Zen Habits lists 10 actions to getting control of his finances.

In article The 10 Key Actions That Finally Got Me Out of Debt", Leo lists an emergency fund as #5 in the keys steps to getting out of debt.

I'm a firm believe that you CANNOT get a handle on your finances until you have a buffer of quick cash. Desperate to get out of the debt burden, I paid a higher portion of my checks to credit card companies than almost anything else. Depressed about not having a savings, and every time the unexpected occurred, I felt I would never get out of it. It wasn't until I changed my debt strategy to include a fund for this purpose that things turned around.

Pay Yourself First

I set up automatic withdrawals from every check to go into a savings account. I started following my dad's sage advice to me years ago - pay yourself FIRST. I'm a far more important investment than any bill. Creditors and utilities get paid after I do. My account started with $260 per check.

Don't Worry about the Size of Your Account

No matter how big or small, it will be useful. It will grow with time, giving you an even larger cushion. When I looked at my bank statements and saw the looming large debt-o-meter versus my minuscule $500 savings balance, it wasn't immediately clear how it that paltry amount would help me. Proportionally, it was so out of wack. By the time I had $4000 saved, the motor in my car window broke for a $500 sum. I winced at the total, paid for it in cash and moved on. My debt continued to go in one direction - down. No further stress about it. Except maybe from now on I might think twice about getting a car with automatic windows - ouch.

Use an Oh-No-Crap Fund Only for Emergencies

Discipline, grasshopper. An emergency is anything that would make you freak out and use your credit card or call mom in desperation. But not in the Paris Hilton "But Mooooom...it's not faaaaaair!" {crycry} kind of way. Car repairs, not car washes. Doctor's bill for a freak accident while sleep walking (true story), not a Grey's Anatomy DVD collection. TV repair, not a brand spanking new HD TV. Sewage pumps backing up during a rainstorm, not a new pair of pumps. Got the idea? Great.

The Rules:

1) Freaking out? Consult the emergency fund.
2) "I want! I neeeeeeed it!" Leave it alone.

Open Another Savings Account for "I neeeeeeed it!"

Ye olde fashioned cookie jar could work, or a bank account. Fund it by selling junk you don't need. Sell your DVDs you don't watch on eBay or Amazon. Seriously. How many of those movies do you really watch and how often? If you don't watch all the movies in your entire collection at least once a year, why the heck did you buy it? Get Netflix or Blockbuster! Hollywood is so stinking rich off movies you buy for $16, open out of package when it's new, then never watch again. Oh, and it will be obsolete once they are replaced with the new HD formats and no one will want to buy your used 'ye olde fashioned' DVDs. Sucker.

Make automatic payments to your savings account. Want a new pair of pumps or HD TV? Do it the way grannie would have done it - put aside money and save for it.

I only started diligently following these rules early this year. I am certainly the rainy day fund made this all possible. As my fund grew larger and larger, I felt more confident. I can now pay off my debt in one swift karate chop at any time, however, I want to make sure I have enough of a windfall cushion at the end. Lesson learned.

Now to figure out how to stick with my diet...

Positive Net Worth!

According to my info at yodlee, I now have a positive net worth!

Of 1,687.28. Woohoo! I have not yet paid off the credit card because I need to have a savings account for the unexpected. I have a dentist appointment coming up, and I don't have dental insurance. My best friend is going in for a root canal, and it's expensive even WITH dental insurance. So I'm very worried. I'm hoping the dentist will just scold me for not seeing a dentist in a long time, and give me a cleaning.

I am also traveling to the UK over the holidays to meet my boyfriend's parents. The US exchange rate is still pretty icky, so I need a few dollars in the pocket. However, I feel great that I could pay that sucker off any time I am ready now. Hurray!