Credit Repair Process: Be Prepared for Financial Emergencies by Having an Emergency Fund

A big mistake that people make when attempting to repair their credit and pay off debt is feeling like they cannot afford to put money into savings while working toward paying off debt.

The bad news is, financial emergencies happen to everyone, and it seems they happen even more for those who are attempting to dig themselves out of a financial pit.

Because of that, not having a savings account actually sets you up for failure and may be what hinders you from repairing your credit.

Therefore, it is important to have an emergency fund at all times, especially when you are working on repairing your credit.

You may feel that you can't afford to put money into savings, especially if you are barely paying your bills. If that's the case, consider the following:

1. Take a look at what you have around the house that you aren't really using and can live without, and put it aside to sell at a yard sale or on eBay.

2. Take a hard look at any unnecessary expenses you currently have (e.g. cable T.V.) and get rid of them one by one and then invest money you were spending on those items into savings until you build up your emergency fund.

3. Look for ways to pick up extra income, whether that be through a part-time job or odd jobs such as pet sitting, baby sitting, yard work, etc.

You should shoot for maintaining a minimum balance of $500 in your emergency fund; $1,000 would be better.

Once you have a minimum of $500 - $1,000 in your emergency fund, keep doing the steps above and use the extra money you make to help pay down debt.

Replenish your emergency fund on an as needed basis, always striving to keep at least $500 - $1,000 in the fund.

Grandma knew to save for a rainy day, because she knew that it was guaranteed that rain would come. We could learn a lot by following grandma's example by putting money into savings regularly.