6 Quick Ways to Rebuild Your Emergency Fund After You’ve Drained It

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More than one-third of American households dealt with a major unexpected expense in the past year, according to a 2018 survey by Bankrate. Financial experts stress the need for building a robust emergency fund for such times. But what happens when you’ve drained those savings?

Rebuilding your emergency fund may not feel the same as it did the first time. While you may be glad that you had the reserves to cover an unexpected expense, you may feel shaken by the prospect of it happening again before you can recover.

To help, we’ve put together six ways to replenish your emergency fund and protect yourself from future rainy days.

1. Cut out all unnecessary expenses

Maddy Osman, an SEO content strategist, had a couple of thousand dollars saved when she moved out of her parents’ house and signed a lease on an apartment. But shortly after she moved in, she lost her job. By the time she found a new one, she had drained most of her emergency fund.

“It took much longer than it did to initially build it back up since I was now responsible for all of my bills, without my parents to lean on,” she said. That said, she saved more than $10,000 after three or four years and had her frugal attitude to thank for it.

“As soon as I was fired from my job, I identified nonessential expenses [such as shopping and going out to eat] that I could cut until I was earning money again,” said Osman. “But I kept the same frugal mindset well into my new job, telling myself that it was better to save money than spend money.”

Cutting back is a great idea anytime you want to save more cash or pay down debt. But it’s also important to leave yourself some fun money. Otherwise, you could get burned out on your Spartan lifestyle and overcompensate by going on a spending binge.

Find the right balance for yourself between the urgency of your savings goal and enjoying your life.

2. Use windfalls

The average tax refund was $2,778 in 2018, according to the IRS. Instead of using your tax refund to pay off debt or put a down payment on a car, use it to restock your emergency fund.

If it’s nowhere near tax season, however, other windfalls such as quarterly or annual bonuses or large payments for overtime can help you get your safety net back to where you want it to be.

3. Pause other financial goals

If you no longer have a financial cushion between you and the next emergency, you could end up with high-interest credit card debt or missed payments on your monthly obligations.

So if you’re saving for other financial goals, such as your next vacation, a home improvement project, or another short-term goal, funnel all that extra cash toward your emergency fund.

Once you’ve reached a level where you feel like you can weather another emergency, you can go back to your regular savings pattern.

4. Look for ways to earn extra cash

Athena Lent, a blogger at Money Smart Latina, was working on building her emergency fund when her cat was diagnosed with feline immunodeficiency virus. “I had around $1,300 saved at the time, and I was working on saving $3,000 for the year,” she said.

Her cat, Harrison, spent three days in a hospital and needed expensive medications. “A lot of people saw this as excessive, but I consider my cat family,” she said. “I’m happy I did it because he is still doing great.”

To rebuild her emergency fund, Lent started doing work as a virtual assistant managing social media accounts for a nonprofit organization. The gig helped her replenish her emergency fund within a few months. But things got difficult again when Lent found out she had osteoarthritis in her spine. The pain made it difficult to work, let alone walk.

“I took a second look at my budget and cut out anything I could do without,” she said. She also negotiated raises with some of her clients from her virtual assistant business, giving her more room to add to her safety net.

5. Sell some of your belongings

Unless you’re a staunch minimalist, you likely have some stuff sitting around your house or apartment that you no longer need. By being proactive and getting rid of stuff you no longer use, you could avoid having to do it in a hurry and potentially get less money on your sales.

Several websites and apps make it easy to sell your stuff online, including:

  • Craigslist
  • eBay
  • OfferUp
  • Facebook Marketplace
  • Decluttr
  • Letgo

Some services are free, while others charge a fee based on a percentage of your sale. When pricing your goods, keep these fees in mind, too.

6. Use a credit card balance transfer

When Janeil Pierre, a staff sergeant in the U.S. Army and blogger at Budget Every Cent, was stationed in Hawaii in 2015, she had $10,000 in her emergency fund. Shortly after she dipped into her savings to fix a leak in the roof of her home in Georgia, Hurricane Matthew destroyed the same roof. Then after she replaced it, she moved out of the barracks where she was stationed and moved into an apartment.

After all that, Pierre had only $100 left in her emergency fund and was panicking. “I was making enough money to rebuild my emergency fund, but it would have taken me too long,” she said. So instead of building her savings gradually, she used a credit card that had a balance transfer promotion with a convenience check.

“It was a 2% balance transfer fee with 0% interest for 15 months,” she said. “I had the cash deposited into my checking account first, and then I transferred it into my savings account.”

Pierre knew she could afford to pay off the transfer within the 15-month period, and the fee was worth the peace of mind she had.

While this isn’t an option we’d recommend to most people, it may be worth considering if you have access to such a promotion, you have the income to pay it off interest-free, and you believe that having all the cash in savings at once is worth paying a balance transfer fee.

Don’t let discouragement dampen your motivation

It can be disheartening to deplete your emergency fund, especially if you’ve spent months or even years to build it up. And the idea of spending that long to get it back to where it needs to be can feel like an insurmountable task.

If you’re feeling this way, take a step back and congratulate yourself on the fact that you were prepared in the first place. Then start doing some of the same things you did the first time you built up your savings, as well as some of the ideas we’ve shared here.

It will take time, but these tips can help you get there faster.

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Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print understand what you are buying, and consult a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time. Please do your homework and let us know if you have any questions or concerns.