Read any financial advice article (including mine) and you’ll be told you need an emergency fund. Usually this is attached to some number (like 3- or 6-months’ salary or expenses)
It can be hard to do good. From each client payment, I set aside a specific percentage of the check and put it in a savings account. I’ve found this
According to dear daughter I’m a world class know-it-all, but every once in a while it’s brought home to me that I don’t actually know everything. So this is another
Read any financial advice article (including mine) and you’ll be told you need an emergency fund. Usually this is attached to some number (like 3- or 6-months’ salary or expenses) that will make you feel hopeless that you’ll ever achieve it. I’m here to say that even having $1,000 or $5,00 stashed is going to help out a lot, and help you avoid a lot of bad results. And, if you don’t have an emergency fund you’ll never get out or say out of debt: we don’t know what the emergency will be, but unexpected things occur regularly. Having some emergency is definitely predictable. Here are a few reasons you need something.
- You lose your job. This is the first thing everyone thinks of—and probably requires the largest emergency fund, since being without any income (even if you collect unemployment) is pretty scary and can last more than a few months.
- You have a health issue and have to cover your deductible and out of pocket expenses. Depending on when this occurs in the year, you may need to cover more than one year’s deductible. Let’s say you get sick in November, but it lasts into February—2 years’ worth of deductibles and out-of-pocket.
- You slide in the snow, doing damage to your car (bad), or to someone else’s car (worse) or both (worst of all). Neither of these expenses is worth claiming to your insurance company know, but given the electronics in cars nowadays, one came up to $700, and the not very happy person whose care you hit cost $500. Damages to your home and car that are near the deductible are probably not worth claiming (because they’ll raise your rates or drop you.)
- You have a fire. Even if you have homeowner’s or renter’s insurance, moving immediately to a hotel, eating out exclusively for any time period, or even couch surfing at a friend’s is going to cost something.
- You have a fire and it only wrecks the kitchen. You’ll immediately incur higher food costs.
- Your refrigerator, computer, or other appliance suddenly goes kaput.
- If you’re a homeowner, the list is almost infinite: tree falls, sewer line gets clogged, hot water heater’s bottom drops out, furnace or air conditioning die, dog destroys couch or bed, cat decides they prefer your wall to wall carpet to their cat pan and you don’t discover it for a while…
- Pets need veterinary care.
- Someone dies and you have to travel to the funeral, or you have to bury someone.
- You lose your job and have to buy temporary health insurance.
- You lose your job and need assistance (coach, networking groups, lunches out, etc.) in helping you find a new one.
- A loved one needs immediate residential care or home assistance not covered by insurance.
- You or your child need a divorce.
- You need to hire a lawyer for any reason.
- Your child needs special testing or tutoring not covered by insurance or the school.
- You have to buy a car, unexpectedly.
- You have to move.
- You need dental work, glasses, or a hearing aid (which are not usually covered by insurance). Check your insurance, especially if you have children who need any of these.
- You have an accident or illness that requires you to pay others for services you routinely did for yourself (grocery shopping, rides, home maintenance and cleaning).
- You work for the federal government.
It can be hard to do good. From each client payment, I set aside a specific percentage of the check and put it in a savings account. I’ve found this far easier than coming up with a lump sum at the end of the year. I can fund things throughout the year, rather than in a blitz in December. And, I know exactly how much I have to give—whatever the account balance is.
However, like all of us, I get multiple appeals from GoFundMe, Facebook friends, etc. I also just had a rather odd experience with a donation on Giving Tuesday (note to self: always write thank you notes when someone does something for you). I started to wonder about how this all works, and whether it was the best way to donate the maximum amount. Here’s what I found.
Donate your bag credit at Whole Foods?
Unless someone convinces me differently, I think this is a scam. Apparently, Whole Foods takes this as THEIR charitable deduction, not yours, so you’re actually funding a giant tax deduction for them. Also, you have no receipt. Keep your bag credit, put it in a jar, and give it to an actual charity at the end of the year. For me, 8 bags a week ($0.80) x (say) 48 weeks would be a $38.40 donation.
This turns out to be an actual donation to Petsmart Charities and you should save your receipts showing this if you do so. However, according to my research the deduction will be reduced by whatever the merchant credit card fees are, if you use a card.
Not only is this not deductible, since it’s considered a personal gift not a charitable donation, but the recipient is charged 5% by GoFundMe as well as 2.9% by payment processors. This is an outright waste in my mind, and I recommend never donating in this way. Just send the person a check if you really do care.
These donations are deductible if the organization is a 501(c)3. However, FB charges the charity 5% to sign up. FB did match the amount if you donated on Giving Tuesday—but only up to $7 million, a pittance which was gone in minutes, as far as I can determine. For all my kind friends who have been induced by FB to post donation requests on their birthday—maybe think again? I suppose 95% of something is better than 0% of something but again, a direct contribution would be better.
Credit card, Paypal, or Square payment?
Once upon a time, some credit cards did not charge charities for donations put on cards. As far as I can determine, this is no longer the case, and charities are charged whatever the merchant fee is for the card. Pay through Paypal and they’ll be charged 2.2% + 30 cents per donation. Square rips them off at 2.75% if there’s an actual credit card to swipe through their reader. It’s an even more whopping 3.5% + 15 cents if the number is manually entered.
Sure, it’s easier to give a charity request a credit card, but for most charities, especially small or local ones, every cent really counts. Many people tell me they no longer have checks, but here’s the ideal place to use them if you have them—or learn to send one directly online from your bank if you don’t use this service.
For more information, check out this site: