Wednesday, September 22, 2010



Experts recommend having three to six months of living expenses squirreled away for a crisis -- twice that amount in a bad economy! Find the cash for it with these steps.

To complete this How-To you will need:

Cash
Savings account
Automatic deposits
Discipline

Step 1: Boost your take-home pay

Increase your take-home pay by reducing or temporarily suspending your 401K contributions and any other voluntary paycheck deductions. If you usually get a tax refund, ask your employer to reduce the taxes taken out of your paycheck. Resume your 401K contributions as soon as you can.

Step 2: Increase deductibles

Lower insurance costs by increasing the deductible — the amount you pay out of pocket before your insurance kicks in. Higher deductibles mean lower monthly premiums.

Step 3: Sell what you don't need

Sell possessions you can live without on eBay, through online classified ads such as Craigslist, or at a yard sale.

Step 4: Open a savings account

Put the proceeds of your cash-generating measures into the highest-yielding interest account you can find that does not penalize you for early withdrawal.

Tip: Online savings banks usually offer the best rates.

Step 5: Divert money into savings

Set up an automatic deduction from your paycheck that goes directly into your savings account.

Step 6: Earn more

Earn some extra money with part-time work. Maybe a local merchant could use an extra pair of hands over a holiday. Or perhaps there's a resort area nearby that hires part-time seasonal help. Babysitting and yard work are also effective standbys.

Step 7: Hands off!

Keep your hands off the money unless you have a true emergency.

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