Emergency Planning in a Hurry

This week while we were at Home Depot buying some carpet, my husband broke a tooth. It was his odd love for beef jerky that initiated the break, but regardless of what the cause, it was broken. These things can happen to any of us at any time, whether we have dental insurance or not, whether we have emergency savings or not. And you can't exactly leave a broken tooth unfixed for an indefinite period of time...you know...stuff can get in there and make an already expensive situation positively catastrophic.

But what do you do if you don't have dental insurance and you don't have an emergency savings account? If you are like most people in this position, you turn to credit cards or costly dental financing--two bad patches to pay for a procedure you can't afford. That is why an emergency fund is so important. Just consider the earthquake that happened in Haiti--if some natural disaster befell your area, would you have some money to put your family up in a hotel before FEMA arranges temporary shelter?

I don't want any of this to scare you, there are ways to get some emergency savings set aside in a hurry and there are also ways to protect your loved ones against those emergencies you can't really save for.

1. Sell all that stuff you have in storage and don't use. I know Grandma's antique sideboard is a really nice piece...but if you are spending money on a storage unit just to house it...well...you might be wasting money. Clean out all offsite (and onsite) storage areas and evaluate each item. Do you REALLY need to keep it? Will you REALLY ever use it again--or is this like those jeans you bought on sale that are one size too small that you keep because you think you will fit into them one day? Then, either have a yard sale or arrange for an antiques dealer to come out and buy your stuff. You can sock away any cash you get from selling AND you can close your storage unit and start putting your monthly storage fees into savings as well.

2. Make smaller payments. If you are paying extra on your mortgage or student loans, you might want to put that on hold until you have a couple thousand dollars saved in an emergency fund. You are doing a good thing paying of your principal early, but if it leaves you without cash reserves then you are going to end up taking on more costly, high interest debt when you have an emergency, and that's not helping anyone.

3. Buy family life insurance. The death of a loved one--even a loved one who does not contribute financially to the household--can put a strain on your budget. Get a family life insurance policy you can afford to help defray some of the costs. Even if you get a simple term insurance policy you will be in a much better financial position.

4. Join the group dental plan offered by your employer or union. Dental expenses can crop up and can be very expensive. Group dental insurance, however, is usually very affordable and can help you keep your pearly whites.

5. Keep your car maintained. When your car is looked at regularly by a trusted mechanic, you can get things fixed before they become expensive and devastating--and before they start to affect other parts of your car.

One of the most important tips I can give for your emergency savings is to only use it during emergencies. Wanting a new chair/television/book/comforter set/tool/gadget is not an emergency and if you use your savings for that purpose, well, you won't have any more savings.