Ask Gustav: Can you afford an emergency?

When Hurricane Katrina hit the Gulf Coast three years ago, the lives of some were lost and the lives of others were destroyed. Survivors, in addition to losing their homes, belongings, and loved ones, suffered devastating financial losses. As Gustav approaches New Orleans, I wonder what from the past will return to haunt veterans of Katrina. What did they learn? How have they prepared? Will their lives be any less devastated?

There have been nights in my life where I have laid awake, wondering how I would make ends meet. I don't need to go into the details of my monthly bills and income, but sometimes they were too close for comfort. I remember once, a few years ago, the last of my monthly bills came due three days before payday. Determined to pay them all on time and avoid carrying a balance on my credit card, I was left with $7 in my checking account until my next deposit came through. How's that for close? Fortunately for me I survived without incident, but it certainly got me thinking about changing my ways.

From then on, I started to live by the principal of "pay yourself first." I could always come up with a legitimate reason to not save money. Because of that I failed to look out for myself, not understanding that I couldn't afford an emergency. By not forcing myself into a "pay yourself first" mentality, I was chaining myself to a paycheck-to-paycheck lifestyle -- one that always left me above the surface, yet unprepared for a flood. I am thankful for having those three days with $7 in my checking account. It was that tiny amount that inspired me to start saving -- even just a little bit each month -- and escape the world of waiting for payday.

I hope that the residents of the Gulf Coast learned this lesson after Katrina. Undoubtedly, the city will close down for a few days, putting hourly workers on the bench and docking their paychecks for their downtime.

Here are my words to the working poor of that area: If you cannot afford to save $50/month for an emergency, you must save $50/month for an emergency -- by whatever means possible. The harder it is to scrape up a little extra money each month and stick it in a savings account, the more you need to start doing it. If you can't afford $50/month, you certainly can't afford an emergency.