Another Reason to Build an Emergency Fund!

So last month I had an emergency, one of my air conditioning units went out right in the middle of the summer heat in Texas. Luckily that has been taken care of and my out-of-pocket expenses were minimal. However, a few more events have happened since then…

Another repair or replacement coming soon

We’ve all heard the saying “when it rains, it pours” right!

Well, I started having problems with my dryer and ordered a replacement part. I’ve replaced this same part before, so I assumed there would be no issues. I had the part replaced but the dryer soon began to overheat and turn off. I contemplated purchasing a new dryer but they are expensive. I was also planning to have the dryer checked and the vents cleaned but did not find anyone to do that for me.

So what did I do? I waited a while (procrastinated actually) and did not use the dryer in hopes that it just needed to cool down and would then magically work (yeah right!). Nonetheless, two weeks later I come to find that things inside the dryer look like they have melted which means I will have to purchase a new dryer after all – not what I wanted.

There have been a couple more events that have affected my finances but that will come at a later time, Now, on to my repair crisis…

Back to my emergency fund and budget

While I have somewhat of an emergency fund (not at all great but something), I can not fit a brand new dryer in my current budget. My only option to make this purchase is with a credit card and let’s face it, it’s simple to swipe a card and receive the product almost instantly but how long is it really going to take to actually pay off that debt. I’ve been in a credit situation before and it is not good!

One bright side to credit cards is that if you have the income and are financially disciplined, it is possible to use credit cards to your advantage in a way that will actually boost your credit score. But what about those who live paycheck to paycheck, a purchase such as this can really disrupt spending decisions.

As for me, I have to really think about my options (disrupt my budget or use a credit card) and make the best financial decision for my situation, whether that means I set aside at least $100 each paycheck until I can pay for the dryer with cash or use my credit card and make $100 payments each paycheck that will be distributed first to the interest and then to the actual balance.

Start a savings plan

In the end, everyone will run into a financial situation that will result in some out-of-pocket costs. The way an unexpected is resolved depends on your finances. If you are financially prepared, you can take on an unexpected expense with little to no stress. On the other hand, for those who are not prepared, an unexpected expense can really throw you off course. For this reason, it is very important to know how to save and grow your money.

If you think about the whole credit card option, why would you want to pay the credit card companies 20% – 30% interest a month watching your balance slowly reducing and possibly linger on for years.

Although we all face difficult decisions, don’t get caught up with debt if you’re unsure or not disciplined enough to manage it. And if you are already in debt, there is a way out and you can become financially free.

The first step to begin your financial freedom journey is by working on your budget, which can sometimes be overwhelming. Working with a trusted licensed financial professional may sometimes be necessary and that can make the budgeting process and analyzing your financial situation a bit more easier. With that said, let’s work together. Contact me today and ask me how to get your finances in control!