I am absolutely the best example of Murphy's Law - "If anything can go wrong, it will." I have a job interview, there will be a jack-knife tractor trailer to back up traffic for hours. I had a date with what would be my future husband, my boxer puppy runs wild outside flinging dirt and grass all over me while I make an ass of myself trying to catch him. On the financial side, I finally pay off my car and open up extra money for investing....my home air condition needs replacing and one my pipes burst. So much for extra money.

I learned a long time ago that I always need to expect the unexpected. Emergency Funds are not just for the worse case scenario of one losing their job. Emergency Funds are any liquid amount you have available in case of anything out of your ordinary budget pops up: medical expense, loss of a job, home/auto repair, etc. These are things that are pretty significant and can seriously dent your budget. More importantly, these are things you would not want to put on a credit card as they would more than likely be a significant amount of money and then you are paying interest on top!

How much should you have in your emergency fund?
Experts always say between three to six months income. This sounds like a lot but if one spouse loses a job, this fund is available to pay the bills until you can get another job. This scenario may be the most unlikely, but if you car breaks down or your home needs a repair...you will have more than enough to handle the repair and not have to pay interest. PERFECT!
We haven't been able to build up this much in a fund yet, but we are almost there...baby steps!

What if I don't have the money for an emergency fund?
This is all the more important reason for you to have one. If you can't find the money to start a savings for emergencies, how will you afford the emergency? And if you think you can use your credit card, how will you afford to pay this off plus the interest? Just start small if you have to. Start with $10 or $50 a week and build up until you have what you need.

Where should an emergency fund be kept?
The most important aspect to an emergency fund is for it to be fairly liquid so it is accessible. You don't want to use something that has fees to withdraw. You also don't want it tied into stocks. If you had your emergency fund tied in with stocks and the market is volatile (like it is now) then your funds are not secure. You want to keep it in an accessible savings account or money market account. Once you have this built, you can always put some in CDs or try the CD Laddering method I previously mentioned.

Most people are frustrated when they think of having to put aside money into a fund for emergencies. This money is still YOUR money, but one better: it is sitting aside earning interest. It should take your frustration and stress away knowing you are ready in case of the "what if" scenario.

If you can't afford an emergency fund....well, there is your number one reason for having an emergency fund.