How to beef up the emergency fund. . . .

I've posted about the fact that my labor union may call a strike sometime during the next two months, which has resulted in my obsessing about my emergency fund. Will I need it? If so, for how long? How much will I need? At this point, I can't answer any of these questions. However, what I can control is how much I contribute, at least in the short term, to my emergency fund. I'm a natural planner---I like to be prepared. Since I can't control whether or not my union goes on strike, the only thing I can do is prepare for it, or for any other unexpected calamity that might affect my ability to pay my bills.

First, I need to establish what my goals are. Most financial experts recommend putting away funds to cover at least three months expenses. Six months is better. My monthly out-go is, on average, about $2,500. That means that at a minimum, I need to save an additional $6,500 to add to the $1,000 I already have. That's a tall order! I can probably do about $1,000 in the next couple of months by paying the minimum on my credit card. Perhaps by this time next year, I'll have saved the entire $7,500!

Next, I need to commit to not spending the funds except in a 'real' emergency. 'Real' emergencies do not include a huge sale at Macy's, dinner and drinks out with friends, or a last-minute trip to someplace sunny. So far, I've not touched my $1,000 emergency fund, so I think I'll do well here.

Finally, my money needs to be working for me, in a high-interest account. I bank with ING Direct, which I love. I'm earning 3.0% on my checking account---not a huge number, but I receive nice little chunks of change at the end of every month (equal to about the cost of a small mocha). It's nice to know that I'm earning interest---with my previous, 'bricks and mortar' bank, the savings account paid---if I'm not mistaken---.075% or some ridiculously low number.

If you can, make your savings deposits automatic. I started my ING account with an automatic $50 coming from my checking account---and then promptly forgot about it! Suddenly (well, it seemed sudden) I had over $700 dollars in my account! I highly recommend automating any savings or investing plan---when you don't have to make that monthly decision to save, it takes the ability to fudge right out of your hands. . . .