My Emergency Fund to the Rescue!!
We have been hearing a lot about emergency funds in recent months because of the state of our economy; saving money has become the new black. I think it is great that people are finally getting serious about building and emergency fund and I honestly don’t understand how people can go through life without it. It is suggested that people now have an emergency fund that’s equivalent to 6-8 months of your income. I am a total realist and understand that this is not possible in every situation and honestly it is not expected to happen overnight, but at least have a couple thousand saved up. You are probably thinking that you aren’t in the position to put money towards an emergency fund. For some, that may be true, but what about using your tax refund? Most people I know cannot wait until January 31st so they can do their taxes and get a refund. Well, instead of spending that money on clothes, a TV, or some other material items, put some of it towards your emergency fund. You can also use those extra paychecks that some receive if on a 26 weeks pay cycle and open up a Bank of America card and sign up for their Keep the Change program. Whatever you have to do, DO IT!! so you can have piece of mind and not totally freak out when problems start knocking at your door.
Our problem this month was our 2001 Nissan Altima. It is started to shake when we went over 55 mph and it was puttering. The car has over 166K miles on it and we have no intentions on buying another car, so our only alternative is to get it fixed. My husband was a little upset, but I, the cheap, frugal, penny-pinching queen, was fine. Why? Because I know we have an emergency fund and I figured the repairs would not cost more than $1,000. I was almost right; the repairs needed to FIX the car only cost $1,000, but I was able to talk them down to $900 (yeah me!!) However, of course, they found everything else under the sun that needs to be fixed which would have cost an additional $700. We did not get those repairs done yet, mainly because they are not life threatening and because I just was not mentally to prepared to pay more than $1,000 even though we have the money.
But I started thinking, what if we did not have our emergency fun, our credit cards were maxed out or cancelled because credit card issuers are closing unused cards, we only had the one car that’s not working, and can no longer get to work. Result: we take out a payday loan, (the worst thing ever invented) get fired because we could not get to work, some other problems comes up which prevents us from paying back to loan, and they take our car. I know this is an extreme situation, but it is a “very” real situation.
Thank God our emergency fund rescued us from this situation, but there are many people who are not as fortunate.
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Free Money w/ Keep the Change…Almost!
1st let me say that my husband works for Bank of America, but I promise that my opinion about this program is completely unbiased.
Bank of America offers a program called Keep the Change which has to be the easiest way EVER to save money. It basically functions as your electronic penny jar. I remember reading awhile ago, when people were using cash,that change is to be saved and not used to purchase items. It stated that at the end of the day, all leftover change should be placed in a jar and used in emergency situations or for things like birthday and Christmas shopping. Times have changed and most people use a debit/check card for purchases. Some even use credit cards. I don’t have anything against using credit cards as long as the purchases fit into your monthly budget and you are able to pay off the balance to avoid interest charges. Bank of America has taken that ‘save your change’ concept and modernized it.
Here is what Bank of America has to say:
Save automatically with every Check Card purchase you make. Saving is a whole lot simpler when you don’t have to think about it. That’s the idea behind Keep the Change. When you enroll, each time you buy something with your Bank of America Check Card, we’ll round up your purchase to the nearest dollar amount and transfer the difference from your checking account to your savings account. You get to keep the change – so every cup of coffee, tank of gas, or bag of groceries adds up to more savings for you. What could be easier?
We’ll even match your savings1
We’ll match your Keep the Change savings for the first 3 months, to the penny. After that, we’ll continue matching 5% a year. The maximum total match is $250 per year.
I am enrolled in this program, I love it, and have saved over $200 since January. My husband and I take advantage of this program when buying gas and tipping by going over the amount by $.01 instead of rounding to the nearest dollar. Meaning, we always fill up the tank so the total amount is $40.01 or give a tip to make our restaurant bill $33.01. That way, BOA will transfer $1.98 into our account. It does not sound like much, but a little bit here and there adds up.
I have been soooo tempted to spend the money, but I plan on using it for Christmas shopping. I will not spend the money until they have matched my savings for the year. I plan to use this money for Christmas shopping, but it can also be used towards building an emergency fund, paying off debt, or spending money on a vacation. I don’t think this should be your only means of saving money, but it is definitely another thought-less avenue for doing so.
I did read at www.wisebread.com a few minor cons about this program:
- If you overdraw your account for a day, you won’t get matched for that day. Only Bank of America checkcards count, so you won’t get it with a regular co-branded Visa.
- You have to report the promotional matching funds to the IRS (form 1099).
- They don’t start matching right away. According to the CSR, they will match your funds at the end of your anniversary
- You don’t get great interest rates on savings.
- You only make a good deal of money on this if you spend on tons of little items.
The enrollment in this program is not automatic. If you already have a Bank of America account, it is worth the 15 minutes you will spend at the branch or you can enroll online.