Why You Should Really Have an Emergency Fund

There are a number of good reasons that everyone should have an emergency fund in place. If you ever find yourself in need of money for something important, you’ll be glad to have the extra money. When you take the time to explore some of these benefits, you will understand why doing this is such a good idea. Whether it is a crucial car repair or some other expense, this fund can be incredibly helpful.

Unemployment

If you suddenly lose your job for any reason, you’ll be able to use the money from your emergency fund to get by. Even a short period of unemployment can be extremely difficult to survive if you don’t have any money set aside. It will be much easier to get by and keep paying your bills. It is a good idea to have enough money to cover three months of essential expenses like rent and utilities.

Pay Back a Loan

You can also use some money from your emergency fund to pay back a loan. If you have taken out a loan but your regular income can’t cover your payments, you’ll have the cash to avoid defaulting. This can be especially helpful for paying back smaller short term loans. You want to avoid being late on any loan, as it will negatively impact your credit. You will also be hit with late fees, which makes paying everything back even more challenging.

Medical Expenses

If you are suddenly hit with major medical expenses, having an emergency fund will help you out quite a bit. Medical bills can stack up very quickly and cost a lot, so you’ll need all the money you can get your hands on. You cannot simply avoid paying your medical bills and expect everything to be okay. This is actually one of the most common reasons that people create an emergency fund for themselves in the first place. You don’t want to find yourself with a big hospital bill and no way to pay it.

Car Repairs

Another good reason to start putting money towards an emergency fund is to cover car repairs. You could have to pay for major repairs to your car at the drop of a hat, so it’s good to have the necessary funds already at your disposal. If you absolutely need your car for getting to work, this is going to be very important. An emergency fund can give you a way to cover the cost of these repairs so you don’t lose your job.

Veterinary Bills

If you have a pet of some kind, one trip to the veterinarian can be very costly. Some people find that they aren’t able to pay for essential care for their pet because they just don’t have the money. Having money that you’ve set aside will ensure that you can keep your pet healthy no matter what.

Helping Family in Need

Those who have a good size emergency fund in place will be able to help a family member who is going through a difficult financial period. It’s always a good feeling to help people close to you when possible. Just make sure that you trust the person to pay you back. Lending money, even when it is to family members, can be a bad idea.

You Own a Home

It is especially important for all homeowners to have an emergency fund in place. There are lots of things that can happen with a home that require a good amount of money to remedy. This could be your furnace breaking or problems with your roof. If you find yourself in this type of situation, it’s good to know that you have the money to cover the necessary repairs. You simply don’t want to own a house without having money to cover emergencies relating to it.

You Don’t Live Near Your Family

If you live quite a ways from your family, there might come a time when you need to travel back home immediately. This could be because someone in your family has died or is very sick. Either way, it is good to have extra money for a plane ticket.

Maintaining an emergency fund will give you peace of mind and prevent a variety of bad situations from becoming a nightmare. You should put as much as you possibly can from each paycheck into this fund. The larger the fund is, the less you will have to worry about what is going to happen when you have a sudden and important expense. You will be able to sleep a little bit better at night with an emergency fund in place. This is something that can help you in many different ways, so you should seriously consider starting on it right away.

Effective Strategies for Improving Your Credit Score

There is no question that having a low credit score can work against you in a number of ways. This is why it’s so important that you do everything in your power to boost this number over time. The better condition your credit is in, the easier it will be for you to obtain loans without high interest rates. This is something that you will be very glad for when you want to buy a car or even a home. When you really make an effort to do this, you’ll get some truly amazing results within a fairly short period of time.

Take Out a Loan

If you take out a loan and pay it back by the required due date, you can improve your credit very quickly. This is one of the easiest ways to give your credit score a significant boost, but you have to be careful. You should only take out a loan if you know that you’ll be able to pay it back on time. There are lots of lenders that give out short term loans online, so you’ll need to make a point of finding one that is highly reputable. This way you will end up getting the best terms for paying what you owe without any issues.

Prioritize All Essential Bills

You also need to make paying all of your essential bills like rent or mortgage on time. Being late on a single payment will be reflected in a negative way on your credit report. Whether it is your utility bill or something else entirely, it is important to keep this in mind. You don’t want to make a habit of being late on any of your payments. This will only lead to a lower overall score.

Balance Your Credit Utilization

It’s also important for you to balance your credit utilization. You don’t want to utilize too much or too little of your available credit. It’s a good idea to aim for around seven percent credit utilization for the best results. This can go a long way towards helping you to rebuild your credit as efficiently as possible. While this is not something that many people consider, it is still an essential part of maintaining a healthy score over the long term.

Get Help Wherever You Can

There are numerous organizations out there that offer credit counseling services, some of which are totally free. These services can really help you with getting your credit back on track sooner rather than later. You should at least take some time to look into doing this, because it could help you out a lot. A credit counseling organization can help you take the right steps to increase your score and avoid problems with it in the future.

Be Careful About Loan Applications

Before you submit any applications for loans or a new line of credit, you need to do some research. It is always better to apply to the one right lender rather than send out a bunch of applications within a small time frame. Doing the latter can cause serious damage to your credit that will take quite a while to recover from. You should refrain from submitting a lot of these applications, because your score will suffer as a result.

Monitor Your Spending

Everyone should make a point of monitoring their spending as closely as possible on a regular basis. This will help you avoid spending money you shouldn’t, which often leads to debt and a lower credit rating. Having an established budget in place can do wonders for keeping your spending under control.

Create Financial Goals for Yourself

When you have clear and obtainable financial goals set for yourself, it will be much easier to improve your credit in a timely manner. You will need to think about not only what your goals are but how you plan to achieve them. This can really help you out with getting to a financially stable place and staying there. The better shape your finances are in, the better your chances will be of boosting your credit score in a major way. Remember to create goals that are realistic so you aren’t frustrated with failure all the time.

Improving your credit can make multiple aspects of your life a lot easier. It is something that everyone should aim for, because there’s almost always room for improvement. The effort that you make to do this will eventually pay off in a very noticeable way. You might have to be a little patient, but it’s all going to be worth it in the end. Your credit score can impact everything from getting a good deal on a loan to your ideal job. This is why you need to do what you can to increase your score consistently.