by: jenniferquilter
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Date: Fri, 18 Jun 2010 Time: 5:11 PM -
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If you've read any financial articles before, you've probably been told to save up for unexpected expenses, because they do come up frequently. This gets mentioned so often though that most people ignore it--which gets them into financial problems. This is why the importance of saving an emergency fund after bankruptcy can't be ignored.
Article Source: DirectoryArticles.com
Now that you have this on your credit report when something unexpected comes up putting it on your card or getting a quick loan is a much more difficult, and very unwise, decision. Having a small, easy to access, fund ready for such experiences is the way to avoid falling into traps.
Without an emergency fund your only open is to take out a loan or put it on a card. These have very high interest rates which add to the debt all the time, making them very difficult to pay off. Add that on top of the fact that during the time you're trying to repay this, you'll probably have other unexpected expenses come up, which will also add to that debt, making it seem impossible to overcome. With a savings account stashed away for these type of expenditures this problem disappears.
Immediately after bankruptcy this should be one of your first goals.
You need to make sure you replenish this fund after taking from it. Whenever you make a withdrawal from your emergency fund consider it a loan and have a plan for repayment. Otherwise after a withdrawal or two you'll be back where you started, having some problems without any way to fix them. In fact, whenever you do have a little extra money on hand, it's a good idea to put it into this fund and try to make this savings a little bigger. You can never have too much cash on hand for unexpected expenses.
Saving an emergency fund after bankruptcy is especially important because of the raised interest rates for credit cards or loans, and because after going through so much effort to start over, you really want to avoid any debts.
The more you know the better off you'll be. Learn more about rebuilding credit after bankruptcy and options for your finances, and your life, at Your Life After Bankruptcy.
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