You may be experiencing every other phone call is another creditor seeking payment for something you just had to have. You saw that white mink in the window of Macy’s and knew it would make you look rich and desirous, even make your friends jealous thinking you could afford such an extravagance that they can’t. They don’t know you can’t afford it either.
It doesn’t have to be a mink either, it can be a new home with all the bells and whistles or even a luxury automobile. It is all DEBT unless you were able to pull out real cash and pay for the right of ownership in full. Debt is money owed with a promise to pay for those things with your future earnings. Yet, we hate to realize the reality that the future is uncertain.
No Emergency Fund Creates Feelings of Being Lost
As you continue to build debt to have the things you are putting off the right to full ownership, one experiences feelings of being lost in a deep forest with no way out. Every sound around you creeps you out until you cannot take it any longer. Then you realize you started out sprinkling breadcrumbs as you walked the path of life so if you strayed ever you could get back on track only to turn around and find the birds had eaten every single crumb.
Well, having no emergency fund creates feelings of being lost out of our frustration and fears that can seem impossible to ever get out of. Some even give up. However, it is important that we realize everything from the beginning of time to your existence now happens for a reason and it is our purpose to understand and find our way out without harming others by excepting our problems and taking them head-on to find our way back to the path of success.
As you research your own personal assets and list all your income and status; then list all your immediate monthly obligations. These obligations are things you must pay every month to maintain the four elements of life – (1) a roof over your head, (2) being able to stay warm (or cool) to live in your environment, (3) food in your table to feed your family and yourself and (4) staying current with your day to day needs and obligations (true expenses). When you take the total of your monthly expenses and subtract it from your funds available at any time – if your expenses are greater you live outside your means.
Baby Step 1 – Starting An Emergency Fund Lessens Stress
To get back on track you need to start by creating a budget that will enable you to start taking back control of your money instead of continuing to allow it to control YOU. In getting back on track you need to get back to the fundamentals and reach out to God for help – He does listen! Even before you start an emergency fund, make Tithing the top element of your knew expense budget followed by Baby Step 1 – Starting an emergency fund.
This first step in your budget gives you a feeling of renewed control over your life situation. As you continue this new process every month it will become second nature and suddenly you will start to see your stress level abating as you give to God each week or pay period and work on building a strong starting emergency fund.
Keep Shoveling in Funds – First Step to Mastering Personal Finance
Don’t worry about paying off your debt until this has been achieved and mastered. Continue budgeting all your immediate (current) obligations and true expenses for the month and with what left just pay the minimums on all your debt entries. Once you have at least $1000 in your emergency fund, you can then reallocate those funds towards your debt.
However, if you have had to tap into the emergency fund for any reason – you MUST repay that emergency fund FIRST to make sure it stays at $1,000. Then you can apply any excess to your debt starting with the lowest debt owed and working down to the highest over the months. This method is also known as the “snowball method”.
So keep shoveling in funds every month to your emergency account to maintain a healthy $1,000 balance. Once you have that you can move onto your debts and rolling the funds you were applying from your paycheck to the emergency fund over to the accounts that you still owe.
Learn to Recognize Real Emergency vs Nonessential Whims
As new situations arise in your life, and they will start analyzing them to determine if they are a real emergency or something that can be addressed in one of your regular budget lines. You may have to cut going out to dinner one month to reallocate those funds needed to another line to pay that situation that came up off.
As you do this you will gain a deeper appreciation for starting that emergency fund and keeping it no lower than $1000 going forward. You also will start to see a real pride of ownership as you gain control of your finances and make changes for the better – perhaps selling that big old house you grew up in and getting a smaller less costly apartment or manufactured home. Debt wreaks havoc in our lives and causes undue stress levels that need to be eliminated and replaced with true right of ownership. Remember, when you don’t use credit and pay for anything with cash – you own it outright! Your future dollars can be saved and used for future goals.
Your Starter Emergency Fund Is Fully-funded – Go Celebrate!!
YAY! Today you got paid and made your last payment – your starter emergency fund is full-funded at last! If you don’t need to touch in next month, you will have those dollars to start applying to the next area of your budget – YOUR DEBT. But first, before you go any further – today is a big deal and you conquered the first step.
Go celebrate this occasion! You could treat yourself to coffee with a friend or dining out at that new restaurant family has been raving about. The act of celebrating mastering the steps of anything brings positive reinforcement to your psyche – just don’t touch that emergency fund to do it!!
If you found this article helpful, please share with a friend and leave a comment below. Have you started or completed your starter emergency fund yet?