Is it possible?
Depending on where you are in your financial journey you may be wondering if becoming debt free and having an emergency fund is even possible. If you are thinking that it’s not achievable, trust me I understand. At one time I thought the same thing, and if you would have told me that I would be teaching people about money today, I would have laughed at you. I am here to tell you that it’s not only possible, but it’s absolutely necessary. If you are going to have any chance of staying out of debt, and having financial success, then you are going to have some margin for life.
How much should I have?
I know if you have nothing saved for emergencies, then obviously anything would be a good place to start right. But we aren’t aiming low, so we are going to make a plan and go after it. Now the end goal is not to aim low but we, are going to take small steps. Our first goal needs to be $1000 ($500 if you make less than $20,000). You should put all your energy into scraping this up. This means selling stuff, working extra, and generally doing whatever it takes (legally) to get it in the bank. This should happen in about a month or two, and before getting out of debt.
If you have debt, then you need to head guns blazing putting all your energy into getting rid of it. You can check my article out here on getting out of debt. If you are already debt free then I suggest putting the same energy into building your foundation. This should be 3-6 months expenses, and for many this would look somewhere in the neighborhood of $10,000-$12,000. If you have more of a stable income then you might be fine only 3 months, but if you work on a variable income (like sales or tipped income), then I suggest you work for 6 months.
Just start
The bottom line is you should start somewhere. Meaning if you can’t get an extra job, or you have little income left even after paying off debt, then you need to just start taking out something. If you just take 2-3% of your check out you will eventually get there.
What do you think? Is it possible? What struggles do you have when it comes to building an emergency fund? On the other hand, have you been able to build the emergency fund and move to build a better financial future? I would love to here comments from either side.
