I want to create an emergency fund

I have a personal finance confession: I don't have an emergency fund. Not yet. I try and keep about $1000 in our checking account throughout the month and use that as a buffer between the budget and unplanned expenses, then throw it at the debt the last week of the month before the paychecks roll in. If we have anything that comes up for more than that, we have available credit on the cards that we can use. Not ideal, I know, but I hate the idea of leaving unused money laying around when we're paying so much in interest.

The other thing that helps me sleep at night is knowing that, despite the unreliability of my commissions, our salaries pay the bills. We are very close to the point where my husband's salary covers everything and the money I bring in goes towards our debt payoff. I can't wait until this debt is gone and we can move into the black. However, something happened today that made me even more eager to build up an e-fund.

I was talking to one of my coworkers about how slow business has been recently. In our company, about half of our income should come from commissions. Having a slow month sales-wise translates into a much smaller paycheck than expected. My coworker was telling me that because the past few months have been slow he was going to dip into his 401(k) to pay his bills. A 401(k) he only started 18 months ago. My coworker is in his late fifties.

I was shocked when he told me this. Absolutely floored. I feel really bad for the guy; he must have no other options. But it strengthens my resolve to set up a big fat e-fund. I never want to be in a position where I have to make a decision on how to pay my bills. I've done that. That's how I got to be in debt now. I'm so happy that I'm young enough to fix it and straighten things out so I can have the security I want.