If you read my last post, you will see a comment from Living Almost Large. This post was inspired by LAL’s comment…

Emergency Fund: The Breakdown:

How Much? $20,000 (16K w/ ING, 2K w/ Tradeking, 2K w/ Primary Checking)

Why $20,000? Our monthly (necessity) spending = $3000.. 3K x 6 months = 18K. So, I wanted at least 18K to cover the cost of living should I lose my job. I bumped it up to 20K for a bit of added security. (The 2K in my checking account fluctuates a bit, and I wanted the 18K to be more “stable”.)

What is is for? Primarily, this money is here for a major life event, such as a job loss or a death in the family. Secondarily, this money is here for a minor life event, like a blown tire or a broken air conditioner. If you BUDGET for those secondary level emergencies (by setting aside a portion of each paycheck to pay for nonrecurring events), then you will not use your emergency fund for such purposes. If you do not budget for those secondary level emergencies, then you will have to use your emergency fund for such purchases. How do I handle it? I usually do a little bit of both. For instance, I purchased a set of new tires for my wife’s van last month. Prior to the beginning of the month, I budgeted the tire amount into our regular monthly budget. So, I did not have to use any money from savings to pay for the tires. However, if I had not budgeted for the tires, and one of them had gone flat, I might have had to dip into my emergency savings, depending on how much discretionary money I had left in my monthly budget. Long term, you want to get to a point where you are budgeting (setting aside allocated funds) for almost every conceivable event, even some of the primary emergency types. Right now, I keep my budget pretty simple, and I put every dollar that I do not spend into a savings account, creating a ’slush’ fund for various unforeseen expenses.

Two kinds of emergency funds: Basically, I have had two kinds of emergency funds in my life. First, I had my baby emergency fund of about 1000 dollars. I had this emergency fund set aside while I was getting out of debt. It’s purpose was to get me out of a jam when / if something unexpected came along. In other words, it’s purpose was to keep me from borrowing money! Now, I have a different kind of emergency fund. It’s purpose is to provide a cash cushion should anything happen to me or my family. It’s there to offer peace-of-mind. I can use a small portion of it, if I don’t have money on hand, to meet small “emergency type” needs. Or, I can totally leave it alone, “forget” about it, and know that it will always be there as my safety net.

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Five days before Christmas, our clothes dryer died. I had a friend (who is an electrician) come look at it, and the motor is kaput. It would cost as much to fix the dryer as it would to replace it. But, this article is not about the dryer. This post is about peace. You see, I have an emergency fund: 3 to 6 months worth of expenses, stashed away in my ING Direct Savings Account. So, I don’t have to worry about where I’ll get the money to replace my dryer. Now, if this had happened two years ago, 5 days before Christmas, I would have freaked out. Now? I just go buy a new or used dryer, and I go on with my life. I don’t have to whip out my credit card, I don’t have to worry where the money will come from. I just handle the problem. When you have an emergency fund and actual cash savings, emergencies cease to be “emergencies” and they become “hassles” and “inconveniences”. (By the way, my sister just called and she has a dryer that is in storage, so I’ll be using it until we find the dryer we want. Yay!) Lesson: You need some cash savings so that you can deal with the “issues” of life! Think about it: If YOUR dryer stopped working, right now, would you have to borrow money to replace it? Hmmm… (Side note: I have 6 more referrals for ING Direct. You deposit 250, you get 25 dollars, I get 10. Click the contact button in the left-hand column and I’ll email you a referral code.)

(Not My Dryer!)

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I’d like a new logo for this site, the network site, and the podcast site. If you have any ideas, or you’d like take the time to come up with something, please let me know. You can email me at ncnblog at gmail dot com, and let me see what you can come up with. What will you receive in return? Fame? Fortune? Probably not, but I will mention you (and your site if you have one) here, at the network and on the podcast. You could be “NCN-famous”. Seriously, I don’t know anything about graphics and I’d like an updated head for the blog, an updated network logo, and a few link buttons. Any and all help will be greatly appreciated. (I’m down with the green color here on the blog… so a “green centric” logo would work best)

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Why? Why in the world would a dude just open up (to complete strangers) about his personal finances? What in the word would compel a person to just be… honest? real? open? about what was going on?

1. I genuinely love talking about personal finance, and I wanted an outlet where I could do so.

2. I think that too many Americans are drowning in their debt, and I want to do my (small) part to throw them a life preserver.

3. The major credit providers have multi-million advertising campaigns on their side. I just have my single voice. But, I choose to use it. I choose to scream.

4. I like the “community” of personal finance bloggers and writers.

5. Honestly? It’s fun to write a post and get a comment of two. Ego? Pride? I’m not sure, but there’s nothing quite like “putting something out there” and having others enjoy the “work”.

6. I’m a nerd. I like personal finances. I like computers. Ergo, I have personal finance blog.

7. I think that there is a “niche” of people who think like I do. We choose not to use credit, we choose not to borrow money, we choose to be different. There’s something cool about swimming against the tide.

8. I MIGHT make some real money doing this stuff. Maybe. Hopefully. Probably not. Who knows? It would be really, really cool to make some real money from doing what I like to do. I already have an awesome job, and awesome wife, and 2 awesome kids. It would be great to have a “side-income” from the blogging that was substantial. (For those interested, I made just enough last year to pay for my hosting, domain names, etc. In other words, the blog pays for itself, and little else.)

9. I need to see if I can “do it”. I need to see if I can live the rest of my life without borrowing ANY money. Wouldn’t that be awesome?!? I think so, and I want to do my best to document my journey, so that others can learn from my mistakes and successes.

10. I just really, really, really like the sound of my own voice and the look of my own writing… Just KIDDING……. kinda… sorta… really… just kidding….

By the way, if you check out pfblogs.org, you’ll see that there are now well over 700 personal finance bloggers out there, chugging away. I’ve linked to some of them. If you are reading this, and you are a pf blogger, keep at it! If you’d like for me to link to you, send me your site, and I’ll check it out! If you’d like to link to me, please do so. My blog url is www.ncnblog.com.

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John, from Adult ADD, has been a loyal commenter here at No Credit Needed for many, many months. So, when he asked for guest articles for his site, I jumped at the chance to contribute. I do not have ADD, but my wife is an educator, and I am familiar with the disorder. I am fascinated with how our minds work. John is doing some really, really good work over at Adult ADD, and I STRONGLY recommend checking out his work. (I’ve picked up quite a few tips and techniques from John’s site. The advice that he gives will help you organize your finances.)

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