It’s crazy out in these streets right now. The President has declared a national emergency and has restricted air travel to and from 26 countries. The Dow Jones Industrial Average posted the largest single-day drop since the 2008 economic downturn. Major events like the SXSW (South by Southwest) concert and Coachella have either been cancelled or postponed several months. The rest of the NBA (National Basketball Association) season has been suspended. Schools are closed. Disneyland, for God’s sakes, is closed! Worst of all, toilet paper on a store shelf is nowhere to be found. You can’t even get it from Amazon.
Though I’m not panicked, I’m now in a state of being reactive. I feel the need to obtain a bunch of household supplies because I’m concerned that they won’t be available in a few days or next week when I need them. I hadn’t planned on doing this, but am doing it now. Why? Well, because everyone else is taking all the stuff.
This comes amid concerns about the spread of the coronavirus in countries around the world, including the United States. It has now, officially, been declared a pandemic. What concerns me about this situation is not the virus itself (except to the extent that it could impact my parents and other elderly loved ones), but how people are responding to it. The level of fear and the corresponding actions that are being taken in response to it are concerning.
Though I’m not panicked, I’m now in a state of being reactive.
~ single girl
Seeing how people are responding and the corresponding changes that are being made in business, and general life in the United States, is making me ask myself, “Is $1,000 enough?” Considering the fact that I work for myself, will I be okay if things continue as they have been?
Anyone familiar with Dave Ramsey’s Total Money Makeover program knows that he advocates a baby emergency fund of $1,000 as the first among several baby steps to financial freedom. The idea is to use the small emergency fund to “cover those unexpected life events you can’t plan for.” In other words, this is supposed to cover those things that you cannot see coming . . . or that surprise you.
Among the exceptions to the $1,000 fund amount are situations in which an emergency is clear and eminent – an emergency for which $1,000 simply would not be sufficient. I’ve heard Dave identify such an emergency situation as one where, for example, someone has a baby coming and doesn’t have insurance coverage or when one knows that they will be losing their job.
(1) Given what is happening now, I’m asking myself some questions.
(2) Is the corona virus and the mayhem it is causing a sufficient emergency to justify saving more?
(3) For those who are self-employed, should one have a higher amount?
(4) Is a $1,000 emergency fund sufficient for someone in extreme debt (over $300,000) like me?
How will this impact my business? Can I turn it into a positive situation? If things continue as they are, will I have enough money? I do not want to borrow. I’ve turned over a new leaf. I. Will. Not. Borrow.
But I only have $1,000 in my savings account. I have a few sinking funds – for car maintenance, home maintenance, personal care and gifts, but those aren’t savings accounts. Those are accounts with funds for expenditures that I know I’ll need to make eventually, even though I don’t know exactly when or how much I’ll be spending. The sinking funds are accounts that allow me to protect my monthly cash flow by having funds already set aside for the handling of certain life things. While I like seeing funds in these accounts, having the money there is a proactive measure, not a safety net.
Since I started my debt free journey last year, I’ve had only the $1,000 baby emergency fund. Though some months have been better than others from an income perspective, I haven’t strongly considered increasing my emergency fund amount until now.
And nnnnoooooowwwwwww . . . I’m thinking that this is a certified emergency situation – one that would warrant me saving a bit more money and putting it to the side. What these circumstances will yield is very uncertain. I’d like to be in a better cash position, even though I hope I won’t need it.
What financial moves are you making in response to this pandemic? How much do you have in savings and are you comfortable with that under the circumstances?