When choosing the right car insurance, this question comes up all the time.  So, how much of a deductible should you have?  Well, there are a few things to consider when trying to figure out how high your deductible should be:

• What do you think your chances are of getting into a car accident that is your fault?  If you are a high risk driver and you get into plenty of fender-benders, you would probably want to have a lower deductible to save your out-of-pocket expenses every time that you get into an accident.
• How well do you want your repairs done?  If you have a really high deductible, say $2,000 - and your damage only totals $1500, you aren’t getting a dime from the insurance company.  If you can live with a shoddy body job or some scratched paint, having a higher deductible will help keep your premium lower while still covering you if you do some serious damage to your vehicle.
• How much do you need your car?  If you absolutely cannot survive without your vehicle, I would recommend getting a lower deductible just to help keep you in your car.
• How much cash do you usually have on-hand?  If you absolutely need your car to get to work, and you are living paycheck to paycheck, what happens if you get in an accident and can’t afford the deductible?  If you don’t usually have high cash reserves in the bank for emergency situations like this, make sure to get a lower deductible.
• Finally, how much will your deductible affect your insurance premium?  If you have a stellar driving record, your deductible might now affect your premium all too much.  When you are searching for quotes, try playing around with your deductible to see what effect it has on your overall premium.

Having an emergency cash buffer is always a good idea to help keep you safe and protect your credit report in the event of an emergency.  Having a nice cash reserve will help you avoid having to take out a payday advance or use your credit card when you need fast cash to make a payment or pay a bill.  I consider having a cash buffer as a form of insurance - it protects you in the event of an unfortunate event, however this form of insurance pays you interest, instead of costing you a monthly premium.

I like to keep about $4,000 in an savings account that I can use in case of emergencies.  I determined this amount by using a few different ideas.  One method of thought is that my maximum health insurance deductible is $4,000.  In the worst medical emergency, I would have just enough in my emergency cash fund to pay for my medical bills.  Also, I considered what would happen if I lost my income.  I figured that four grand is enough to hold me over for about two months, and two months should be plenty of time to get back on my feet.

How did I start my cash buffer?  I just saved the money up, stashed it away and forgot about it.  I lived below my means for a while until I had enough money saved away.

So how can I afford to have that money just sitting in my bank account?  Well first, it should not be sitting idle - it should be accruing interest.  There are plenty of free online banks that have competitive savings rates.  Just shop around online.

The question I ask is: how can you afford not to have that money just sitting in your bank account?  Think of the domino effect if you are just barely getting by and something bad happens.  First, your credit goes downhill, then you become overwhelmed in debt - things can easily spiral out of control.  Not having an emergency cash buffer could end up costing you in the long run.

After much futzing with the layout and the link structure, we now have established our blog.  Keep checking in for miscellaneous personal finance tips and tricks.  We will continue posting helpful articles each week.