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Can I Get a Debt Consolidation Loan?

Do You Have to Have Good Credit to Get a Debt Consolidation Loan?

If you're struggling to pay off your debts and can't find a good way to increase your income, you may be thinking about finding relief by other means. As you probably know, there's an entire industry that's devoted to helping folks pay down their consumer debts in a timely fashion. A significant amount of the activity that occurs in this industry involves a practice known as debt consolidation lending.

Debt consolidation loans are large loans that may carry relatively low interest rates. They are ideal for borrowers who carry large amounts of credit card debt. Debt consolidation loans enable these borrowers to pay off their high-interest debts and may dramatically simplify their debt payments.debt consolidation loan application form.

True to the "consolidation" in their name, debt consolidation loans are designed to reduce the number of monthly debt payments that a struggling borrower must make. Instead of 12 outstanding credit card bills, a credit card consolidation borrower only has to worry about making a single larger payment to his or her lender.

If you're behind on your credit card payments, you may be wondering whether you have to have good credit to obtain a consolidation loan. Unless you've been very lucky, your credit score is probably not as solid as you would like it to be. You might have a justified worry that you'll be unable to secure approval for your loan.

It would be ironic if you were unable to secure a credit consolidation loan as a result of your poor credit profile. After all, consolidation loans are designed to help borrowers who struggle with large amounts of credit card debt. Most such borrowers have less-than-ideal credit scores. Debt consolidation lenders that adhered to strict credit-score standards when screening borrowers would be cutting out a significant portion of their "target" clientele.

For this reason, it's possible to get a debt consolidation loan with bad credit. Many debt consolidation lenders are willing to issue loans to distressed borrowers. Unfortunately, such loans typically come with some problematic drawbacks.

High interest rates are one of these drawbacks. Whereas "prime" borrowers may be able to secure low-interest consolidation loans, borrowers who have poor or mediocre credit may have to pay through the nose for their loans.

Even in this low-rate environment, it's not uncommon for lenders to charge annual interest rates of 15, 20 or even 25 percent on their sub-prime loans. This might substantially raise your borrowing costs and negate any of your loan's potential savings. If you can't save at least 5 percent on your outstanding debts with a consolidation loan, this course of action may not be worth the hassle.

The potential need to collateralize these loans is another serious drawback. Although each lender's policy is slightly different, many may require you to put up some collateral as a condition of your loan. This could take the form of a car, house or other valuable asset. If you become unable to make the payments on your loan, this asset could be subject to seizure.

The prospect of doing further credit-score damage is a final weakness. Since these credit facilities are so large, the monthly payments on credit card consolidation loans can be massive. If you fall behind on your loan or become unable to make your payments at all, you run the risk of a credit-damaging default.

Once you default on your loan, your credit score will drop precipitously. In turn, this will make it difficult for you to take out another loan. Even if you can find a lender that's willing to approve your application, your new loan would probably carry a far higher interest rate than your original credit facility.

Before you take out a debt consolidation loan, you'll want to consider all of the credit relief options available to you. Although you may be able to secure a loan with a poor credit score, there are certain risks associated with this course of action. In the end, you're the only person who's capable of determining how best to tackle your unsecured debt burden.

by Lacie Kehm

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Spend Money Wisely With These Money Tips

Spend Money Wisely With These Money TipsIt is no question that people need to spend money wisely but it is easier said than done. If it was an easy task, a lot of consumers would not be in debt. Everyone would have more than enough for their retirement fund and emergency fund. Credit card statements will always be paid on time every single time they are received.

However, this is not always the case as consumer debt amount are always increasing for a number of reasons. Though there is no denying that taking on debt can put you in a great financial position if managed correctly. Sadly, this is not always the case for a lot of people. Credit card debt and other types of debt are leaving a lot of people stressed out. CNBC even shares that credit card debt per cardholder is over $6,000.

This makes it all the more important to spend money wisely. Apart from managing your finances well, you also address any financial stress that comes with it. When you start looking for smart ways to manage your finances, you might be surprised by the multiple pieces of financial advice you can get. The challenge sometimes becomes trying to discern which ones to listen to and which ones to disregard.

It has a lot to do with your current financial state. You need to understand that there are no two people in the world who are exactly the same. Even twins grow up to have different sets of goals in life. That being said, you have to make sure that you pattern the money tips according to where you are in your financial life. Here are a few of the general tips which can help you spend your money wisely.

Goal setting

A ship out on sea without any compass runs the risk of getting lost in the water. They would simply sail without any destination in mind. They would use up a lot of resources but never really get anywhere. It is possible that they reach port someplace they never intended to go to. This can pose a problem for the whole crew.

In order to spend money wisely, you need to make sure that you have a goal you are aiming for. If your goal is to pay off the house faster, all your actions need to get you closer to that goal. If you are going to cut down on expenses, make sure that the money you save goes to the house payment. When you decide to get a side gig, it is important to funnel that income towards house payment.

When you have that goal, you get more focus on how you spend your money. It gives you the chance to separate what you really need and what you can do away for the moment. As you get to do that, your spending gets more focused on helping you eliminate unnecessary purchases. You understand what you need and you stick to them to reach your goals in life.

Learn from people around you

There is a lot of wisdom you can get from other people and these can help you spend money wisely. Take a look at how other people are able to reach their goals. There are some high-profile people who are sharing their wisdom with a lot of people. They do this through interviews and even articles where they impart their philosophy and beliefs in life which got them to the top.

This is not to say that you follow and do every little thing they did because results can and will vary from one person to another. The idea is to look at what you can apply in your own life to help you reach your goals. A lot of these people would have some proven techniques to help you understand how you can spend wisely.

You also have a lot of friends and family members whom you can talk to. Meeting out for coffee or even inviting them over for dinner can open your mind to a lot of possibilities. You just have to talk to the right people and those that you trust. It also helps to know that the people you talk to only have the best intentions for you and that they do not have any hidden agenda.

Know your priorities in life

Apart from setting your goals, having a clear understanding of your priorities in life can help you spend money wisely. This gives you further direction on what you need to spend on. If you are not really into gadgets, you do not have to spend and buy the latest smartphone that comes out. Same with clothes – if you a minimalist approach when it comes to your wardrobe, you don’t have to go shopping for clothes every month.

Once you have an idea what your priorities are, you allocate your funds toward those goals. If you prefer to improve on yourself by learning as much as you can about your chosen field, then use the money to go back to school. You can also look into workshops near your area. If you believe that taking care of your health is a top priority, use the money to get into specific exercise classes. You can even opt for healthier meals as well.

Keeping up with other people

This is one of the characteristics that will hamper your desire to spend money wisely. If you constantly compare yourself with other, there will be a lot of times you end up disappointed. This is not to say that everyone else is better than you. What you need to understand is that every single person you see and meet is different.

Your neighbors and even colleagues might seem to have more than you. They have a bigger house, new car, or even a new phone. However, they might have bigger payments than you and struggle every month. Your only competition should be yourself. Try and be a better version of yourself every day so you can reach your goals in life.

Common pitfall when trying to spend money wisely

One of the most common problems people face when trying to spend their fund better is that they get trapped with the notion that their credit limit is part of their budget. What that amount really represents is the ceiling or limit by which you can use your card. This is not a challenge for you to see if you can max out your card.

In fact, you always need to be mindful of how much credit you are using. This is because it can affect your credit score. Be mindful of how much you charge and make it a habit to pay it off once you get the bill. Credit card lenders add several fees and other charges when you only settle the minimum amount. You think you are saving money but you are actually digging a deeper debt hole with minimum payments.

There are a lot of ways to help you spend money wisely and you just have to find the right advice that fits your current situation. The bottomline is that you need to make concrete steps to help you improve your finances and bring you closer to your goals.

Money Saving Tips Before Your Vacation Outside The Country

Money Saving Tips Before Your Vacation Outside The CountryTaking a vacation is a welcome respite from the daily grind but you still need to take a look at some money saving tips before you head out. As enjoyable and relaxing a vacation can be, you do not want to come home to stacks of credit card bills with unexplained fees. That is what will be welcoming you home if you are not smart with the way you manage your finances.

One of the many reasons why you want to get out and enjoy a nice vacation is to get a break from stressful situations. A big part of this can be your finances. So when you go out on a trip without creating concrete steps to make sure your finances are taken cared of, you will regret it. You might need another vacation just to get over your financial worries.

This is why having money saving tips are important for when you are about to travel and you want to come home all relaxed and energized. Especially as more and more people are traveling around the world. As Forbes reported, about 68% of Americans went on a vacation in 2017. This means a lot more people are going out and enjoying the world.

If you are planning to take a trip, here are a few things you need to consider to make it as hassle-free financially as possible.

Create a budget

One thing you need to understand is that a household budget is an important tool in getting your finances in order. However, creating a separate one for your trip can help you organize your travel. For one, it can give you an idea of how much you need to save up before you head out onto the sunset and sipping margaritas by the beach.

This one takes a lot of forward planning since you need to know how much your vacation costs. This is one of the money saving tips you need to take to heart. Find out what you plan to do while on vacation. Are you going to the beach or just taking a guided tour? Are you visiting museums or friends in the area? You then figure out how each one costs so you can have a running budget. Factor in all items pertaining to your travel.

Include your plane fare, any transfers you would take to and from the airport to your hotel. The budget also tips you will be giving out. It might sound like a tedious process but you have to remember that every small thing adds up. Having a comprehensive budget can help you prepare and enjoy your vacation without ringing up a huge debt amount along the way.

Call your bank

This is one of the money saving tips you need to keep in mind before traveling outside the country. It differs from one bank to another but a lot of them have systems in place to protect your account. One of which is flagging and denying any transactions made out of the country. This can be a big hassle on your end if you are out shopping and your transaction is denied.

It is best to give your bank a heads up on your travel plans and let them know where you are going exactly. This way, you get to use your credit card without any hitch. If your bank knows where you are, transactions in that country are most likely to go through and be approved. You don’t have to deal with calling them while you are out of the country and explaining the purchase.

It is also good to ask them about foreign banks accepting your PIN number. If you have a 6-digit PIN and banks in other countries have 4-digit PIN numbers, ask your bank how you should proceed. It is possible to change your PIN or simply use the first four or last four of your existing numbers. This all depends on where you are going and what your bank tells you so it is better to call them before leaving.

Take note of foreign transaction fees

One of the money saving tips you have to keep in mind when traveling abroad is to try and minimize these foreign transaction fees. Simply put, this is a fee imposed by your bank or lender when you transact abroad. This can be a surprising amount in your statements when you get home after a nice trip.

When you put a call to your bank or lender before leaving, ask them about it. Make sure you know how much that fee is. If possible, you can ask to have it waived for the whole duration of your trip. Your lender may or may not give in to this request but it is worth a try. They may not completely waive it but they might be able to give you a reduction on the fee.

Keep track of your debt and bill payments

When you look at money saving tips before travel, one of the things you need to remember is that you will leave behind payments when you go on extended vacations. Even if it is just for a few days, it might coincide with a bill payment that is why you have to make a note of your payments. You do not want to stress out while on vacation simply because you overlooked your car or house payment.

One idea you can explore is to set up your payments online. This helps you stay on top of your financial obligations while ensuring everything is paid automatically every month. ACI worldwide shares that about 56% of American consumers pay their bills online. This is a great start and you just have to make sure that your payments go out even while you are on vacation.

Online payment makes it easier for you to monitor your financial obligations regardless of where you are in the world. It does not matter if you are at the beach, on a cruise, or even in the park. You simply need your device and an internet connection to monitor and make sure your bills and other debt obligations are paid on time.

Enjoy your vacation

It might not seem to be part of the money saving tips you have to keep in mind when out on a vacation. However, you might be surprised with people who seems stressed out while trying to enjoy a break. Part of this is that they are trying to think about the problems back home. Their mind is thinking about their mortgage payments and when it will end. They can also be thinking about their car payments and insurance and even their student loan payments.

Though it is important to keep all these on top of mind, you need to remember that you are taking a vacation to relax and manage financial stress. Your break is no use if you keep on thinking about finances. Take time to pamper yourself and relax so you can come back feeling refreshed and ready to take on life.

Money saving tips maybe the last thing on your mind when you decide to take a vacation outside the country. However, it needs to have a place in your plans because you do not want to come back to stacks of unpaid bills and high foreign transaction fees from your trip.

Activities To Manage Financial Stress

Activities To Manage Financial StressOne of the most challenging parts of your adult life is trying to manage financial stress. It might seem like a small thing since everyone is dealing with them. You may feel nothing to it because you are already used to it. What is worrying is the fact that you might think the solution to it is taking in more debt. If you cannot pay for a debt obligation or you want to buy a new pair of shoes, you simply charge it.

This way of thinking has been prevalent with a lot of consumers that credit card debt is a part of an average household debt obligation. Experian shares that the average credit card debt for consumers in 2017 is $6,354. This may pale in comparison with when you think of your mortgage loan, student loan, or even your car loan payments. However, credit card debt can come with serious penalties and charges. This can quickly increase your payment amount in no time. This makes it all the more important for people to try and manage financial stress. It can come easily from an unpaid credit card, a delayed mortgage payment, or even foregoing student loan due dates.

Financial stress and your health

There are a few physical manifestations of stress that you have to look out for. One of the very first signs of it is having questionable coping behaviors. People who are stressed out tend to look for an unhealthy outlet which further complicates the situation. Some would just start drinking, smoke heavily, or even gambling.

Another sign that people are unable to manage financial stress is that they start to forget about themselves and focus on what little they can do. This usually comes at the expense of personal health, safety, and even grooming. Rather than seek medical help with aches and pains, they would rather tough it out. People under immense financial stress also tend to forget how they look even in the personal hygiene department.

If you are trying to manage money stress, you might not notice it but you are slowly losing sleep at night. This is because your mind is overthinking and over analyzing your current financial situation and you get to sleep only for a few hours. As a result, you look tired in the morning and unable to fully function at work or even at home.

To make matters worse, financial stress can introduce a myriad of unhealthy emotions. You may start to entertain thoughts of frustration, anxiety, and even become hopeless when you see your finances. The challenging part of this is that once you dwell on these emotions, it can aggravate your situation further. It is possible that you go deeper into debt because of this.

Now that you have an idea what money stress can do to you, here are a few things you can consider to help you manage stress better.

Face your financial problems

One of the best ways to manage financial stress is not to cower and hide but to face it. It is easier said than done but the longer you beat around the bush, the bigger the problem can get. You just have to sit down and start writing down all the debt obligations you have. It would help if you have current statements from your lenders and creditors so you are looking at current numbers.

Start making a list of who the lender is, what type of debt it is, the amount you have to pay, the due date, as well as interest rate. Make sure to include everything from as big as your mortgage loans and student loans to small ones like borrowing from family and friends. You need to make sure you do not forget anything so you can manage your payment plan.

Talk to a professional

After you have made a list of what you owe, you need to start crafting a plan on how you will pay all of them. If your income can cover your expenses as well as your debt obligations, you simply need to make sure that you send out on-time payments. However, if you are running short and your take-home pay is not enough for all your expenses, then you have your work cut out for you.

To help you manage financial stress better, it is a good idea to try and hire a finance professional. There is a lot of wisdom to learn from them because their expertise is helping people like you manage and eventually, get out of debt. Their focus is to guide with into managing your finances so you can reach your goals in life.

One of the first things they would be asking you is to give them an idea what your debt situation is all about. At this point, you already have that list you made so it is best to show it to them. They will then ask how your finances are in terms of your income. They would also ask you what your goals are in life. What they will do is put these things together to give you options on how you can manage your financial stress.

Debt consolidation

One of the programs you might have heard about from friends and family and even finance professionals is debt consolidation. This repayment program works best if you are able to cover for your payments. If you are simply overwhelmed with the number of accounts you are managing, this can be an excellent repayment program of choice.

You get to manage financial stress better because you combine your debt obligations under one account. When this happens, you will only be concerned with just one payment amount to be paid on one due date with one interest rate. This gives you the chance to monitor your payment very carefully. It also lowers the chance of forgetting to send out a payment.

Exercise your body

It might sound like a cliche but getting some exercise for your body can be a big help in addressing stress all around you. As you exercise, you get to clear your head and get to think clearly. This in turns gives you the chance to address your problems squarely. Once you have a clear head, you can better assess your situation and think of ways to get out of it.

You also feel better and get to do more when you have a healthier mind and body. It pushes stress out of your life and you get to do more in the day. It helps you manage the work you need to do because you get to focus on quality work rather than quantity of things you need to accomplish. This also helps you prepare for what you need to accomplish in the coming days.

There are a lot of activities you can look into when you are trying to address and manage financial stress. You just have to identify what works for you. It is also crucial that you stick to it and not give up on the first sign of problems. As you manage your stress, you will encounter a lot of challenges and you need to persevere. It will not be easy but it will not be impossible. More importantly, it will be worth it in the end.

Having A Side Gig Benefits Your Whole Life

Having A Side Gig Benefits Your Whole LifeYou might have heard someone taking on a side gig to complement their take-home pay. It is becoming a new normal especially coming from the recent Great Recession. A lot of people are now trying to look for ways to increase their income. It helps them budget better, pay for their expenses, and more importantly, prepare for unforeseen incidents.

This is because a lot of people were caught off-guard when the 2018 Great Recession hit the country. There were about 8 million jobs lost and about 1.2 million homes lost during the Recession. Many people are still trying to get back up on their feet fixing their finances. Some are already thinking ahead and strengthening their emergency fund.

In both these situations, having a side gig will be a big help in helping your finances get to a point where you will feel comfortable, or at least safe. Safe in the sense that when another unforeseen incident arises, your finances will be able to handle it. You will have that buffer you need to get it through and weather the storm.

It might surprise you to know that the gig economy consists of about 34% of the total workforce according to reports from CNN. According to the same report, it is expected to go as high as 43% in 2020. With these numbers, it is safe to say that a lot of people are gravitating towards taking on a side job. Here are a few of the actual benefits it brings you.

A side gig provides you additional income

This is one of the most obvious reasons why people want to take on extra side jobs. As mentioned earlier in the article, it helps increase their take-home pay and gives people the chance to create an elbow room in their finances. It is quite hard to try and live from paycheck to paycheck because one wrong move and you are back in debt.

If you are in debt, having an extra source of income is a welcome development. This is because the extra money you get can help you pay for your financial obligations. If you have been forced to pay just the minimum on your card, you can now pay more than that or even pay it in full. You can finally get your car fixed or even get up to date on your house payments.

If your finances are on track, the extra money you get can help you move forward faster with your goals in life. For one, you can strengthen your emergency fund to tackle unexpected situations in life. You can also put more into your retirement account. The extra money can even help you max out your 401(k) contributions and take full advantage of an employer matching program.

It allows you to pursue your passion

A side gig can also help give you the chance to pursue things that you love to do. This would be challenging or even close to impossible if you are on a shoestring budget. Rather than pursue something else, you would simply put all your efforts into meeting your payments. You would not have the time or the resources to do anything else.

If you are able to find a gig that involves your passion or hobby, then good for you. Not only will you be able to earn extra money, you get to do something you love as well. That is a win in most people’s book because that does not happen always. There are people who feel they are trapped in their line of work and stay there because of the bills they have to pay.

For some, they are not as lucky to find a sideline job that they want. Maybe it was there for convenience’s sake like dog walking or tutoring the neighbor’s kids. This is still a good way to earn money. It can even give you the ability to take on your hobbies with the little extra you make.

Retirees find purpose

Retirement is a completely different experience and people usually forget to plan for activities once they retire. Most people’s idea of retirement is not reporting for work and staying in watching tv all day. Though it really depends on you on what you wish your retirement to be, a lot of retirees feel differently especially when it comes to working.

A Gallup survey revealed that about 63% of retirees plan to work part-time after retirement. This simply means that a lot of retired people would be looking for a side gig for a number of reasons. Some would obviously do it for the money. Any source of income after retirement could be a big deal. They can use it to buy medicines, eat out, or even set it aside for the rainy day.

Then there are those who would do it to find an alternative way of spending their time. They can devote their time to pursuing a passion no matter how much they make out of it. The already have what they need to live out their retirement anyway. The money is a plus but they do it simply because they love what they are doing.

It keeps you occupied

There are times that you need a side gig to keep you preoccupied. It is possible that you may have a lot of time on your hands due to different situation in life. For one, retirees have a lot of time on their hands that is why they can pursue any sideline work. There are also students who need it and may want to put the extra time to good use.

You might also have a lot of energy even after you get home from work so looking for something to do and earning from it seems like a good choice. You can take up online work writing articles, designing artwork, or even managing projects for other people. This is all possible without having to leave the comfort of your own home.

Weekends are also a great time to look for a side job you can do. If you have a particular hobby you are good enough for people to pay you for it, then you can explore that. It can be baking on weekdays and selling them at a nearby market on weekends. If you love photography, you can offer your services to family and friends for a minimal fee.

There are a lot of benefits you would get from taking on a side gig whether to augment shortage on your own income or to spend time wisely. What you need to keep in mind is that you can do this at any point in your life. As a student, you can take on side jobs to help you pay for school. Cost of attendance is one of the biggest problems of students nowadays. When you are already working, you can take on an extra job to make use of time and energy you both have. Retirement can also be a good stage in your life to consider doing some part-time work. The bottomline is that you can take up extra jobs to help you reach not only your financial targets but your life goals in general.

Emergency Fund And How Much Do You Really Need

emergency fundOne of the areas of personal finance you might be struggling with at the moment can be your emergency fund. For an account that is supposed to be as straightforward as it goes, a lot of consumers are still in the dark. It is either you do not have any reserve money to speak of or you do not have enough to help you when unexpected life situation occurs.

Not everyone is able to save up for their own reserve funds. It is sad that only 39% of Americans have enough to cover a $1,000 emergency according to a CNBC report. This is a dangerously low amount of consumers who have money for emergencies. There are times when you think life is going great but all of a sudden, it can throw you a curveball.

You might think that you have a great career but there are things out of your control which can affect that. A sudden buyout by a competitor might leave you jobless. There can even be economic problems with a big supplier which can affect the company you are working with. It may cause your company to fold and you would be out of a job in no time.

There can also be medical reasons why you would need an emergency fund. It helps to invest in your health early on but there are instances where you cannot control what happens to your body. Apart from accidents happening, there are some illnesses that seem to just come out of nowhere. Some can just be your common flu but there are others much worse.

The CDC shares that heart disease is one of the leading causes of death for most Americans. This happens without any warning and if you make it to the hospital in time, you might make it. But this is just one of the instances where having your reserve funds can be handy. It would give you the chance to meet your financial obligations while you recuperate in the hospital.

How much do you really need in your emergency fund?

This has always been one of the first questions you would ask yourself when you start saving for your reserves. When you start to do your own research, there will b a lot of suggestions from $100 to even 12-months or more of emergency money. It could start to get confusing real quick when you do not have an idea where to start.

One of the factors is job stability. The stability of your job and that of your partner if you are married plays a crucial role in deciding how much emergency money you need. If you are at a point where you have a stable job and able to cover your expenses easily in your budget, you can do away with about three months worth of emergency fund in your finances.

On the other hand, if you are trying to make ends meet holding unstable jobs, you would need a lot bigger amount in your reserve fund. This is to help you get through the unforeseen events which could lead to a lot of things including job loss. Once your current situation negatively impacts your income, you need to rely on your emergency savings to get you through while looking for a new job.

The challenging part of this is that when you are struggling, you need more in your emergency money but that is hard to accomplish with your current financial situation. When you are doing great, you do not need a lot. What you need to remember is that you will not always be in the same financial position as you are now. So remember to save up when you can and limit spending when times get tough. This will help you save for emergencies and manage to spend when running a tight budget.

What does you emergency money cover

You may have a lot of factors to consider when your emergency reserve money is concerned. Apart from identifying how much you need, you also need to make sure that you are able to cover all the essentials in your budget. There is no two budget that is the same but there will common expenses that need to be covered in times of emergencies.

One of the most important expenses your emergency fund needs to cover is your housing situation. You need to include either your rent or your mortgage payment in your planning. This helps ensure that you do not become homeless when experiencing an emergency. It is also important that you factor in your utilities so you keep essentials like water and lights running.

Other expenses would be food budget, car payments, and expenses, as well as insurance premium payments. Take a look at other recurring expenses you might have at home as well. When computing for the amount you need to save, try and limit the amount you put into discretionary expenses. This can help you lower down your target and make it a bit easier to save up for it.

Running behind on your savings

There will be times when you might seem to be behind your schedule in saving for your emergency fund. You could think it is doable since you might not need it in the coming months. However, the sooner you save up for what you need, the less stressful it will be when you need it. There is no way of knowing when that instance will be so the sooner you save up, the better.

One idea to try is to enroll in a high-yield saving account into automatic transfer. You can put your emergency money into this account. It can work because the money is not just at home in a drawer where you can be tempted to use it. At the same time, it is not that hard to get hold of your funds when an emergency happens. Once you put that money into that account, you need to forget about it. Think of it as an expense or a bill payment every month. Once you make a payment, it stays there and you do not dip into it unless you have to for emergency purposes.

What is an emergency situation

This is another question that you have to seriously consider when managing your emergency money. You cannot simply consider every problem an emergency otherwise your fund will run out real quick. It is a good idea to make a list of possible situations that would classify as an emergency. The last thing you need is dipping into your emergency account because you want to buy a new pair of shoes.

Make a list of what an emergency situation is for your if you cannot distinguish a sale event from car trouble. It can as big as losing your job or getting hospitalized or even your car needing emergency repairs. Your funds need to be used for emergencies only and not to give in to your wants.

There are a lot of factors to consider when you start saving for your emergency fund and you need to consider all of them. Look at where you are financially and save up based on what you can and what you might need.
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