(...) writes:


"I feel for the people in New Orleans and other Gulf Coast cities that were
devestated by the Hurricane so when I received an email from an aquaintance
it really caught my attention. He was one of the people who left New Orleans
before the hurricane hit but now was in a financial dire straits because he
had no money. He had never saved for a 'rainy' (no pun intended) day or a
disaster. I felt so bad then realized how important financial planning is. How
crucial it is to a life philosophy. How would you have made it in his position.
Would you have money on reserve to take out of an atm (assuming you found one
that worked)? Are you prepared for disasters? Thoughts?"


V writes:

I am very well prepared for almost all emergencies. I have a generator,
backup cooking equipment, many, many led and candle lights, short wave radio,
battery op TV's, bulk batteries, solar showers, snowshoes, back up heat,
storage containers for bulk water and bulk gasoline, a trailer to live in,
extensive first aid supplies, a few firearms for protection or hunting, a canoe,
kayak and jet ski for floods, (jet ski can get clogged up easy with debris)
chemical toilets lots and lots of bulk foods, lots of bulk drinking water.

But, if the compete destruction of my home and community occurred and I was
homeless I would not be very prepared. Yes, I would have money in the bank,
but the electric would be off, the banks would be devastated and shut as would
the grocery stores - so the money would be useless.

Now, if the question is would I have money to live on if I was able to move
away from the disaster - the answer is yes, I could live well as long as the
nations financial system did not decompose. Financial cushions are very
important to surviving 'rainy days."

Here is an old post on "cushions" written for a Debtors Anonymous group.

I have found the contingency fund or financial cushion to be of the highest
importance to my continued solvency. For me, it is right up there with the 12
steps and recording my numbers. The only way I can see success in Debtors
Anonymous is to have such a financial cushion. Inevitably, if I work out things
down the penny with no margin for error, the emergency or unforeseen
circumstance will pop up and mess up my budget.

In my savings account I keep $2500 for a bill paying cushion and $400 in
house in cash as a petty cash fund as well as $50 cash in my car.
With the bill paying cushion and my normal monthly income I am able to write
checks only once a month on the 30th. This was a major breakthrough for me,
not having to fool around with bills and checks 14 times a month. I also keep
thousands of dollars in special funds for car repairs, household repairs,
appliances, vacations, kids college, new cars, etc. These are parked in savings
accounts and or money market funds.

In addition, I keep $500 in my checking account at all times as my "0" base.
This not only gives me free checking, but more importantly it provides a
cushion for any bounced checks. I don't have a check bouncing problem, but I am
human and do make plenty of math mistakes, so I need a checking account
cushion. In the last 10 years I've only dipped, by mistake, into this checking
account cushion 2 or 3 times, due to accounting errors, but it saved me from
bounced check fees.

Each debtor will have to determine what how much they need to keep in the
contingency fund to stay out of debt. While I was paying off my debt I was
working on building up a contingency fund at the same time. I started the
contingency funds with a $170 that came from returning the prior weeks
compulsive
purchases. I eventually opened a savings account and gradually built it up as I
paid my debt off. After I was out of debt, I used some of the money that was
earmarked for debt retirement and put it in the contingency fund to build it
up further.

It's a tough thing to build up a contingency fund while your paying off
debt. Personally, I cut back on a few expensive habits so I could pay off debts
ASAP and build up my financial cushion. Work with your PRG to see what fits
your circumstance best. A properly funded contingency fund should be of prime
importance to any debtor wanting a cushion between themselves and returning to
debt. The measure of how far we wish to stay away from a life of debt is the
measure of how well our cushion or contingency fund is designed and
maintained.

Use your contingency fund for its intended purpose...emergencies. I consider
it debting, for me, if I borrow from the contingency fund to pay for some
compulsive, not planed for purchase that could not be paid for otherwise.
Example: If I borrowed $600 from my contingency fund to buy a gold chain and
plan
to pay it back over the next few months, instead of developing a spending
plan and saving up for the chain in the normal way, for me, that would be
debting.

One last note regarding contingency funds. If you dip into them for
legitimate reasons, build them back up ASAP before the next inevitable emergency
pops
up and before you know it your in debt again.




V (Male)


For access to my earlier posts on voluntary simplicity, compulsive spending,
debting, compulsive overeating and clutter write: vfr44@.... Any opinion
expressed here is that of my own and is not the opinion, recommendation or
belief of any group or organization.



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