Earlier this year, we brought you the first three of twelve steps toward living a debt-free life.
The first step was to take stock of your debt by writing down exactly how much you owe to whom, plus information on payment amounts and interest rates. Put that information into a spreadsheet.
The second step was to assess your spending and work hard on not incurring any more debt than you already have.
The third step was to call your credit card and loan companies and see if you could get your interest rates lowered.
Now, it's time for the fourth step: Create an emergency fund.
Sometimes called a rainy day fund or just a savings account, this is a critical step to making sure you don't fall back into debt.
While you may be feeling impatient to start more aggressively paying down debt, it’s important to create an emergency fund. If you don’t have money set aside for unexpected expenses like a car repair or a surprise medical bill, you may be tempted to use the money that’s already earmarked for your debt payments to fund this expense.
Experts recommend keeping three months’ worth of living expenses in an emergency fund, but you can start with just a few hundred dollars.
We strongly recommend that you set up an automatic monthly or bi-weekly transfer from your CommonWealth One Checking Account to your Savings Account until you have a fully padded emergency fund.
This may take several months, but no worries, you can continue working toward your debt-free life as your emergency fund grows.
For more information on your emergency fund, budgeting and living free of debt, be sure to join us this Wednesday, June 3 or Thursday, June 4, for Creating a Workable Budget Workshop Part 1: Completing a Budget Worksheet!
This free webinar from CommonWealth One is a hands-on budgeting workshop where participants will work to create a working budget.
Led by Certified Financial Counselor Emmanuel Obe, participants will receive worksheets and other resources to get them one step closer to creating a budget they can stick to. Part 1 is offered at 10 a.m. and 2:30 p.m. on Wednesday, June 3 and Thursday, June 4, so you have four opportunities to join!
Part 2 of the budget series will be offered later this month and it will focus on getting your money to go where you want it to go.
We look forward to working with you toward your debt-free life!
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