07 April 2010

Taking the First Step Toward Financial Freedom

If you are one of the millions who are struggling to get out of debt and currently live from paycheck to paycheck, you might be interested in knowing that there is something you can do to help ease the pain and get you back on the right track to reclaiming your life. It is a simple thing to say, but can be a very difficult thing to do and that is: try and get $500.00 in savings.

Yep, that's it! Simple, huh? Like I said, it's easy to say, but can be very difficult to do. If you currently squeak by each month with little or nothing extra, this can be a monumental task, but it needs to be done. But you may ask, why? Well, this money would be set aside and used only in case of emergencies; it would act as a financial safety net. Let's say you have an unexpected car repair or your dishwasher breaks down, you can use your emergency funds to help pay for the repairs. These funds can also be used to cover unexpected overdraft and credit card late fees. I know, for some a thirty-nine dollar late fee may not seem like a lot, but for those who live paycheck to paycheck, it can be a devastating blow.

Now, it may take quite a while to reach this goal, but every dollar you set aside, is another dollar closer to obtaining your financial safety net. Aside from taking that first step and setting up the dreaded budget, (please follow the link for more detailed information) here are a few ways to try and get that initial $500.00.

Stop using your credit cards!! This is one of the hardest, yet most important steps to take in regaining your financial freedom.

Next, start by trying to save $100.00. Although it may sound strange, it is best to try and set goals that are more easily attainable. The $500 goal my be too high for some, so try and break it up into manageable chunks.

If you received a tax return, use the money from that to setup a new savings account.

Review your phone and cable packages. Are you paying for something you never or very rarely use? Do you subscribe to HBO, but watch it very little? Do you have a package that allows you to surf the Web on your cell phone, but hardly ever do? Try and trim those unwanted expenses by getting a lower-end package.

Put any change you get into a jar and deposit that at the end of each month. Again, it may only be twenty or thirty dollars (or less), but it's twenty or thirty dollars toward your ultimate goal.

Try and skip the $5.00 morning coffee and put that money towards your goal. This is one of the first things that we did and you would be surprised at how much we were able to set aside.

If you purchase something purely out of habit, as in the morning coffee or that irresistible magazine in the checkout line, try and resist.

Although it may not seem like much, this safety net is a very powerful financial and emotional tool. It can save your family from taking a devastating financial blow due to unforeseen circumstances and it creates peace of mind by its very existence. Once you obtain this goal, try and continue to build your safety net. The ultimate goal is to have enough to live on for five to six months.

As in any journey, that first step is always the most difficult to take. Just remember to look at what you have accomplished, not how far you need to go.



I would like to thank Liz Pulliam Weston for her article...Why you Need 500 in the Bank

6 comments:

  1. We were doing really well at this, saving $600 a month but then that $400 a month prescription came along so now I am trying to save at least $200. Only trouble is, I don't have it automatically transferred from checking anymore so I have to actually do it. Great advice here though. I like the tip of cutting some things out to put it towards savings instead.

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  2. Ann: That's a really good way to build-up your account. You're right, it takes a lot of discipline, but eventually we can get there.

    Karen & Gerard Zemek: WOW! That's really expensive! I am so impressed that you can save that much money. Hopefully, once we get out from under our debt, we'll be able to do something similar.

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  3. Very good advice! As a CPA I have to add that if someone does get a tax refund they should change their withholdings to have less tax taken out of their checks in the first place and just put that extra straight to savings. No need to give the government an interest free loan.

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  4. BeadedTail: Thank you for the advice. I know, they get enough of our money as it is.

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  5. These are such great ideas. I'm sure they will help a lot of people during this time period. I think people start to feel hopeless and are at a loss for ways to get ahead. Great post :)

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  6. Michelle: I really hope that it will help someone. It can be very lonely when going through something like this, so I hope this will give someone hope that they are not in this alone.

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