Okay, so hopefully at this point, we are building some momentum to tackle our finances. We are in the boat rowing our way to financial freedom. We will experience obstacles that we will need to deal with and get around. So to make sure that we can steer and keep the boat moving, we need to make sure we have a paddle. I personally feel that this is the most important part of this process because it’s the tool that enables us to stay the course. While we attempt to pay off debt, refine our budget and continue to improve our finances, we will still have the same problems as we did. The water heater will stop working, you’re going to get a flat tire, or need some unexpected medical visit. The issues that we will face during this journey may seem small and manageable but we need to keep our guard up. As we face these problems we may find ourselves using more credit to pay for them. This will make our situation worse, and could potentially derail us from the plan.
So, what is our “paddle”? Our paddle is our “What-if” stash of cash. This stash is going to be $1,000 and will need to be maintained at $1,000 as we proceed through the following steps. Notice that I referred it as the stash of cash, not the credit card balance, or the allowable loan at the bank for an emergency. This “paddle” needs to be made of cash, and I recommend that we keep it accessible but safe. When I say “safe”, that simply means that you can get to it when you need it, but not when you want it… the key word here is NEED. Don’t remove money from your stash because you want a new pair of shoes, or to buy that purse because it was “on sale”. Prepare yourself for the issues before they arrive, because they will come and it may even seem like more often than normal. Make sure that each time you have to use money from this account, that your first priority is to refill it to the original $1,000.
There is a great book called The Total Money Makeover by Dave Ramsey, it’s a must-read for financial freedom. In this book, Dave uses “baby steps” to create his plan. I read this book and applied the methods, and attribute much of my financial improvement to this book. This $1,000 cushion is the first step Dave gives us, and for good reason. The money works as a safety net to catch us when we fall, so we can easily get back up and keep going.
Where am I going to get $1,000?
Okay, we get it.. we need to save $1,000 for a rainy day. This isn’t as difficult as it sounds, but most of us have already talked ourselves out of trying. “I barely can pay the bills I have”, “I’m already using credit cards to pay my expenses”, telling yourself “I can’t do this”. I’m here to tell you that it is possible, but you have to be willing to get creative and make some sacrifices. This is a simple task so don’t make it some big life-changing goal, get $1,000 into a separate account and you’re done. Take some time a review your budget and evaluate if there is anything you can cancel, or cut back on. Clean out the garage and sell some stuff, work a part-time job, or any other means of generating more income. There was a financial survey that I read about, and the #1 thing people did to save the most money was to stop going out to eat. If you just reduced going out by two times in a month could be $100 that could go towards this stash of cash. This is a required step that we must do prior to moving on to the next step.
This step has more to it than its intended purpose. For some people saving a thousand dollars is going to be very challenging, but you can do this. This step offers training in saving, provides money for setbacks and will create a true sense of success. The initial victory of this small battle will inspire you to keep pushing forward and show you that you have what it takes to win the war. The transformation can begin to take place once we realize that money problems are less related to our money, and more to our behavior.
No comments:
Post a Comment