What to do when emergency comes?

I was driving down the highway yesterday and my truck started making a really loud clicking noise, then it turned into a clanking noise. It got really bad so I pulled over and got it towed. I opened the hood while I was waiting and realized that a spark plug was blown out of the engine. I don't know what happened, as today is Labor Day and the mechanic is closed, but I know this will be expensive.

I have spent so much time saving money and being frugal, and now I just feel like it's all for nothing because something like this happens. I am trying to be optimistic and bring out the good in this though, so I'm going to try to write about the good that can come out of a major catastrophe in your life.

This is when you need to have an emergency fund. Luckily I have one, but it will most likely be depleted after this. I don't have much income as most college students normally don't, and what I get goes to school, so this month is going to be rough. Actually, these next few months will be. My hours at work are cut back now that classes have started, and I don't have near as much free time, so I don't know where the income will come from but I will probably beg my parents for money and cut back my spending drastically.

Problems like this can happen to anyone, and the more you have, ie car, house, pets, kids, etc., the more can go wrong. It is very important to have an emergency fund in times like this so that you don't have to go into debt. You don't want to be stuck paying for years down the road for an emergency that happened just because you were not saving your money properly.

There are many different opinions on how much you should have in your emergency fund, but for me I just have savings. It is my emergency/retirement/downpayment for a future house account. It gets really good interest and is FDIC insured so there is no risk. I don't have enough money to designate it to different areas such as retirement, and I know many people probably disagree with me on this, but I'm just happy to have some savings. Most of my friends have less than $1000 in the bank, and if something like this happened to them they would have to sell the vehicle and everything they own. I'm not saying I won't sell it, because I don't know what will happen, but my point is you need an emergency fund now. I recommend enough to live for one month off of. Then once you get that make it 2 months, then 6 months. I'd say once you have that much you can start retirement and just make sure you maintain the emergency fund.

So basically, create an emergency fund and pray you don't have to use it. You know the old saying, "prepare for the worst and pray for the best."

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