Saturday, March 24, 2012

Life After a Bucks County Bankruptcy: What is an Emergency Fund?

After people go through a Bucks County bankruptcy and have their debts discharged, they frequently ask how to get back on solid financial ground and avoid bankruptcy again.

Most financial counselors and Bucks County bankruptcy lawyers recommend that you have a fund set aside for unanticipated expenses or unanticipated events that will prevent you from making your usual salary. This goal is normally called an "Emergency Fund".

Your goal should be to have the equivalent of six months salary set aside to be used only in extreme situations. What would you do if you suddenly lost your job or your child became seriously ill and you find yourself with huge medical bills? Even more simply, what if the hot water heater in your home goes in the middle of winter?

Use some discipline and set aside a few dollars from each paycheck until you have six months worth of salary. You can arrange to have your bank direct deposit the money and you won’t even miss it. I personally use Smarty Pig to create my emergency and savings funds. It provides a nice interface and tracking tools. When asked, I always tell my internet savvy Chapter 7 and Chapter 13 Bucks County clients to set up an account with Smarty Pig.

Here is the key: Don’t even think about using that money unless it is absolutely necessary!

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