How I Built My Emergency Fund
Yesterday, I reached a savings goal that was long overdue. The excitement gave me such a rush, I was doing every dance from the runnin’ man and cabbage patch (80s/90s) to the harlem shake (2K). Now that my adrenaline level is back to normal, I can fulfill my promise and explain how I went from spending every dime I earned to saving $10,000.
My favorite excuse was “I can’t afford to save because I don’t make enough money” Have you ever said that before? While this may be the case for some (please believe, I understand), it is not true for probably half the people who speak it. I’ll be the first to admit I could have saved a lot more or achieved my goal a long time ago. When I landed my first professional job fresh out of college, having extra money was so new to me that it flowed through my fingers like water. I had to have a new Coach bag every season or the latest Nine West shoes. Shopping was (ok it still is) entertainment for me and I was ready to walk the walk and play the part of a Corporate America Diva!! Never mind the fact that rent was due in a week (lol). My gear was tight and my hair was always fab-u-lous but my bank account was straight up anorexic. Ya girl was one paycheck from a homeless shelter. I’m so glad I learned my lesson before it was too late. Now don’t get me wrong, I’m still flyy dammit!! LOL but my priorities have shifted. *whispering* Dooney & Bourke is my latest obsession.
In early 2004, a friend turned me on to this bank called ING Direct. It was one of very few banks (at the time) that offered high rates on their savings accounts. Check out Flexo at Cosumerism Commentary, he keeps an up to date list on the most competitive checking and savings rates to date. Back then, ING was offering about 2.5%, which was much higher than the measley 0.8% from my local bank or credit union. They were also giving away $25 for opening a new account with no minimum balance. So in essence, you could open an account with $1 and get $25 free (my friend received $10 for referring me). I thought it was a pretty good deal, so I jumped on it.
Initially, I opened the account just to get the $25 bonus. I didn’t trust online banks so I let the $25 marinate just to see what would happen. I thought I was doing something too (lol)! Little did I know, ING was the topic of conversation all over the internet. After doing some research and asking a few questions on finance message boards, I learned that ING is FDIC insured up to $100,000 just like any other bank and has been in business for many years and in multiple countries. Since other people seemed to be satisified with their accounts, I decided to start saving $20 a month with gradual increases…of course “if I could afford it.”
Some months I saved $20, but most months I saved nothing. Hell, some months I even withdrew $20 for meaningless reasons I can’t even remember. *sigh* I through myself a pity party because I wanted to get serious about saving but didn’t know how. Then I set up a payroll allotment to send $20 directly to my ING account every pay period. Yea baby, I was back on a roll! I went from barely saving $20 a month to a payroll alloted savings of $40+ a month. Maaaan, let me be honest. I won’t even tell you how many times I stopped that allotment (lol). Shoot, saving was hard!! By the end of 2004, my account had less than $200. I was ashamed to say the least. But guess what?? ING allows you to see a running total of the interest earned everytime you log into your account. Of that $200 balance, about $48 was from interest! My money was making money! Now that is when my wheels really started turning. What I saw was the result of compounding interest!! I was psyched!
When the new year turned, my ‘05 goal was to buy a house by the end of the year. I put my game face on and started saving $100 per pay period. I adopted the “pay yourself first” mentality and gradually increased the allotment to $550 per pay period. Ya see, I’m not big on budgeting so I figured if I could save over $1,000 a month, then the rest was free game. The allotment made it easier to save because the money never touched my hands. Some months were hard (and yes I did dip a little) but I kept riding by this new development and imagining MY house in the neighborhood. By late summer, the builder released lots for sale and I was ready! In September 2005, I signed a contract and used most of what I’d saved for the earnest deposit. My dream of owning a home was becoming a reality. This was a HUGE milestone and motivator for me. We curbed our spending (a lot), stopped eating out, and even cut back on Christmas. My BabyGirl didn’t even complain. I swear, I have the best child in the world.
At that point, I set a new goal to rebuild our savings to $10,000 – a nice, round 5 figure number. I continued to save $550 per pay period (extra deposits here and there), and **ING’s interest rate continued to rise. The current rate is 3.8%, but they’re also running a promotional rate of 4.75% for new deposits through April 15th. Eventually saving became a game. I wanted to see how much I could trim our spending and how much interest I could earn in any given month. Over time I became disciplined enough to stop dipping, then saving changed from a game and turned into a habit. Even my daughter has started saving 20% of her allowance without me persuading her to do it. I’m so proud! This new “habit” allowed us to reach our goal 4 months earlier than planned. It was a long, hard road to travel but it feels so good. :-)
**Note: there are other banks that offer higher rates than ING. I haven’t moved my money yet because some banks pull your credit to verify identity (Patriot’s Act) and I didn’t want any new inquiries on my credit report until after closing.
I know this is long, but I can’t close this post without encouraging my readers to save. Here are some of SingleMom’s savings tips:
(Email me if you want a ING referral. You’ll get $25 and I’ll get $10.)
UPDATE: My ING referral links can be found here. Thanks in advance!
($5 is better than nothing)
(Depriving yourself of life’s niceties is a recipe for failure)
(Save before any other money is spent…even before bills)
(I don’t know who said if you don’t see it, you won’t miss it…that’s a bold face LIE. I’ma keep it real wit ya. Saving allotments just curb the temptation to spend)
(this is a life lesson, not just a money one)
(all work and no play is no fun…spend 1/2 too!)
(EX: I don’t like budgets and I luv shopping, so I save FIRST and spend the rest however I want)
Also check out Young and Broke’s blog, she has a post about “Creative Ways to Build an Emergency Fund”. She gives some really good tips that are easy to follow no matter how much money you make.
As with all other goals, saving requires discipline. It is hard at first, but it doesn’t take much to get started. Watching your money grow is the greatest reward. Imagine being fabulous AND financially savvy? Ha! Now that’s wassup! Life’s emergencies have a way of sneaking up on you, so just do the damn thang and get your saving on!
Peace & Blessings
-SM
This blog is all about Finance, Fitness, Fashion & Fun - the sum of my life. If you like what you've read, feel free to subscribe via (feed reader) or (email) to follow along.
hi thats a nice news but is it present in the india also?I would like to know it was good to read ur post it was informative.
Congrats on your accomplishment!
I hope you throw “The Robot” into your dance mix just for good measure! :P
COOL ! Thanks for the explanation cause you know that was my next question ( how the hell you save 10K)
I am opening an account with ING next pay period ! PROMISE ! My goal is to own a home by this time next year ! LETS SEE !!
anismobile ING is an online bank so I would imagine an account can be opened anywhere in the world but I am not sure. Go to their website,www.ingdirect.com, to check it out.
bored Thanks! Yea man, I was doing the Robot too. LOL
me I’m gonna hold you to that! When do you get paid again (lol)? Email me and I will send you a referral so you can get the $25 account bonus (you have to deposit at least $250 to qualify). When you open your account, you can use one of your own referrals to open another account for your daughter and she will get $25 too.
Wonderful post, SM. You gotta find a way to do this on a wider level. Such great advice and you’ve been through it…there’s a huge audience out there for you.
Sorry, that’s the former PR person in me talking… :D
SM,
As one single mom to another, you need to hit me up so you can get the 10 and I can get the 25 *smile*
Cocoa Thanks girl! You might be on to something. It’s definitely something I’d consider.
mz Hey, hey now! Welcome to my blog. I stopped by your spot to find an email address with no luck. Hit me back so we can get our hustle on. :-)
Thanks so much! These are small, realistic goals that we can all start TODAY.
And like CG said – you’ve got a niche, girl. Think about it. Then work it!!!
Kudos on saving that $10,000! I love ING as well. One of my favorite features (besides the running interest earned tally) is the ability to create sub-accounts. Now that you have reached $10,000 be sure to create an Emergency sub-account and continue saving in your main ING account. This way when you finally do get into that new house and the temptation to spend on nesting kicks in you can clearly see that $10,000 is EMERGENCY cash only and the rest is available for making your new home as fabulous as you are :)
I just found your blog>>GREAT WORK///LABTECC
Supa YW! So you think I got a niche too huh? The same compliment from two fabulous writers…I’m flattered. Ya’ll gassin’ me up. LOL I’ll give it some thought and pray for direction.
jane Welcome! I love your blog! I’m over there all the time. I feel honored to have you posting a comment at mine. I thought about adding a sub account for that exact reason, but I think I’m going to move the cash over to HSBC. Separating it will ensure that it won’t be touched AT ALL…except for a true emergency. And thanks for recognizing my fabulosity! :-)
anon Thanks!
I’m reading this again to stay inspired. I got my house. Now I have to get myself ready for any emergencies! Just a little more to go…
I just came across your blog today. Love it, love it, love it. I am also 25 and broke. The artile on how to save your emergency fund is very helpful. It lets others no the it is possible. This is an example from another real person, not financial mumbo jumbo from an expert. Keep up the good work. I will come back and post when I have reached my goal.
Hi SM. I posted a comment before to tell you how you have inspired me. But this post is the truth for real. I have a hard time saving but this post makes it sound possible, (and still leaves room for shopping obessions:-) ). I am definitely insterest in opening an ING account and I would be glad to list you as a referral so that we can both benefit.
Thanks
Tee Cee
Hi Tee Cee
Welcome to my blog! Send an email to singlema at gmail dot com and I’ll get you a referral link.
Thanks!
I love your blog.Haven’t been a single mom for long but your advice is soo practical importantly honest with sharing your weakness andovercoming them. Now I don’t feel so depressed or hard on myself with the up and down of my e-fund. Oh yeah ING is fab! Keep up the excellant work
I think this advice is fabulous! I’m leaving work soon to return to school full time and money is constantly on my mind. I’m going to start one of these accounts and send my work study money there for safe keeping. Tough times are ahead. I enjoy your blog – very informative…
DAMN !!!
$10K in 10 months , you are the woman
I am 33 yo own my a house and fully funded in my accounts, ie 401K, mutual fund, and stocks
But I do not have near 10K in savings
I will adopted your plan $550 a pay period !
I started a savings account with ING Direct in April 2006. So far I’ve saved $1,200 and will add $300 to $500 per month to my “Buy My Own Home and Stop Paying Rent Fund.
I can only hope to save $10,000 in about a year. You are a roll model for all of us Single Ma’s.
True Fan, Melinda.
Hi Single Ma,
A great posting, thanks for putting his posting out there. It seems like personal finance blogsphere, there is a lot of discussion about savings, but less actual examples of how people actually save.
Thanks again!
-James
Congrats on meeting your goals!
I’ve had an ING almost from their inception. In 2006 I made over $800.00 in interest. I could of did better last year but I withdrew a large sum to purchase a car in cash. My balance is over 20K so I’m happy :)
Have you heard about ING’s new Electric Orange account? They sent me an email – and I jumped on immediately – supposedly it was offered to select members initially – at least that’s what the CR told me when I called to set it up. 3.00% on a checking account ain’t half bad!
you are my hero…i stop by to see you making your goal..and i’m eventually going to meet mine..
I just re found your website and I am in LOVE with this. I love reading other financial blogs but I love how REAL you are with yours. I too make OK money and I know I can save but I spend spend spend.. I have a HSBC account and only have 13.00 dollars in there and that comes from me dipping in there for DUMB things. You have really inspired me to do more and I appreciate that. I am going to transfer some money right over there after reading this.
First and foremost, Congrats on reaching your goal! I have to confess… I am so hooked on your site. You’ve inspired me to get myself together financially and to strive for fabulosity. Hope you don’t mind if I email you on January 11 (my pay day) to get that referral. I’m getting myself together and out of debt and you’ve been so helpful. Everyones right, you have a natural talent. Be Blessed and Thank you. P.S. There’s no better way to start a year out then to SAVE.SAVE.SAVE