Debt Elimination Step #2 - Next, you have to be able to establish an emergency fund.
The step of establishing an emergency fund is going to take as many as several months longer, but it is well worth it when you see how far your savings have come in the process. Saving money is actually more important than paying off your debt. Because if you do not save first, then you will never be able to cope with expenses that you weren't expecting when they do finally come up. You cannot keep a credit card on hand for emergencies, because having a credit card at this point is a really bad idea. All of your credit cards should be destroyed and out of the picture and instead you should be saving cash or saving in a savings account for the purpose of dealing with emergencies.
So how much money should you be saving? Ideally, you should be aiming to save around $1,000 dollars to start, though some people, such as college students for example, can probably get by with as little as $500 dollars. This money is to be saved for emergency purposes only, so don't think it's for any other rainy day expenditures. You cannot use this money to buy video games, to redecorate your bedroom or to go on a vacation. This money is for use in repairing a broken down car, or emergency services when you get sick or hurt. This money is for paying bills when you get sick and miss work, or lose your job unexpectedly. That's it.
This money should be kept in a liquid form but not an immediately accessible form. You should not tie your emergency savings fund to your normal debt card account for example. You should not be sabotaging your savings efforts by making it all too easy for you to spend this money on items that are non essential. You may want to open a savings account in an online bank such as ING. When an emergency does happen to come up, it should be relatively easy for you to transfer this money right into your typical checking account. This way, you can have access to the money when you need it, but you cannot simply spend it spontaneously without at least a little forethought.
Establishing an emergency fund is one of the best things that you can do for yourself. It may put your debt repayment schedule on the back burner for a period of time, but when an emergency does come up that is going to wipe out your finances, having an emergency fund is going to come quite in handy. Once you have established $1000 to start, or $500 if you are a college student, then you can start focusing on paying debt off while simultaneously continuing to save more money.
Photo Credits: amfdesigner
Originally posted 2009-09-01 03:34:10. Republished by Blog Post Promoter
Related Posts -
Learning Basic Money Management Skills Whether economics is your idea of a great way to fight insomnia, or you just didn’t get the benefit of learning about money management early on, it is never to late to learn the basic skills of proper money management. We highly recommend taking a brief course on finance if...... -
Supplementary Solutions for Debt Repayment There are a number of other things that you can do in order to improve your current money situation at the same time as you are working on the debt repayment solutions that we touched on in the previous three articles of this series. While you will be seeing results...... -
Shopping Professionally pt 2 One of the best ways that you can save money is to shop professionally, which is learning how to develop skills and talents in shopping that allow you to shop smarter and save more money than ever before. When you learn how to work with a tight budget, you can...... -
What Does it Mean to be Broke Being broke means that you are relying on cash advances on your credit card in order to pay your rent or your mortgage, and you are praying that you are going to have enough money left on your credit line in order for you to do so. Being broke means...... -
4 Tips to Getting Bad Debt Under Control If you are swimming in a sea of bad debt, keeping your head above water can be incredibly difficult. Thanks to our consumer culture, the availability of credit cards and a general lack of concern for what debt means, many people find that their bad debt is out of control.......
Related Websites -
Saving Money On Your Country Garden Landscaping Projects When it comes to creating a garden landscape, the planning process can really require you to think long and hard about what you really want to do, and part of this has to do with figuring out the budget that will accompany your plans. If you do not put thought...... -
Ten Tips Toward a More Eco Friendly Home Tip 1 - Turn the lights off any time that they are not needed, even if you are just moving from room to room in the course of your day. According to Energy Star, as much as 20 percent of a home's overall energy use comes from its lighting. Using...... -
Stringing Tension for Tennis Racquets One of the most commonly misunderstood issues when it comes to playing the game of tennis is tennis racquet stringing tension. Despite being commonly misunderstood, this is a very important consideration that you need to put attention into, especially when you are just getting started in the game of tennis....... -
Book Review: What Your Contractor Can't Tell You: The Essential Guide to Building and Renovating by Amy Johnston Why do so many home improvement projects end in disaster? According to Amy Johnson, the author of What Your Contractor Can't Tell You, it's due to the fact that homeowners simply don't have access to the right tools, knowledge and planning abilities that the pro's do. Her basic premise is...... -
A Beginner’s Guide to Home Inspections If you are considering buying an older property to renovate or repair, it is very important to make sure that you get an inspection done on the home before you complete the deal. Every year, homeowners end up with homes that are beyond repair, simply because they did not take......
- Kits Survival & Emergency Gear Camping & Hiking
- Foldaway Step/Riser Sets Fitness Equipment Gym, Workout & Yoga Exercise & Fitness
- Emergency Flashlights Flashlights, Lanterns & Lights Camping & Hiking
- College Football Cards College Trading Cards Cards Sports Collectibles
- Eisenhower (1971-78) Dollars Coins: US Coins & Paper Money
Categories:
Debt, Financial Security, Personal Finance, bad debt
Tags:


0 comments ↓
There are no comments yet...Kick things off by filling out the form below.
Leave a Comment