The Emergency Fund

I can't stress enough how important this is. If you haven't already, it's time to give up that credit card you have "in case of emergency". Why? Well, just ask yourself which credit card was your "emergency card" before this one, and why aren't you still using it for emergencies. Chances are the answer is, "because I reached the credit limit".

So you need an emergency fund, because let's face it - stuff will break on you.

You need to save between $500 and $1000 and toss it in a savings or money market account that doesn't charge you fees. If your bank can't help you, go to a credit union. In my opinion you'll get the best rate without fees. Paying a bank fees for using your money is ridiculous. Keep in mind the idea here isn't so much the rate of return - it's a safety net. This will keep you from reverting back to a credit card to get the car repaired or a broken window replaced.


If you use it, put it back.

Don't forget to replenish your emergency fund after you use it. Go back to paying the minimum on your credit cards until it's replenished. After your emergency fund is back to your set amount, re-attack those credit cards with a vengeance.