Does Your Budget Needs a Buffer?

While none of us like to face it, the truth of the matter is that sometime in our lifetime we will hit a dark cloud and things will go the wrong way financially. This could be any number of things, including the loss of a job, a major medical disaster with no health insurance, or a sudden temporary disability. Each family and individual needs to have an emergency fund that can be turned quickly into cash for these emergencies. There are varying recommendations out there but it seems that most recommend three to six months of cash reserve so that a family can weather the storm.

That could mean having anywhere from $10,000 to $20,000 in cash possibly just sitting in an account ready for access should an emergency arise. Most of us typically do not have this kind of money lying around but it is a goal to try and achieve. The best advice is to start saving for your emergency fund now. Even if you only have $3,000 lying around in an account, do not touch it and use it unless it is for an emergency. Also, keep in mind that when the emergency hits, you may be cutting your expenses anyway so the emergency fund might last longer than under normal circumstances.

If you still find that you do not have enough cash lying around to get through then check things like the life insurance policy you may have purchased a long time ago. It may have cash or loan value and this is a good source to get a quick low interest loan. However, beware that it is difficult to pay the loan back usually and it reduces the benefit value of the policy. Another source of quick cash is if you have any stocks that have a reasonable share value. Keep in mind though that you will pay capital gains taxes on stocks based upon their value at the time of the sale less the price you purchased them for.

Save on Heat to Save on Money

Among all home appliances, those that produce heat consume the most power. This is why your electrical bill shoots up to the high heavens during the peak of winter. However, there are ways to make maximum use of the heat your appliances give off so that your energy consumption does not need to increase unnecessarily, whether it’s winter or not.

Residual heat—heat given off by an appliance even after you've pulled the plug—is a powerful yet often ignored tool. If you make use of residual heat, you'll be amazed at how much energy, and consequently money, you're able to save.

So how do you make use of residual heat? When you're ironing your clothes, pull the plug just a few minutes before you need to stop using it. The heat coming from the iron is enough to remove the wrinkles from an extra couple of shirts. It’s best if you iron your clothes by the bulk instead of pressing just one outfit every time you go out. Pressing clothes by the bulk lets you unplug the iron every few minutes so you can use up residual heat. In effect, you’ll be pressing a significant portion of your clothes without having to use up electricity for it. The same principle goes with using the stove. Just a few minutes before you finish cooking, especially if the setting is on high heat, turn off the stove and allow the residual heat to finish the job.

Since appliances that generate heat cost the most, don’t leave them turned on when they aren’t in use. Leaving them on for a few extra unnecessary minutes may be insignificant if it’s done for one time only, but if you make it a habit out of it, they add up and reflect on your bills.