Before anyone can begin on the road to success, you must get your personal finances in order. If you do not get your personal finances together, you will not be able to handle a great amount of success and money once it comes to you. Many Americans are 1 paycheck away from being in a horrible financial situation. According to Bankrate.com, just 37% of Americans have enough money to pay for a $1000 emergency. This is a serious problem among many families today. We have uncontrollable spending within our homes and it is no wonder why many of us today have so much credit card debt and we begin cutting back in other areas or asking friends and family for help. There is a small number of people who make savings a priority and I am one of them! I wasn’t always a saver but after reading Dave Ramsey’s book Total Money Makeover,
I was convinced that I had to get my home in order because I was living paycheck to paycheck. I owed so much on my student loan debt and I had credit card debt and I was just tired of being tired. It is scary to think about things like, “What happens if I lose my job?” or “How will I afford to pay a mechanic if my car breaks down?” and “How will i retire when I’m 65?”, when you are in a situation like this. These are all common questions for every American living paycheck to paycheck and who seem to have lost hope for their future.
Well, I have good news for you. Today, I want to share with you some very simple steps that I have learned and how I am getting out of debt and planning ahead for my retirement. These are so simple that you can begin to implement them now and they are all found in Dave Ramsey’s book, Total Money Makeover
. The first step in realizing that you need a total money makeover is to truly want and desire real change in your life, and that includes your personal finances. This is the first step to being on the right path to kicking out that poverty mentality that has held you back.
Save $1000 and Save It FAST!
News flash! If you haven’t heard, a storm is coming and when it comes it will pour. All of us will have major negative events in our lives and we need to be ready. It can be anything from having a job layoff to getting fired, your car dying, the transmission going out, having to bury a loved one. This is not a surprise! So you need something to cover those catastrophic events. It is life and you need to be prepared! Saving $1000 is not going to cover for all the events that happen but it will help with the little emergencies that happen. The emergency fund that you create is not for vacations or buying new things, it is simply for EMERGENCIES!
Lets face reality, many of us, including myself, use credit cards to cover these emergencies and that is NOT a good idea. We end up owing the bank so much money that we trap ourselves in a pit that is not easy to get out of. Putting ourselves under yet another financial burden.
The priority in my home is this: Give and Save and in that order. The first thing that I do when i get paid at the beginning of every check is to set aside a portion for giving and then, once that’s taken care of, I put towards savings. Everything else after I give and save goes to paying bills and paying debt. For example, if you get paid $1500.00, give $100 and save $60. Save something because you will need it. Start somewhere because if you don’t, you will regret it later. Begin right where you are.
When you finally reach the $1000, HIDE IT!!! Do not hide your emergency fund in your top drawer because it will inevitably get spent on non-emergencies. I tried it at first and then shortly after I spent it. So don’t do it. Get a safe and put it away somewhere.
If you have to use your emergency fund because something happens, then use it, but whatever you use, you must replenish what you used. Be focused and be determined to get out of debt and build your savings account.
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