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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