
There have been a lot of questions coming in recently which I don’t feel qualified to answer as they involve topics which aren’t my areas of expertise. So I’m so excited that my husband, Jesse, has kindly offered to occasionally tackle these questions in my place on Tuesdays! -Crystal
We have been thinking of making the transition to my husband becoming self-employed for a while and are currently looking at all the ins and outs of that. We have no debt, a paid-for car and house, the capital needed to start up the business he is thinking of and an emergency fund which will last us 5-6 months of living expenses.
Part of me thinks that this choice to transition to self employment, isn’t really an emergency, and so we should build up another fund to allow for that transition to happen rather than using our emergency fund. On the other hand, that is going to take us literally years at our current savings rate and the potential to rebuild our emergency fund (or top up whatever we have used from it) when my husband is self-employed is greater.
What is your perspective? What should (and shouldn’t) emergency funds be used for? -Karen
Starting a business from the ground up is always an exciting and daunting prospect at the beginning. You have the thrill of realizing you can work for yourself and make your dream into a reality, accompanied by fear of the unknown and of providing for your family. How will it all work?
Well, I certainly don’t know all the answers, but what we have learned from our experience and observation, the key to starting any business is to start small. And grow when you can afford it.
Granted, this is not the make money hand-over-fist, get rich quick answer, but it is what will create staying power in this economy. We have started three businesses with $2000 each, with each succeeding business stretching that money farther each time.
Bear in mind, also, that, unless you have created a market for your business to succeed, you will probably not make a living wage after expenses and for a couple of years. This is why it is generally a better idea to start the business on the side while being employed full-time.
I know one man who did this for 10 years before jumping out on his own. He worked several nights a week and on Saturday mornings until the business was at a place where it could support his family and any new employees who needed to be hired in the transition. If your husband can at all squeeze even an hour at night or a few on the weekends and put that time into starting a business, you will be in a much better position administratively and financially to jump onto the self-employment band-wagon a few years (or months!) down the road.
As far as using your emergency fund is concerned, I would not touch it if I were in your shoes. The emergency fund is a necessary cornerstone of any financial plan, one that should not be lightly moved or reduced.
You are in a great position right now as you are debt free and have a steady, full-time income and a good cushion in savings. If you were to remove that cushion to finance the business and remove the steady income, you will have added stress and unnecessary risk that will potentially put your paid-for assets on the chopping block should the business not take off.
If you cannot run a small portion of the business on the side in the wee hours, I would suggest taking the next year to save up as much money as you can in addition to your emergency fund. If you have enough saved up so you do not have to touch that money, and can reasonably foresee being able to get the business off the ground (with a lot of sweat equity, mind you) and taking advantage of today’s technology and free internet tools, then come and jump on in. The water is nice!
Jesse Paine is a licensed attorney who owns his own law firm. He’s married to Crystal and is the numbers nerd of the MoneySavingMom.com team! If you have a question you’d like him to answer in a future column, you can submit it here.



And there’s no need to feel like you have to scrub every little nook and cranny of your house all the time. Give yourself grace to let some stuff go.








The tree swing was a favorite!










