You already know this advice: Get out of debt. And we’re totally on board with this plan. But first, you need a starter emergency fund. Just $1,000 in the bank provides you with all kinds of financial protection.
When you’re holding $1,000 before getting out of debt, you can avoid taking on new debt. So when life tries to mess with you—your tire goes flat, your kid gets sick, the pipe under your sink bursts—you’re ready. You can easily pay what you owe and move on to more important things like knocking out that debt.
Of course, maybe you’re wondering, How on earth am I going to make $1,000?Don’t worry. We’ve got plenty of ideas. If you’re willing to get a bit radical, you’ll not only make $1,000, but you’ll make it fast!
- Start budgeting. Want to hear something cool? The first time you create an EveryDollar budget you’ll probably find money you didn’t know you had. Seriously. Without a budget we often spend money carelessly. After a few dollars here or a couple twenties there, we have no idea where our money went. With a budget, you give every dollar a name. And one of the top names on that list should be your $1,000 emergency fund. Decide how much money you can save each month and do that first. Then tell the rest of your money where to go.
- Drop entertainment, restaurants and unnecessary shopping. Brace yourself for this one. We all have to eat, right? But we don’t have to eat at a restaurant. If you’re serious about gathering $1,000 quickly, consider putting a temporary stop to dining out, visiting the movie theater, and grabbing Friday night drinks with friends. Be aware of other ways you tend to spend for the sake of fun. Maybe you’re a sports junkie who goes to every home game, or maybe you enjoy a good online shopping spree. Perhaps you like to decorate and redecorate or love to entertain large groups in your home. To save $1,000 fast, look for inexpensive ways to have a good time.
- Evaluate necessary expenses. Spend some time with your budget. Get acquainted with categories like groceries, clothing, diapers, and gas. We’re talking about areas you can’t cut out but could cut back. Buy generic brands or store brands for a bit. Try traveling less. If you find a great deal on an item you absolutely need, buy it in bulk. Make a list and stick to it when running errands. You might just surprise yourself with your own creativity in spending less to save more.
- Re-examine your bills. Most likely your monthly fixed bills are of the “set it and forget it” variety. You chose your plans years ago and just don’t think about them now. Well, it’s time to rethink everything because you have $1,000 to earn! Log into the online accounts for your cell phone, cable or internet provider, car insurance, life insurance, and gym membership. Investigate how much you pay, the benefits of the service you pay for, and how much you actually use those benefits. Contact a customer service rep or independant insurance agent to negotiate better deals or consider cancelling where you can.