One of our financial goals last year was to build up a savings account while simultaneously paying down our consumer debt. By cutting costs and working overtime, we were able to save nearly $5000 which has made a huge difference in how money flows in and out of our household budget.
How have we benefitted? Having cash in a savings account means that we can finally afford to cash flow an emergency instead of putting the bill on a credit card and paying gobs of interest. Here are some other ways how a savings account has benefitted our family.
Made refinancing possible.
In the past, having a cash reserve wasn't require for a refinance. That's all changed with banks now requiring a savings safety net equal to 6 months of mortgage payment plus an additional 3 months if refinancing an investment property. Having a savings account made it possible to refinance our rental; without it, we wouldn't have qualified nor had the funds to open up an impound account.
Improved our credit worthiness.
Another interesting observation was discovering that banks are much more eager to lend money to people who don't need it. Our credit lines were recently extended automatically on a couple of cards; we also had absolutely no trouble in opening an overdraft account.
Gave us bargaining power.
Having access to ready cash has also improved our bargaining power. A few local gas stations still discount for cash, so do doctor and dentists offices, and even vendors on Craig's List. We were able to knock down the price on some high ticket items recently by paying in cash pulled from our savings account.
Made money saving repairs possible.
We learned the hard way that delaying a repair until we could save the money often cost us more in the long run. An emergency savings fund makes it possible to fix small problems before they develop into a large, expensive ones.
The most beneficial part of having cash in savings is how it dropped our stress levels. While we still worry a bit about our finances (and who doesn't these days?), knowing that we have a safety net makes it easier to sleep at night.