A Shelter in the Time of Storm

The most important thing you can do to make your personal economy strong is to have an umbrella — a contingency fund with at least enough money to pay all of your bills without a paycheck for three to six months.

Call it $10,000. On a weekly basis, try to save 10% of your paycheck. It may sound like a lot, so if you can’t do 10%, start with 5% or even 1% and build up.

Deposit the money automatically into your contingency fund; you won’t miss what you don’t see in the first place. OK, you’ll miss it for the first few months, but soon you really will not miss it.

Until you have a fully financed contingency fund, approach this with scorched-earth determination. No spending on anything that is not necessary or legally obligating until you reach your goal.


Give up things such as cable TV, eating out, gym membership and entertainment.


You can’t cut off your utilities, stop eating or give up driving. But you can reduce the cost of the food, energy and fuel you buy. Opt for the cheapest supermarket and gas station. Turn out the lights; run only full appliances.


This suggestion requires no explanation. However, it does beg the question, who can even afford to smoke these days? The U.S. average is about $8 for a pack of smokes. If you smoke a pack a day, that’s a $2,920-a-year habit. And in New York City, it’s $11.96 a pack ($4,365 annually).


If you’re paying a $6.95 (or more) per month for the privilege of maintaining an account, stop! Open an account at an online bank, such as Ally Bank, that doesn’t charge a monthly maintenance fee for checking or savings accounts. They pay better interest rates anyway. Or check with a local credit union for free personal checking accounts. Some banks, such as U.S. Bank, even offer free business accounts in some circumstances.


Stop sending more money than required each month to your credit card companies, mortgage lender or any other creditor. It’s admirable that you’re being diligent in repaying the debts, but if you continue to do this while living without money in the bank for major emergencies, you’ll be setting yourself up to fall even deeper in debt.


Take a look through your cupboards and closets. Identify everything you haven’t used in the past six months. Turn what you don’t need into cash on a website such as eBay or Craigslist or hold a yard sale.


Use the Federal Tax Withholding Estimator to make sure you aren’t having too much or too little income tax withheld from your pay.


Get a second job. Or third. Work more hours at your current one. Get creative by making money doing things you already love to do, such as dog walking or selling handmade items.


More than 60% of American adults have given up their land-based telephone service. Are you in that group? If not, why not? Basic service costs at least $25 per month in most markets.


Have you figured out what you’re spending per year on eating lunch out? If you spend just $10 a day, that comes to about $2,500 a year. Just think of all the dinner leftovers you throw out that could easily be tomorrow’s lunch.


If you are contributing to a retirement account such as a 401(k) or 403(b), don’t stop now, but limit your contribution to the amount your employer matches. Once you have your contingency fund in place, return to your more aggressive contributions.

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Mary Hunt

Mary invites you to visit her at, where this column is archived complete with links and resources for all recommended products and services. Mary invites questions and comments at, "Ask Mary." Tips can be submitted at . This column will answer questions of general interest, but letters cannot be answered individually. Mary Hunt is the founder of, a frugal living blog, and the author of the book "Debt-Proof Living."

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