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Personal finance tips: Rules for emergency funds, and more
Three top pieces of financial advice — from negotiating a debt settlement to countering cash buyers
 
It's a start, but you need more than that in your emergency fund.
It's a start, but you need more than that in your emergency fund. (Thinkstock)

Rules for emergency funds
Start building up your emergency fund, said Christine DiGangi on Credit.com. "It may not be the most fun budget category," but emergency funds are an essential part of personal finance. First off, define "emergency." The answer "may not be the same for everyone," but one rule of thumb is to maintain separate accounts for "income emergencies," such as job loss, and "expense emergencies," like paying for unexpected repairs. Financial planners suggest stashing the cash in a dedicated savings account to avoid the temptation of simply writing a check, but "if you don't like the idea of letting money sit in a savings account," you might consider a CD or a Roth IRA. Be wary of early withdrawal fees, but the higher yields will be a nice bonus if you don't have an emergency after all.

Negotiating a debt settlement
Sort out your debts like a pro, said AJ Smith on Credit.com. While "there are countless services out there" for settling debts, "it is possible to resolve this on your own." Begin by making a list of your creditors, and then prioritize the bills with the highest interest or smallest balances. Collectors typically won't settle unless the account is delinquent, but "there is no guarantee they will accept a settlement even if you stop paying." Being up front about your inability to pay may encourage them to negotiate. Calculate the "percentage of the debts you are able to pay and the maximum you can afford," factor in other expenses, and start negotiating with a lowball offer: 25 or 30 percent of the balance. This "sets the tone" and will help you score a more realistic settlement, ideally between 40 and 60 percent of the original debt.

Countering cash buyers
Don't get beat by all-cash bidders, said Daniel J. Goldstein on MarketWatch.com. These days, all-cash deals are making the high-end housing market more competitive than ever. But for buyers who want to finance, there's still hope. For example, some borrowers might combine "second mortgages, home-equity lines of credit, and quick closings" to get a leg up. And since many all-cash bids come from overseas, the offers "can appear and disappear." With a big down payment and some patience, "your financing-contingent offer still might have a shot." And recruiting an expert — such as a real estate agent or a loan officer — can help you find sellers who are more "open to accepting bids with financing."

 
Sergio Hernandez is business editor of The Week's print edition. He has previously worked for The DailyProPublica, the Village Voice, and Gawker.

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