Could you come up with $400 in an emergency?

in an emergency
Rich Legg/iStockphoto.com NPR

“If a financial emergency struck — say, a health problem or a car that needed repair — would you be able to come up with $400? According to the Federal Reserve Board, 47 percent of Americans would have trouble doing so — they would have to sell something, borrow money or simply couldn’t pay.”

$400 in an emergency? Of course!
Without borrowing it? Sure, just put it on my credit card! (um…)

Yesterday on Weekend Edition, NPR reported the startling findings that almost HALF of US Citizens couldn’t come up with an emergency $400 without borrowing it or selling something to get it.

And think of what “in an emergency” means:

  • $400 is a simple car repair.
  • $400 is an airline ticket to your Aunt Ruth’s funeral.
  • $400 is Fido’s vet appointment.
  • $400 is a chipped tooth.
  • $400 is Jr’s emergency room visit.

Before we got control of our finances, a $400 emergency would have caused us to go into a panic! And then we would have sucked it up and charged it on our already-maxed-out credit cards.

This is why we have a $1,000 starter emergency fund before we do anything else. Click To Tweet

Before you can save for college, before you can budget, before you can start aggressively paying off debt, before you can invest, before you can vacation, before you can be truly generous, you must have a baby emergency fund. If you don’t, every little $400 emergency will set your whole plan back by a year!

These 47% of Americans aren’t all poor people. These are the American middle class. And they’re living paycheck-to-paycheck.

Here’s another quote from the interview:

“We have been taught that a middle-class existence is … maybe a $250,000 house, and a vacation every year, and a car for each adult, and education for the children. And, indeed, those are the very metrics that the commerce department has used in defining what a middle-class life is. But as I point out in the article… the price tag for that middle-class life is $130,000. Only 1 in 8 Americans makes $130,000. So the middle-class life that we’ve all been taught is ours — if only we work for it — is out of the reach of all but a very small number of us.”

So some of this is about contentment:

Would you be content living a lifestyle you can actually afford? Click To Tweet

And some of this is about processes:

Are you doing the right things in the right order to win with money? Click To Tweet

If you find that you wouldn’t have $400 in an emergency, you may need help with contentment or help organizing your finances. Who do you know that could help you with that?

Webinar – Thriving on a Pastor’s Salary

Thriving on a Pastor's Salary WebinarClergy Financial Coaching is offering a free webinar to help you learn the Three Keys to Thriving on a Pastor’s Salary.

Pastors have unique financial needs. They also have unique opportunities. This 45-minute presentation gives you the framework you need to gain full control of your financial situation.

Thriving on a Pastor’s Salary is available three days a week.  Click now to reserve your spot.

Two New Financial Calculators

This week, we’ve added two new financial calculators to help you with your spending plan. The first calculates the percentages you’re currently spending. The second calculates how much Dave Ramsey recommends you should be spending for your income level.

Expense Percentage Calculator

Use this calculator to determine what percentage of your income you are currently spending on each of your various expense categories. Print off a copy and compare it with the Recommended Spending Calculator.

Recommended Spending Calculator

Use this calculator to figure out the recommended spending numbers for your current income. Are you planning too much for housing or not enough for savings? Which of your categories would be easy to change?


See all of our financial calculators here.

 

New Financial Calculators

This week we’ve added three financial calculators to Clergy Financial Coaching:

Financial Position Calculator

Use this calculator to get a snapshot of your finances and calculate your net worth.  Print out a copy to compare over time.

Debt Snowball Calculator

Use this calculator to show how much time and money you can save by paying off your debts using the “snowball” method. Print out your snowball plan and get out of debt fast!

Retirement Calculator

Use this calculator to do advanced retirement planning. Are you saving enough? Play with the variables. Print off different scenarios and compare them.

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