kind of let people know what we're what 0:03:36.440 --> 0:03:38.360 we're doing here over poor not poor. You know, a 0:03:38.360 --> 0:03:40.600 lot of different neighborhoods have beer fest now as well. 0:03:40.640 --> 0:03:43.040 And so that's the other thing to consider volunteering your 0:03:43.040 --> 0:03:46.160 own local beer fest. Instead of forking out the money 0:03:46.160 --> 0:03:48.120 and coming over and seeing us, which would you know, 0:03:48.200 --> 0:03:50.800 that would be awesome, consider pouring and volunteering with your 0:03:50.800 --> 0:03:53.840 own local beer fest. Yeah. And the great thing is 0:03:53.880 --> 0:03:56.080 it's a blast, it's a fun day, it supports neighborhood 0:03:56.080 --> 0:03:57.600 and on top of that, you save some money to 0:03:57.680 --> 0:04:00.920 drink beer. Speaking of drinking beer today on the show, 0:04:00.960 --> 0:04:05.360 we're drinking a beer by Avery Brewing Company out of Boulder, Colorado, 0:04:05.560 --> 0:04:08.720 a really, really, really good brewery. You already know Colorado 0:04:08.760 --> 0:04:11.160 makes awesome beers and Avery is one of the best 0:04:11.200 --> 0:04:14.920 producers even in the state. And today we're drinking a 0:04:15.000 --> 0:04:18.560 beer called Lily Koi Cupolo, and it's a Belgian style 0:04:18.600 --> 0:04:21.760 white ale brewed with spices and passion fruit. Man, that's 0:04:21.760 --> 0:04:23.960 pouring that nice kind of cloudy golden almost like a 0:04:24.000 --> 0:04:26.360 little bit of ruby kind of color there to it. Yeah, 0:04:26.360 --> 0:04:28.720 and a nice nice ruby and orange. It's got kind 0:04:28.720 --> 0:04:31.360 of kind of a grapefruit look to it. Yeah. Yeah, 0:04:31.440 --> 0:04:33.760 it's got that fade. So I've had this before, like 0:04:33.920 --> 0:04:37.279 once or twice before. You love this beer. I love 0:04:37.320 --> 0:04:39.960 this beer. I am curious to taste it again because 0:04:40.040 --> 0:04:41.680 the last time I had it, I was like, I 0:04:41.720 --> 0:04:45.080 don't know about this. Guy comes in six packs and 0:04:45.520 --> 0:04:48.040 you can get this because Avery is distributed in most 0:04:48.040 --> 0:04:50.120 states now, I think, so you can probably find this 0:04:50.200 --> 0:04:53.239 in your local package store. I love the passion fruit. 0:04:53.560 --> 0:04:55.800 It almost has kind of a smoothie issue kind of 0:04:55.880 --> 0:04:58.600 vibe to it with the with the passion fruit kind 0:04:58.600 --> 0:05:02.960 of blended up in there. It's tropical tart a juicy 0:05:03.000 --> 0:05:05.440 and delicious. You know, it does taste a little better 0:05:05.480 --> 0:05:07.400 than I remember it. It does have those tropical fruits. 0:05:07.480 --> 0:05:08.880 It kind of remind makes me think of like a 0:05:08.880 --> 0:05:11.159 little tropical fruit cup, you know, like, oh yeah as 0:05:11.200 --> 0:05:13.960 a kid, you don't you're not talking about most totally. Yeah, 0:05:14.000 --> 0:05:15.279 you feel that, Yeah, like one of the like the 0:05:15.360 --> 0:05:19.000 dull pineapples cup things. Yeah, a little sugar. I mean 0:05:19.000 --> 0:05:21.040 certainly this isn't crazy sweet like that, but it's got 0:05:21.040 --> 0:05:23.279 like the token cherry, like just like that one cherry 0:05:23.320 --> 0:05:26.080 that you're allowed to have in it. Yeah, it kind 0:05:26.080 --> 0:05:28.120 of tastes like sliced pineapples that you kind of get 0:05:28.520 --> 0:05:31.280 as well. Yeah, it's totally get The pineapple got a 0:05:31.279 --> 0:05:33.919 lot of throwback flavors from my childhood. I love the 0:05:33.960 --> 0:05:36.960 can too. It's a cool color blue with a ticky 0:05:37.040 --> 0:05:41.520 man on the front. This is a great summer beer because, yeah, 0:05:41.640 --> 0:05:45.600 it's light, it's refreshing, it's easy to find. What's the 0:05:45.600 --> 0:05:48.919 add on this? Five point four easy? Yeah, you can 0:05:49.000 --> 0:05:52.599 drink a couple. I totally recommend the Avery Brewing Company. 0:05:52.760 --> 0:05:56.000 Little Quoi Cupolo dang tasty. What's up with the tiki man? 0:05:56.520 --> 0:05:58.839 I feel like tiky bars and sort of tiki theme 0:05:59.279 --> 0:06:02.440 is making a comeback. Heck, yeah, you think you've noticed 0:06:02.480 --> 0:06:04.520 that loved me a good tiki bar man. I think 0:06:04.600 --> 0:06:07.200 in general, themed restaurants might kind of make a comeback 0:06:07.240 --> 0:06:09.280 from Is that like the seventies or the eighties where 0:06:09.279 --> 0:06:12.160 there's like the themed restaurants. Yes, and I hope they 0:06:12.160 --> 0:06:15.160 do Beame restaurants are so fun. I was like right 0:06:15.160 --> 0:06:17.640 after Alley, Yeah, did you go to Medieval Times as 0:06:17.680 --> 0:06:20.400 a kid or like in middle school? My parents totally 0:06:20.400 --> 0:06:23.120 took me in the Medieval Times and oh, in the 0:06:23.160 --> 0:06:27.640 Dixie stamp Dixie and like near Dollywood in Tennessee, the 0:06:27.760 --> 0:06:32.080 Ryanstone cowboy jumpsuits, riding around on the horses. I distinctly 0:06:32.120 --> 0:06:35.960 remember chasing chickens on on the dirt floor in front 0:06:36.000 --> 0:06:39.279 of a giant crowd with my sisters. Yeah, when we 0:06:39.279 --> 0:06:42.000 were young at the Dixie Stampede. So what you're saying, 0:06:42.040 --> 0:06:46.440 that makes me picture your children chasing out And like 0:06:46.440 --> 0:06:48.840 when you said that, immediately pictured your girls, not you 0:06:48.880 --> 0:06:51.279 as a child, and we're so awkward, and my girls 0:06:51.360 --> 0:06:53.880 included and and so I would imagine they would fall 0:06:53.880 --> 0:06:58.440 faced ch almost immediately. So yeah, it was fun. All right, 0:06:58.480 --> 0:07:00.920 Matt topic, we're tackling today everything you need to know 0:07:01.000 --> 0:07:04.520 about emergency funds. Yes, emergency funds. This is something we 0:07:04.520 --> 0:07:08.200 talked about briefly when we did the Budgets episode forever 0:07:08.279 --> 0:07:11.480 ago now, um, but we decided it's time to do 0:07:11.520 --> 0:07:15.080 an entire episode on emergency funds because they're just so clutch. 0:07:15.560 --> 0:07:18.120 They don't get nearly the the attention I think that 0:07:18.200 --> 0:07:20.720 they need and that they deserve. And so that's why 0:07:20.760 --> 0:07:23.240 we're gonna spend an entire episode. We're gonna talk about 0:07:23.360 --> 0:07:25.240 how to get started on your own if you don't 0:07:25.280 --> 0:07:27.720 currently have one, and uh yeah, hopefully by the end 0:07:27.720 --> 0:07:29.760 of this, if you don't already have an emergency fund, 0:07:29.760 --> 0:07:31.920 you you'll be well on your way to getting yours 0:07:31.960 --> 0:07:34.400 set up and running. Yeah. And first, really, there's a 0:07:34.480 --> 0:07:36.760 huge problem in the United States. Stats bear out that 0:07:36.800 --> 0:07:39.360 the majority of Americans couldn't get their hands on three 0:07:39.360 --> 0:07:42.360 thousand dollars cash if they had a big car repair 0:07:42.440 --> 0:07:45.040 that they need to put money towards. And a lot 0:07:45.120 --> 0:07:47.840 of Americans also couldn't even come up with five dollars 0:07:47.880 --> 0:07:50.360 cash in the case of a minor emergency. And we 0:07:50.400 --> 0:07:52.440 live in the one of the richest countries in the world, 0:07:52.520 --> 0:07:55.120 and those facts are kind of startling when it comes 0:07:55.160 --> 0:07:59.040 down to it that most people are completely unprepared for 0:07:59.080 --> 0:08:01.640 an emergency. And that's a huge part of the reason 0:08:01.720 --> 0:08:04.360 that that this episode and what we're gonna talk about 0:08:04.400 --> 0:08:07.440 here with emergency funds is crucial, yeah, man, And I 0:08:07.440 --> 0:08:09.840 mean the problem is then, is if you don't have 0:08:10.360 --> 0:08:13.000 an emergency fund set up and you you face an emergency, 0:08:13.080 --> 0:08:15.040 well you're probably gonna have to put that expense on 0:08:15.080 --> 0:08:18.040 a credit card, and that obviously leads to a downward 0:08:18.080 --> 0:08:20.160 cycle because then you're making payments on that and then 0:08:20.200 --> 0:08:22.280 all of a sudden, something that may have only cost 0:08:22.640 --> 0:08:25.680 seven fifty bucks and like car repair costs, is now 0:08:25.720 --> 0:08:28.160 costing you, you know, a thousand bucks twelve hundred bucks 0:08:28.160 --> 0:08:31.760 over over time. Yeah, And in large swass of America, 0:08:31.880 --> 0:08:36.200 that's what tidle loan places do and payday lenders. They 0:08:36.240 --> 0:08:40.200 take advantage of people that are in emergency situations and 0:08:40.400 --> 0:08:43.120 don't have access to any amount of cash really to 0:08:43.160 --> 0:08:45.160 get out of it and can't wait till pay day. 0:08:45.400 --> 0:08:47.040 And so there are a lot of people living their 0:08:47.040 --> 0:08:49.360 lives on the margins. And it's not just people living 0:08:49.360 --> 0:08:51.960 in poverty. But there are a huge portion of Americans 0:08:52.200 --> 0:08:54.120 making good money, right. And there was a New York 0:08:54.160 --> 0:08:56.680 Times article that you and I both read, oh yeah, 0:08:56.720 --> 0:08:59.320 about a successful dude who had published books and was 0:08:59.400 --> 0:09:03.160 still author living paycheck to paycheck and could not seem 0:09:03.200 --> 0:09:06.280 to get ahead financially. And just because you have a 0:09:06.280 --> 0:09:09.199 big income, if you're spending just as much or more 0:09:09.240 --> 0:09:12.080 than you make, you're still living paycheck to paycheck. Yeah, 0:09:12.080 --> 0:09:14.880 you just live from bigger paycheck to bigger paycheck. So 0:09:14.920 --> 0:09:17.600 this is a problem across all income levels in America. 0:09:17.960 --> 0:09:20.959 We spend more than we make, and our emergency funds 0:09:21.040 --> 0:09:24.600 are nil, and it leads not only to financial hardship, 0:09:24.720 --> 0:09:28.680 but then emotional and marital and relational stress in our lives. 0:09:28.760 --> 0:09:31.040 Stresses you out, man. Obviously we're talking about this from 0:09:31.080 --> 0:09:34.280 a financial angle, right. We don't have enough margin. We 0:09:34.280 --> 0:09:36.920 don't have enough cushion in our life. Not only that, though, 0:09:36.920 --> 0:09:38.400 I feel like we just don't have enough margin in 0:09:38.400 --> 0:09:40.120 our lives when it comes to time, and like the 0:09:40.160 --> 0:09:42.920 amount of time that we have for other people and 0:09:43.480 --> 0:09:46.440 those around us in need, just situations where it might 0:09:46.480 --> 0:09:49.240 take us out of our usual you know, get up, 0:09:49.240 --> 0:09:51.839 go to work, make money, come home or spend money 0:09:51.840 --> 0:09:54.320 on the way home, and then go to sleep and 0:09:54.400 --> 0:09:56.760 you know, nse and repeat. That might be a topic 0:09:56.800 --> 0:09:58.880 for another episode, but yeah, I don't know. That's just 0:09:58.920 --> 0:10:01.400 something I wanted to mention. But hopefully while we're discussing 0:10:01.679 --> 0:10:04.400 the financial aspects of having an emergency fund and what 0:10:04.440 --> 0:10:06.480 that does to your life, think about two where your 0:10:06.480 --> 0:10:10.599 time goes? And oh yeah, can you build essentially reservoirs 0:10:10.600 --> 0:10:14.040 of time that as opposed to go go go busy, 0:10:14.080 --> 0:10:17.440 busy busy. Uh? Creating those reservoirs of time is crucial 0:10:17.520 --> 0:10:20.040 And yeah, this podcast, right, we're all about saving money, 0:10:20.160 --> 0:10:22.920 but we're also about living mindfully and I think it's 0:10:23.040 --> 0:10:24.760 just a really important thing to discuss, and not many 0:10:24.760 --> 0:10:27.680 people are discussing that, Like, yeah, it goes hand in hand, right, Yeah, 0:10:27.679 --> 0:10:31.120 we prop up business and uh and getting stuff done 0:10:31.320 --> 0:10:34.640 and you know, I'm all about working hard, but there's 0:10:34.679 --> 0:10:37.599 a downside too, the way our culture treats work and 0:10:37.640 --> 0:10:49.559 the idea of business in general. Yeah, so obviously that 0:10:49.640 --> 0:10:52.079 mean what we're gonna talk about is the emergency fund. 0:10:52.120 --> 0:10:54.520 So Joel, do you have an emergency fund? I sure do. Man. 0:10:54.640 --> 0:10:57.720 Do you remember always having an emergency fund. I remember 0:10:57.760 --> 0:11:02.200 always prioritizing savings, right, so always building the savings up, 0:11:02.240 --> 0:11:05.120 and I didn't always call it an emergency fund, you know, 0:11:05.160 --> 0:11:07.080 when I was in my early twenties, but I was 0:11:07.200 --> 0:11:10.560 always building my savings level. So I was always prioritizing 0:11:10.559 --> 0:11:12.960 putting money in my savings account every month and watching 0:11:12.960 --> 0:11:16.000 it grow. I just wasn't calling it an emergency fund 0:11:16.000 --> 0:11:17.680 at that point in time. Yeah, that was kind of 0:11:17.679 --> 0:11:20.520 my approach. Honestly. That's basically what I did up until 0:11:21.240 --> 0:11:25.120 I became like a Dave Ramsey junkie. When I was 0:11:25.160 --> 0:11:27.560 like in my early in my early years, like shooting 0:11:27.600 --> 0:11:29.400 them into your veins, what are you doing? Basically, that's 0:11:29.440 --> 0:11:31.679 weird man. Early on, you know I was, I was 0:11:31.720 --> 0:11:33.439 pretty hardcore, and that's when I was like, no, it's 0:11:33.440 --> 0:11:36.040 called an emergency fund. This is what we're calling it, 0:11:36.120 --> 0:11:38.520 and it's got to be you know, this exact length, 0:11:38.720 --> 0:11:41.280 it must be this exact dollar amounts, and you know 0:11:41.320 --> 0:11:43.880 other rules associated with sort of his approach to things. 0:11:43.880 --> 0:11:45.440 And you've kind of calmed down on that a little 0:11:45.440 --> 0:11:47.439 bit now. And and I think that's why this is 0:11:47.480 --> 0:11:50.680 interesting too, because I think there are some hardcore personal 0:11:50.679 --> 0:11:52.440 finance people that would be like, this is what you 0:11:52.480 --> 0:11:54.720 need to have and and I think there's some good 0:11:54.800 --> 0:11:57.839 rules of thumb in what they're saying, but I think 0:11:57.880 --> 0:12:00.000 there's also a lot of caveats that will that will 0:12:00.040 --> 0:12:01.800 hitting this episode as well. Yeah, there's a lot of 0:12:01.840 --> 0:12:04.200 room for flexibility, and a lot of it depends on 0:12:04.240 --> 0:12:06.920 the individual. It depends on sort of their life stage, 0:12:06.960 --> 0:12:09.199 where they are in life, and overall how sort of 0:12:09.240 --> 0:12:12.440 financially prepared they are for financial events in their life. 0:12:12.720 --> 0:12:15.360 So quick tip to people that don't have one at 0:12:15.360 --> 0:12:17.520 all right now, and they do find themselves in that 0:12:17.559 --> 0:12:20.880 boat that man, if my transmission went out tomorrow or 0:12:21.760 --> 0:12:23.840 if I lost my job next week, I have no 0:12:23.840 --> 0:12:25.840 idea where I'm gonna get money. I'm gonna be using 0:12:25.920 --> 0:12:27.679 high interest rate debt right I'm gonna be going to 0:12:27.720 --> 0:12:30.240 the payday lender or using my credit card, tapping my 0:12:30.280 --> 0:12:33.600 credit card right. Really, for people like that, their first goal, 0:12:33.720 --> 0:12:37.320 the necessity right now is to start saving little by 0:12:37.360 --> 0:12:41.600 little and accruing an emergency fund of five two thousand dollars. 0:12:41.600 --> 0:12:45.520 That's a goal that's that's feasible, that's reachable if you 0:12:45.520 --> 0:12:47.800 have income, and and that's Ultimately, the first goal that 0:12:47.840 --> 0:12:50.120 needs to be set reaching a level like that where 0:12:50.160 --> 0:12:52.560 at least you could meet some sort of financial distress 0:12:52.760 --> 0:12:54.800 without having to tap into some sort of high interest 0:12:54.920 --> 0:12:57.440 rate revolving debt. That's a really good first goal to 0:12:57.480 --> 0:12:59.200 have in mind. Yeah, if you don't hear anything else, 0:12:59.320 --> 0:13:00.960 just go do that. Like if you gotta cut the 0:13:00.960 --> 0:13:03.160 episode off, now, go ahead and just make sure you 0:13:03.160 --> 0:13:05.960 write that down and yeah, wait, I have lots more 0:13:05.960 --> 0:13:08.400 to say, and well, yeah, we'll say there's a lot 0:13:08.400 --> 0:13:10.959 more to cover because it varies, but but yeah, that's 0:13:11.000 --> 0:13:13.760 that's the first thing. So most definitely, so juel first off, 0:13:14.080 --> 0:13:17.080 So essentially what is an emergency fund? So an emergency 0:13:17.120 --> 0:13:21.080 fund is essentially the savings account that's separate money only 0:13:21.200 --> 0:13:25.160 used for major financial emergencies. And typically the amount that 0:13:25.200 --> 0:13:28.200 you would want stored in an emergency fund would be 0:13:28.280 --> 0:13:32.000 three to six months of your core expenses. And ultimately 0:13:32.040 --> 0:13:34.120 what that means is, let's say you did lose your job. 0:13:34.640 --> 0:13:36.600 You could pay the mortgage, you can put food on 0:13:36.640 --> 0:13:39.560 the table, you could keep the lights on four three 0:13:39.559 --> 0:13:42.280 to six months while you're looking for work. Yeah, so 0:13:42.320 --> 0:13:44.200 it's important to point out there though, is that that's 0:13:44.240 --> 0:13:46.640 like the emergency, right. So what the emergency was in 0:13:46.640 --> 0:13:50.160 that situation wasn't paying for groceries. It was the job 0:13:50.200 --> 0:13:53.560 loss right to cover the regular expenses. And some other 0:13:53.679 --> 0:13:56.360 situations where it might call for the emergency fund, right, 0:13:56.559 --> 0:13:58.320 say you've got to hide it higher deductible on your 0:13:58.320 --> 0:14:01.160 car insurance, which we would recommend to keep your monthly 0:14:01.200 --> 0:14:03.160 expenses down because it's not likely that you're going to 0:14:03.200 --> 0:14:05.040 get in an accident. But if you do and you 0:14:05.080 --> 0:14:08.240 have a higher deductible, say a thousand bucks is totally 0:14:08.280 --> 0:14:11.160 reasonable to have, you're gonna need to find a thousand 0:14:11.200 --> 0:14:12.960 bucks to put towards your vehicle if you you know, 0:14:13.000 --> 0:14:15.600 if it's totaled. Yeah, and you'll save big money every 0:14:15.800 --> 0:14:19.040 year by having a higher deductible in your homeowners insurance 0:14:19.240 --> 0:14:21.040 and hopefully you know, the goal is never to have 0:14:21.080 --> 0:14:22.680 to use it. But if a tree falls on the 0:14:22.680 --> 0:14:25.760 corner of your house, causes major damage and you know, 0:14:26.000 --> 0:14:27.600 goes through the bathroom and you gotta have you gotta 0:14:27.600 --> 0:14:29.280 have a new roof put on in a whole new bathroom, 0:14:29.680 --> 0:14:33.400 uh installed, then five thousand dollar deductible is that's a 0:14:33.400 --> 0:14:35.600 lot of money, man, That's an emergency right there, right, 0:14:35.880 --> 0:14:38.400 And so an emergency fund is great for something like that, 0:14:38.680 --> 0:14:41.920 whether it's a small fix that you that you can 0:14:41.920 --> 0:14:44.720 do yourself without insurance, or whether it's just a high 0:14:44.760 --> 0:14:47.520 deductible that you have to meet. Having that emergency fund 0:14:47.560 --> 0:14:51.600 for situations like that, of these extenuating circumstances that you 0:14:51.640 --> 0:14:54.880 know can happen but are unlikely and you're hoping and 0:14:54.920 --> 0:14:58.000 praying don't happen. I mean, that's exactly what emergency fund 0:14:58.120 --> 0:15:00.640 is for the things that you want to stay away from. 0:15:00.760 --> 0:15:03.720 The what an emergency fund is not for. It's not 0:15:03.760 --> 0:15:06.120 for putting new tires on your car, it's not for 0:15:06.360 --> 0:15:09.360 routine bills, it's it's not for paying for groceries when 0:15:09.400 --> 0:15:12.840 you currently are employed. Right, So the emergency fund, you 0:15:12.840 --> 0:15:14.400 want to kind of keep that separate and you don't 0:15:14.400 --> 0:15:15.880 want to use it for some of these things that 0:15:15.920 --> 0:15:20.200 you really should be budgeting for. It's for that unexpected really, yeah, 0:15:20.240 --> 0:15:22.160 all those things you should be budgeting for. There's things 0:15:22.160 --> 0:15:24.560 even if it happens not even just once a year, 0:15:24.560 --> 0:15:26.880 but say once every few years, there are certain expenses 0:15:26.920 --> 0:15:29.080 that you just need to be looking ahead to and 0:15:29.280 --> 0:15:31.400 planning not only every year, how much to set aside 0:15:31.400 --> 0:15:33.520 for but literally every month to break that down and 0:15:33.600 --> 0:15:35.480 to know how much you need to set aside. I mean, 0:15:35.480 --> 0:15:37.600 that's that's what it takes. That's what it takes planning 0:15:37.720 --> 0:15:39.760 that way. When the bill comes due, you're prepared and 0:15:39.760 --> 0:15:41.720 it's not an emergency at that point because it's something 0:15:41.760 --> 0:15:43.480 that you can plan on, all right, And so by 0:15:43.520 --> 0:15:47.120 the very definition of emergency, it's an urgent need, right, 0:15:47.160 --> 0:15:50.920 And so emergency funds do need to be accessible and 0:15:51.360 --> 0:15:54.200 fairly liquid. So if that's the case, Matt, that means 0:15:54.360 --> 0:15:57.920 that your emergency fund and we'll get into some caveats later, 0:15:58.200 --> 0:16:02.080 but then it should probably be in a savings account 0:16:02.160 --> 0:16:05.240 earning a decent rate of interest, and preferably even a 0:16:05.280 --> 0:16:09.280 savings account that is separate from the one that you 0:16:09.360 --> 0:16:11.880 normally use. Yeah, Man, So for us, we actually have 0:16:12.320 --> 0:16:15.480 our emergency funds set aside in our savings account. So 0:16:15.680 --> 0:16:18.080 currently we have most of our money in ally bank, 0:16:18.560 --> 0:16:21.280 where we have our sort of day to day expenses. 0:16:21.280 --> 0:16:23.520 Monthly expenses come out of our checking account, but then 0:16:23.560 --> 0:16:26.400 our actual emergency fund chunk is sitting there and the 0:16:26.480 --> 0:16:29.120 savings account because that's where we're earning the high interest 0:16:29.200 --> 0:16:31.560 rate and hopefully your emergency fund is going to be 0:16:32.160 --> 0:16:34.080 a decent chunk, and so you do want to find 0:16:34.120 --> 0:16:36.280 a high interest rate of savings, that's the best place 0:16:36.320 --> 0:16:38.960 to store it. Uh. You definitely don't want to put 0:16:39.400 --> 0:16:41.840 an emergency fund in a four oh one k, right, 0:16:41.880 --> 0:16:44.040 because then you're you're subject to the womens of the 0:16:44.040 --> 0:16:46.040 stock market, and it's not liquid cash you want to 0:16:46.040 --> 0:16:48.120 have in a bank account. And by the way, I 0:16:48.160 --> 0:16:50.040 recently opened a new account with a bank called c 0:16:50.200 --> 0:16:52.680 I T and they pay a lot more than what 0:16:52.840 --> 0:16:54.600 my bank Capital one was paying, and so I went 0:16:54.600 --> 0:16:57.080 from one percent to one point seven. Uh. And so yeah, 0:16:57.080 --> 0:16:59.600 for a large chunk of change, right, earning a little 0:16:59.600 --> 0:17:01.960 bit more every month is where it's at. And there's 0:17:01.960 --> 0:17:04.080 an article on on the website just kind of comparing 0:17:04.119 --> 0:17:06.119 and talking about my experience switching, if you want to 0:17:06.200 --> 0:17:08.120 check that out. So that being said too, if you're 0:17:08.680 --> 0:17:10.919 just more of a nerd, it's not necessary that you 0:17:10.960 --> 0:17:13.719 have your emergency fund in a completely separate account. If 0:17:13.760 --> 0:17:15.679 you're able to create a floor, you know, or like 0:17:15.720 --> 0:17:18.000 a blind that you never kind of dip down into. 0:17:18.240 --> 0:17:20.879 I mean, that's your emergency fund. It doesn't necessarily have 0:17:21.000 --> 0:17:22.960 to be a completely separate thing, because a lot of 0:17:23.000 --> 0:17:26.000 times it just gets complicated. And so and that's the 0:17:26.040 --> 0:17:28.760 last thing we want is for your listeners to not 0:17:28.840 --> 0:17:30.800 do this because you're like, I don't want to have 0:17:30.880 --> 0:17:33.879 to open up another account. I'm just happy with whoever 0:17:33.920 --> 0:17:36.760 I have. Yeah, and I completely you know what I'm saying. Yeah, 0:17:36.800 --> 0:17:38.400 that's kind of how I approach it. I can keep 0:17:38.400 --> 0:17:41.080 everything in the same fund. I think it's important probably 0:17:41.080 --> 0:17:42.720 for a lot of people to have a second fund 0:17:42.760 --> 0:17:46.720 just it helps mentally, but more barriers and sort of walls. Yeah, yeah, 0:17:46.720 --> 0:17:48.679 and then you know, it's like kind of untouchable or whatever. 0:17:48.720 --> 0:17:51.080 But for people that you know, do have like their 0:17:51.119 --> 0:17:55.879 financial act together, uh, creating a separate account certainly isn't necessary. 0:17:56.320 --> 0:17:58.280 And just knowing that there's a floor that you don't 0:17:58.280 --> 0:18:01.480 go beneath is like a really helpful way of doing it. Cool, 0:18:01.520 --> 0:18:04.600 So that's the first thing. Consider opening a separate account, 0:18:04.800 --> 0:18:07.240 or if you know that you're an ultra nerd, create 0:18:07.240 --> 0:18:09.439 that blind start sacking that money away that you know 0:18:09.480 --> 0:18:11.480 you're not going to touch. Yeah. The next thing to 0:18:11.520 --> 0:18:13.920 do is, let's say you don't have one or you're 0:18:14.359 --> 0:18:18.920 kind of a nube, right, at at starting this emergency fund. Well, first, 0:18:18.960 --> 0:18:20.960 know that anybody can do it, and then we'll kind 0:18:20.960 --> 0:18:22.400 of give you a couple of tips to get started. 0:18:23.200 --> 0:18:28.000 My favorite way to actually big time jump start electrify 0:18:28.040 --> 0:18:30.960 your emergency fund is to use a tax refund to 0:18:30.960 --> 0:18:32.600 do that. And so a lot of people probably just 0:18:32.680 --> 0:18:35.320 recently got their tax refunds. We talked about in an 0:18:35.320 --> 0:18:37.880 earlier episode what to do with a tax refund, and 0:18:37.960 --> 0:18:40.239 that was one of the things we mentioned. Using that 0:18:40.320 --> 0:18:44.280 refund to jump start your emergency savings is an awesome 0:18:44.280 --> 0:18:46.880 way to handle that money. So if you have your 0:18:46.880 --> 0:18:49.720 still lingering around, you haven't blown it all on you know, 0:18:49.760 --> 0:18:53.720