Emergency Fund Why I disagree with Dave Ramsey, Suzie Orman, and Everyone Else

Let's be clear I absolutely think you should have an Emergency Fund, this should be part of the beginning of every road to debt freedom, early retirement, or Murphy's Law that's around the corner.

What I think is dead wrong is where you should place your money.  Dave Ramsey recommends a Money Market account, Suzie Orman says a Checking with Interest account, guess what I totally disagree. There is a few factors that in this,  but I believe the best place to keep your emergency fund is in an individual stock that you know and trust.  Here's how I got here.

When first starting out to build your emergency fund, whether it's the initial $500, $1000, or arbitrary amount that you see fit, this should go to an account that you have limited to no access, whether it's only online at a separate bank or you have to physically step into a branch to get your money, play Hide and Seek with your Emergency Fund.  So you are building up your emergency fund on a weekly, monthly basis congratulations and you have to climb up Mt. Everest to get those funds, not make a transfer from Savings to Checking.

I'm quite sure not everyone is going to read this article and say this guy is brilliant I'm listening to every word this guy's the smartest man alive.  Ok now here's the risk tolerance for your Emergency Fund, Las Vegas Style, see where you are at, since as of right now you have already made the Hide and Seek choice.

• Low-You think going to Las Vegas involves going to see a show and eating  the Buffett(non-seafood)Open a Checking or Savings at a Local Bank/Credit Union that's separate from your main account, you might not even do that your probably just putting it over to your savings you already have, less risky that way.
• Medium-You go to Vegas with ready for a show, some slots, and maybe even a drink at the casino, who knows I might be feeling crazy.  Chances are you are still going to put it a money market of some sort and probably online after you checked out the best online accounts available.
• High-You go to Vegas with cash in your pocket and only the clothes on your back, because you will be buying new ones with the money you will be making.  This is me in a nutshell, I have a little gamble to me, I'd rather double down than and risk it then take a small win.  I suggest and use investing in direct company stock, here's GRS read on How to Invest Using Direct Stock Purchase Plans.  

I started many months ago and found I was able to set aside $50 month towards my emergency fund into a company I felt comfortable with and in this case absolutely love, Nike.  I have since upped my contribution to a little over $100 month.  I find that having money in an online account that is separate from my everyday expenses and automatically drawn monthly from my checking is the best plan for me.  It gives me that little gamble of a my stock purchase going up or down(my money is on up, literally).  This also gives me the liquidity to sell my stock and receive the funds in about 3 business days.  There's a small risk in every aspect of my choice, but if you used to play poker online, enjoy fantasy football or a good survivor pool, or even buy a lottery ticket when it's 350 million dollars you probably agree with every word I'm saying.  I can't be boring, I have to have some risk and if this is the most risk I'm taking, I think I'm going to be just fine.  

Here's something to think about if you think I'm the craziest man alive after reading the last paragraph(also possible).  Here's a quote from Insurance Industry Basics: Float  and Motley Fool "The great thing about premiums is that the insurer collects the money up front but doesn't have to pay out claims until later down the road. In the meantime, the company "floats" these unpaid premiums. This float is invested in stocks, bonds, and other securities, and the insurance company pockets the profit."  

So let me get this straight they use the Insurance Premiums or Emergency Fund equivalent and try to make a profit off of this money until they have to pay it out?  That's exactly what I am suggesting, run your emergency fund like you are an insurance company!!!!

Automatic Plan-Figure Out Where All Your Money is Going

Automatic Plan.  So you have to start somewhere, no it doesn't instantly make you rich, but it can in the long run.

You need to know exactly how much is coming in and more importantly in Step 1 is Going Out.  For some people it is easy, they use online banking so they can take a look at the last 3 months of transactions and get a great idea of what they are spending.  Even download it to Mint.com, Excel spreadsheet(personal favorite) or whatever financial software or online tool you use to figure if your money is going towards groceries or new clothes. Just remember to make sure you keep an eye out for ATM and Bank withdrawals, chances are you don't remember where that $60 went on Friday night after work, well maybe you do, but you have chosen to suppress that memory of buying everyone you recognized a "Happy Friday Cocktail".

By my calculations this is f***ing impossible.  It's not this is a weather spreadsheet, let's just do plus and minus today.

So you have some tools that you can use, but being old fashioned in this case works as well.  Save all your receipts for 30 days, every receipt, write it down because it matters.  Buy a special notebook to keep track of everything, don't forget you need a receipt for that.

OK great you have written down everything that is going out, Congratulations!!!  I mean it, this was so tough for me.  I knew I was spending to much, I didn't want to admit it, but when I looked at the numbers I knew something had to happen.  Well almost done with Step 1, we just have to figure out how much is coming in, should be pretty easy take your last month's paychecks that are for normal hours and add them up.  Easy to say if you are working a 9-5 for a company, if you are Self-Employed take whatever you pay yourself in a given month and if you don't do this do it now give yourself a salary.

So by my calculations all we have to do is take What's Coming In (Minus) What's Going Out=What We Have Left.  Seems simple enough, just have to sit down, take some time and figure these numbers out.  I know it seems like this isn't that important, but we are building a house and we need a foundation, no cracks in this fine looking base(Slapping the Base reference here).  Also I don't care if your number is negative $4,000, negative $40, or positive $400, we really are looking for our base number something that we can use for that fine looking base.

1. Figure out Where all of your Money is Going
2. Make things Automatic-Debt, Savings, and Investments
3. Make paying off Credit Cards a Priority
4. Add additional payments to the Debt you like the least
5. Pay off home early
6. Make sure you and your loved ones are taken care of
7. Build wealth and give!

Here's another more experienced blogger's perspective.  Here is a great article by J.D Roth from Get Rich slowly.

http://www.getrichslowly.org/blog/2006/09/22/track-every-penny-you-spend/

Making Extra Cash thru Amazon

After going through some of my business ideas, I realized that I needed to make money now. Alot of my business ideas are more for building up a business. Most of us want instant gratification, I want it now type of attitude and I am no different.

After reading a financial blog Get Rich Slowly (one of my favorites), I came across a good article giving a couple of ideas for making extra money. One thing that I had plans to do, but just needed a little motivation was to sell my books that I had either bought or had been given as a gift(I don’t really believe in buying books, but more on that later). So I decided to post them on Amazon.

Putting them on Amazon was a fairly easy process. You need a seller id/account which I already had from some of the Amazon links you see here. Next was to list the books. All you really needed is the title or ISBN number and to put a price on them. I know everyone wants to get what they paid for the books, but I went with the method of put the lowest price listed.

Now Amazon gets a commission for selling your book on there forum. They charge a certain amount for shipping to the customer and give you a reimbursement for what it will cost you to ship the product(I will give more detail as I sell the books). So maybe you only make $2 or $3 dollars, but how many times do you read a book. Plus I am willing to bet your local library has the same book that you can read again.

Sales update. I posted about 20 books yesterday around 6 pm and before the night was over I sold 4 books, so to me it already has been worth it. Now I just have to figure out the cheapest way to send the books via USPS.