9 Ways to Eke Out an Emergency Fund

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Bills.com suggests ways to save on any budget.

With unemployment rates soaring, many Americans are looking enviously at their friends or family members who boast a savings account that can carry them through a rainy day and beyond. Yet, according to Bills.com president Ethan Ewing, just about anyone can save a little something for the future.

"One positive element has come from our nation's recent economic worries: The recession has turned around Americans' savings habits," said Ewing, who oversees free online consumer portal Bills.com. "For several years, Americans saved 1 percent or less of their income (and in some years, the savings rate was negative). Today, the personal savings rate is well over 3 percent. "

Any action consumers take to establish an emergency fund, of any size, will help their bottom line, Ewing added. Here are Ewing's suggestions to get an emergency fund rolling.

1.    Anything counts. Prioritize savings and set aside the largest amount possible. Turn a monthly savings goal into a "bill" to be paid along with other bills. Ideally, have a bank automatically transfer the money into a savings account.

2.    Stick to a percent. Vow to save a certain percentage of all income. "Ten percent is an excellent start, but even if it's lower, choose a percent and stick to it," Ewing said. "Whenever you receive a paycheck or other income, set aside that pre-determined percentage."

3.    Sock away windfalls. Save any extra money -- whether from a larger client check, a gift, a tax refund or activities such as a yard sale. Even small amounts count, such as a rebate or a co-worker's repayment of a $10 lunchtime loan. By stashing the extra - in addition to a regular, pre-determined amount - savings will soar.

4.    Make work pay. The Making Work Pay credit of $400 per eligible worker will, in most cases, provide an additional $11 in each weekly paycheck from April 1 through year-end. Save that credit for a painless nest-egg addition.

5.    Adjust tax withholdings and save the difference. Those who received an income tax refund this year should discuss filing a new W4 form with their employer. The IRS online calculator can help to determine how much should be withheld to cover next year's tax bill. Put the extra paycheck cash into savings.

6.    Save store "savings." If the grocery store register receipt says, "You saved $17.52 today," transfer that amount into a savings account. "You will be driven to hunt for bargains, as every deal means you pay yourself instead of a retailer," Ewing said.

7.    Ignore a raise. "Most people are not getting a raise in this economic environment," Ewing acknowledged. "But if you did get one, budget and spend as if you did not. Set up automatic savings withdrawals equal to the amount your paycheck increased (or for even better results, round up that figure)."

8.    Keep it safe. Emergency fund money should be kept safe and accessible. It should not be in stocks or other investments that might lose value. Good options might be in a money market fund or rolling certificates of deposit (CDs). The funds will be earning interest, and cannot be spent without forethought.

9.    Pay it back. "If you must spend the emergency money, try to replenish the fund as soon as possible," Ewing counseled. Cut costs wherever possible to replace savings. However, always continue making at least minimum payments on debt, and always prioritize a mortgage payment.

"By implementing some or all of these steps, you will see your savings account gradually growing," Ewing said. "If you need it, it will be there for you; and if you are fortunate enough not to need it, you will soon find yourself with a sizable nest egg."

About Bills.com (http://www.bills.com)
Based in San Mateo, Calif., Bills.com is a free one-stop portal where consumers can educate themselves about complex personal finance issues and comparison shop for products and services including credit cards, debt relief assistance, insurance, mortgages and other loans. As the online portal to Freedom Financial Network, LLC, the company has served more than 50,000 customers nationwide since 2002 while managing more than $1 billion in consumer debt. Its RSS feed is available at http://www.bills.com/news_releases/.

Bills.com holds the No. 257 spot on the Inc. 500 list for 2008, and the No. 3 spot on Entrepreneur Magazine's Hot 100 list of the fastest-growing U.S. companies. Company co-founders and co-CEOs Andrew Housser and Brad Stroh were named to the Silicon Valley/San Jose Business Journal's "40 Under 40" list in 2008, and were recipients of the Northern California Ernst & Young 2008 Entrepreneur of the Year Award.

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Aimee Bennett

Ethan Ewing
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