All could mean same thing to you: financial catastrophe.

No, you may not have to declare bankruptcy or move back in with your parents, but losing your job could put a big dent in your financial goals and even set you back several years. You may need to live on your savings or liquidate some of your investments.

If you have no savings or investments you may have to rely on credit cards and could rack up significant credit card debt. Then when you find a new job, your expenses may have increased because of additional credit card payments.

And job you eventually find may not pay as much as one you lost. So you are now forced to live on less while your expenses have either continued at same level or even gone up.

Studies show that average worker will have six career changes in his or her lifetime. Not just job changes, but career changes.

So how can you prepare for your own financial "downtime"?

An emergency fund.

An emergency fund is really just savings. But it is not savings for a particular item or even an investment for your future or your retirement. It is your "rainy-day" fund. But unlike insurance where once you pay your premium, money is out of your hands, your emergency fund is yours to keep.

So how much do you need? How can you build your emergency fund? And where should you keep money?

The easiest way to figure out how large your emergency fund should be is to take your current income and multiply it by number of months you could be out of work. If you make $3,000 each month and you want to be prepared for a 6 month "vacation", you will need $18,000.

But obviously saving $18,000 will take some time. How quickly you want to build your emergency fund depends on how concerned you may be about your current and future employment prospects.

Saving $100 each month will take you 180 months or 15 years. Saving more each month means you will be protected sooner. Also consider that during next 15 years your income may increase and your expenses usually rise to match your income.

Credit cards are a great way to make purchases and record to penny your spending. They also provide a way to postpone payment on items and thereby earn more interest on your money.

For example, if you have a money market account that gives you 5% annual interest and you spend $1000 a month through your credit card, you can keep that $1000 in your money market account for an additional month. At end of a year you would have earned an additional $51.16 for doing nothing.

Now $51 may not be much but it's free!

Also you can use your credit card statements to keep track of exactly how much you are spending and where your money goes. With some credit cards you can use personal finance software to download your credit card transactions from Internet right to your home computer.

Credit cards may actually save you money. Some people avoid making purchases if they do not have cash. Cash seems to "burn a hole" in our pockets, it just disappears. It is so easy to spend and it is right there. But a credit card takes more effort and you know that you have to pay bill later that month.

Your credit card may also offer a rewards program where you get cash back, frequent flyer miles or discounts on services and merchandise.

Credit cards are convenient. Some purchases, especially those on Internet, will only accept credit card payment. Also you don't have to continually go to bank or ATM to get cash.

A credit card also provides a measure of safety. You don't have to carry large amounts of cash for large purchases. Even if your card or credit card number is stolen, you are not responsible for thief's use of your card.

But credit cards can also be a crutch. Too many people see their credit limit not as maximum amount of debt they can go into, but as an account full of money that they can spend.

Average household consumer credit balances have now topped $7000. The monthly interest charge for a credit card charging 18% interest is over $100. More than $1200 a year just in interest.

And this interest is not like home mortgage interest that you can deduct from your taxes. You are paying an additional 15-36% on top of $1200 for taxes on interest you are charged. That brings your interest charge total up to $1400-1600 each year. Even more if your balance or interest rate is higher.

What is silly is that many people who are paying 18% interest rates on credit are also investing in a stock market that only averages 11%. Or worse, keeping money in money market, savings accounts or CDs that only pay .5-3%.

Want an investment that returns over 20%? Invest in paying down your debts. In above example you can save over 20% with taxes factored in.

Many people have developed habit of using their credit cards to buy what they want now and paying for it later. They then make only minimum payments required. Often minimum payment is set so that you only pay monthly finance charge (interest) or just a small amount above it.