My Money Market Emergency Fund

One of the steps in the “getting our of debt plan” is to set aside $1000 as an emergency fund. What exactly is an emergency fund? Well, it’s your hedge against Murphy’s Law. As you try to get our of debt emergencies will occur. Car repairs, medical, etc. The emergency fund covers those incidents and prevents you from using credit cards. So what do you do with your emergency fund? Money Market Account?

You put it in a Money Market Account. The reason you put it in a Money Market Account, and not a saving or checking account, is you want to limit access to your money except in an emergency. Money Market Accounts give you a little better interest rate than checking or savings account and you can only write a couple of checks a month.

Money Market Accounts are usually not tied to debit cards. We have put our emergency fund in our local bank’s Money Market Account and we rarely even remember it’s there. When we do think about it we feel a sense of relief knowing that should Murphy hit us, we can take what we need from our Money Market Account.

So go ahead and do your best to save an emergency fund. For some of us it’s $1000 for others it may be $500, whatever the amount just make it a priority to save it and stick it in a Money Market Account. You’ll be glad you did.

Regards.