A shout out to the emergency fund
April 16, 2008, 12:29 pm
Filed under: Money Basics

Jake and I have decided to rent the house from the owner of my dad’s studio because it would be pretty stupid of us to pass up such a great offer.

In order to secure the place, we need to fill out the application and give her the $600 security deposit (she didn’t say by when, but we’re guessing within a week or two). Once that’s squared away, we need to turn the electric over to our names and pay $200 by May 1st and another $200 by June 1st for her to continue to hold it for us. We will then sign the lease and officially have the house July 1st.

For those of you who are counting, that’s a total of $1,000 we need to pay (not including the electric bills during those two months, but those should be very small) before we even sign our names on the dotted line. There’s no way we would be able to snag this house and pay these extra “bills” if it weren’t for our wonderful friend, the emergency fund.

As I type this, the $600 is about a day or two away from landing in my checking account. Not a drop of sweat has been wiped off my brow over the figure or where we were going to scrounge up the money. We’ve saved our dimes here and there in a high yield HSBC savings account so that when we need a nice chunk of change to pay for something significant, we’ve got it; no problem.

If we didn’t have this money saved up, we would have to wait until our current lease is up, have our current landlords inspect the apartment, and have them send our $590 security deposit back to us. By then, the house would probably be long gone. Now, we’re securing the house and whenever we get that deposit back, we can just put it straight into our savings account to raise our balance back to where it was before.

As far as the other $400 goes, Jake and I might be able to swing it without dipping into our savings since it will only be an extra $100 a month for each of us. Besides, if we can’t afford to pay that extra money, we might as well not get the house to begin with since that’s about how much more we’ll be paying a month to move into the bigger place. As a result, those two months will be a trail run of sorts.

If you haven’t started an emergency fund yet, what are you waiting for? Socking away just a small amount every week, two weeks, or month makes a big impact over the long term. I highly recommend HSBC Direct or ING Direct in order to get a great interest rate. If you are seriously considering opening an account with ING (they also offer a free checking account that has a competitive interest rate), please drop me a comment or email me directly at 20saver at gmail dot com so that you can get a $25 bonus by using my referral link.