Alright, alright, we’re back with another installment of:
HOW NOT TO BE A DUMBA** WITH YOUR MONEY
In our previous post, we talked about how the first thing you should do when you have some savings built up is to start paying off your debt (DEAATTTHHH).
More specifically, paying off high-interest debt like credit cards or car loans (because paying off a mortgage can take YEARS).
Once you start paying off your high-interest debt…
This is the second most important thing you should do:
Build an Emergency Fund.
An Emergency Fund is a cash reserve specifically for unplanned expenses or financial emergencies like:
- Getting in a car accident
- Being laid off or fired from your job
- Replacing something necessary in your home
- Unexpected medical bills
“But do I even need it, Caleb?”
…
Accidents happen. Things will happen. LIFE HAPPENS.
Don’t assume that everything is going to go the way EXACTLY as you imagine it…
Because it won’t.
Having an emergency fund will keep you from dying on the Walmart floor.
If you don’t have an emergency fund to cover unplanned expenses, that means:
- No vacations
- No dumb, dumb purchases
- NO TAQUITOS
Not having an emergency fund is AN EMERGENCY!
“Well, how much should I have inside?”
Although you never know what emergencies might pop up, it depends on your expenses.
Let’s say you get laid off. If you just have $2,000 in your emergency fund and have $2,500 in expenses, you won’t last a month on it.
You should have 1 month’s worth of expenses in your emergency fund minimum.
This is mandatory. No exceptions. If you don’t have a 1 month emergency fund, I would actually start on this before paying off debt.
If you’re a responsible, smart cookie, you’ll have 3-6 months’ worth of expenses. This you can start building up after you pay off the debt.
Here’s where you should keep your emergency fund:
- ✅ Bank account
- ✅ High-yield savings account (BEST)
- ❌ Crypto or stocks
- ❌ Investment properties
NEVER keep your emergency fund in an “investment opportunity.”
That’s not dependable.
Imagine if you got laid off from your job and the market went absolutely through the f**king floor.
You would lose 50-80% of your emergency fund because it was in “investments.”
People who “split their emergency fund into crypto and stocks”
“Ok Caleb, I’ve got 1-6 month’s worth of savings in my emergency fund. What now?”
- Don’t touch it. At all.
- Keep putting money into your fund.
- Only use the money from your fund when you run into an emergency.
AND PLEASE.
FOR THE LOVE OF TAQUITOS, DO NOT SPEND YOUR EMERGENCY FUND ON DUMB S**T YOU DON’T NEED.
Your emergency fund isn’t a regular savings account.
Don’t use the money to treat yourself to a new car. Or a new TV.
Only spend it when it’s ABSOLUTELY NECESSARY.
Ok?
Good.
Now you know how not to be a dumba** with your money.
Congratulations 🙂
Go apply what you’ve learned and get your finances in order.
Taquitos,
Caleb Hammer
