IRS Money Grab: Here’s Your Last Line of Defense

Dear Money & Crisis Reader,

Last year, Carey and her husband, Steve, decided to file their taxes separately.

They had hoped it would push them into a lower tax bracket and reduce their total tax bill… But instead they ended up owing over $3,000.

A tax bill this size would be enough to ruin anyone’s day.

But for Carey and Steve, it wasn’t a big deal.

After all, this was exactly why they had an emergency fund.

With it, they were able to pay the bill with zero impact on their lifestyle — without taking on any extra debt.

And after a year of putting aside $125 a month each, their fund is already back up to $3,000.

That’s the power of an emergency fund.

It takes those big financial setbacks — like urgent home repair or a whopping bill from the vet — and sucks all the stress and financial strain out of them.

That’s why a robust emergency fund is the No. 1 tool for anyone serious about their financial security.

You can build one gradually, like Steve and Carey. But if you want to save as much as possible — in as little time as possible — you can use a couple tricks to supercharge your emergency fund.

Supercharging Strategy #1: Sell Your Junk

One of the easiest ways to make some quick cash is to sell the junk you don’t need.

If you’re anything like me, there’s probably a basement, attic or closet in your home that’s full of stuff you don’t use or need.

Exercise equipment… collectables… household items…

You might not think anyone would want this junk. But if you sell this stuff online, you’ll be tapping into a marketplace that spans the globe.

Amazon, Craigslist and eBay have hundreds of millions of users that are searching for all manner of junk every day of the week, 24/7. With that many users, you’re bound to find someone who wants what you’re selling.

That said, I’ve also had success selling on sites like Nextdoor.com, which connects you to a smaller number of folks living in your local area. This is ideal for bulky items like furniture that would be difficult to send in the mail.

Supercharging Strategy #2: Turn Your Cable Into Cash

Nobody likes the idea of cutting back on the things they enjoy.

But taking a temporary break from overindulging in life’s little luxuries will hit the fast-forward button on your emergency savings.

Simply pick three of your unnecessary expenses and eliminate them for a couple of months. This could be your cable TV, unused gym membership or social expenses like frequent restaurant meals.

Add up how much you usually spend on these expenses and bank that amount in your emergency fund every month.

You could even ask your employer to deposit the amount directly into your savings account so you’re not tempted to spend it.

Supercharging Strategy #3: Bank Your Windfalls

Most folks can expect at least one windfall of cash a year.

It might come in the form of a tax refund, a fat commission check, an inheritance or a bonus.

Regardless of where it comes from, banking a windfall is an easy way to give your emergency fund a shot in the arm.

Now, you don’t have to bank 100% of every windfall you get.

Where’s the fun in that?

What I recommend instead is to mark a small percentage of the money (10–25%) as fun money — and bank the rest.

For example, with a $3,000 tax refund, you could secure $2,250 in your emergency fund and still have $750 left over to treat yourself.

With one of these strategies or a combination of them, you should be able to get a robust emergency fund up and running in no time at all.

As always, if you agree, disagree or have any topics you’d like us to investigate, you can email me right here.

All the best,

Owen Sullivan
Editor, Money & Crisis

Editor’s note: The strategies you read about in Money & Crisis were developed with the help of Jim Rickards, the best-selling author of Currency Wars and The Death of Money.

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