| Unexpected expenses sneak up on the best of | | | | moneymakers, but you can access your money |
| us. Paying these unexpected expenses looks | | | | quickly and do not have the threat that it will |
| impossible when you are in debt and barely | | | | decrease in value. |
| making the payments from month to month. If | | | | The reason that I like money market funds is |
| you're like most, you have to reach for the credit | | | | that they will make a return comparative to other |
| card and then find yourself deeper in debt and | | | | accessible investments, most have check writing |
| farther behind. | | | | capabilities, and your investment is safe from |
| What do you do about this? | | | | downturns in the stock market. |
| The answer for paying unexpected expenses is | | | | There are other options such as interest bearing |
| an emergency savings account. | | | | checking accounts, savings accounts and possibly |
| An emergency savings account is a sum of | | | | other savings vehicles in various banks, |
| money set aside in an account that is only used | | | | investment institutions and credit unions. Choose |
| for paying any unexpected expenses. | | | | the investment that is available to you and fits |
| Unexpected expenses come in many varieties | | | | the criteria. |
| and range from a roof leak to a job layoff. | | | | One thing to be aware of when choosing a |
| There is no hard and fast rule to determine how | | | | money market or any investment option is the |
| much you need in an emergency savings account, | | | | expenses. Expenses will vary widely among |
| only rules of thumb. | | | | investment firms. Ideally you want to find an |
| If you are still paying off your unsecured debts it | | | | account that lets you invest in the money market |
| is generally accepted that $1,000 is an appropriate | | | | with no up front or back end fees and minimal |
| amount until you have become "bad debt" free. | | | | yearly expenses. Since a money market does not |
| If you have nothing more than a mortgage | | | | appreciate quickly it would take a long time to |
| payment or perhaps are completely debt free the | | | | make up for high expenses. |
| common recommendation is that you have 3 to 6 | | | | An up front fee is a percentage of your money |
| months living expenses put aside. Now this is | | | | that you have to pay when you initially invest it. |
| where it gets tricky. Everyone will have different | | | | For example if you invest $1,000 and the fee is |
| requirements for 3 to 6 months living expenses. | | | | 5%, they will take $50.00 out of your account |
| The general rule of thumb is to have at least | | | | and you will only end up with $950 invested. |
| $10,000 available. | | | | With a back end fee they take a percentage |
| This is just a rule of thumb and you will have to | | | | when you withdraw your money. |
| do some thinking for yourself here. If your | | | | All investment firms will charge an annual expense |
| mortgage payment is $2,000 each month, then | | | | on your invested money. Just pay attention and |
| $10,000 surely will not cut it. On the other hand, if | | | | choose one that has a low expense. Be careful, |
| you are debt free, $10,000 may be a nice | | | | since some will lure you in with a low initial |
| cushion. Once you are living on a monthly budget | | | | expense that will be raised after a specified |
| it will be easy to determine how much you will | | | | number of months. Look at the track record |
| need for your emergency fund. Make sure that | | | | going back a few years to make sure that the |
| you do not skimp on this account. | | | | expense ratio has stayed consistent. |
| Your emergency savings needs to be readily | | | | Make sure that you have an emergency savings |
| available; money market accounts are usually the | | | | account so that paying unexpected expenses |
| best choice. | | | | does not chase you back in debt; it is a vital step |
| Unfortunately money market accounts and other | | | | in living without debt. |
| short-term savings vehicles are not big | | | | |