Thursday, October 11, 2007

Second Emergency Fund Brings Security

Philip over at Wisebread wrote about having a second emergency fund you never spend. A kooky idea, he says, but it really resonates with me. Since we got on a budget and saved for an emergency fund, it has changed the way we look at money. Having money saved in a separate account makes a huge difference in the way I feel about our financial security.

I no longer feel that we desperately need money- on paycheck day I don't worry if the money got into the bank before the cut-off time. Debt creates an anxious feeling in the pit of your stomach, and it's gone now that we have an emergency fund.

Having an emergency fund for us is a psychological safety net. It makes you feel like you are in control of your money, instead of your money controlling you. If you had a second emergency fund, like the article suggests, I imagine your security level would be even higher. As soon as we get our debts paid off, maybe we will find another place to stash some cash and forget about it.

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