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The AC in your car is on the fritz. Your dog has a seizure and needs extensive blood work and scans. The hot water heater dies. Ka-ching!

In this tough economic climate, it’s not surprising to learn that many Americans – 64%, according to a recent study cited in a CNNMoney article – wouldn’t have funds available to handle a $1,000 emergency expense. And many folks don’t know the difference between a rainy day fund and an emergency fund, says Personal Finance Expert Lynette Khalfani-Cox. She wants to change that, and she wants to help people pay down debt and raise cash so they won’t have to turn to credit cards for surprise expenses.

“The two funds are different in their size, purpose and benefits,” Khalfani-Cox, a.k.a. the Money Coach, explains in a recent column. The rainy day fund, typically in the $1,000 range, is for things like the dog’s weekend vet bill, or fixing the car’s AC condenser. The emergency fund is usually three to six months worth of living expenses.

The amount for your ideal emergency fund, typically between $3,000 and $10,000, depends on your current income and expenses, your marital status and whether you’re responsible for financially supporting others. It’s designed to help you pay your bills if you lose your job, have an unexpected medical issue, or hear that your spouse is leaving and all of a sudden the income you counted on goes ‘poof.’

The Money Coach asked some members of the AARP community how their safety nets helped them when the unexpected occurred. Want to get inspired? Read actual stories from people about how having these funds helped them not just financially, but emotionally.

And if you’re drowning in debt and saving $1,000 seems like a pipe dream, the Pay Down Your Debt series of articles, tips and challenges can help you go from in the red to in the black.

Photo by M.W. Boeckmann via Flickr Creative Commons.

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