What is an emergency fund? An emergency fund is a fund of money you can use when something unexpected happens in your life, some examples include, a car breakdown or a large appliance suddenly dying. If you already have one, consider putting it in a separate bank account, where you can transfer it and use it where necessary but won't be tempted to slowly pilfer it alway for the little things.
Your personal situation is what determines the size of your Emergency Fund, is your work situation secure? Do you own your home? What kind of situations are you likely to encounter as emergencies?
I have always started by making a list with all the debts we know about, i will filter emails by the keywords (debt, collection, owed, fine, minimum payment details, ect.) and write it all down with details like, (Amount owed, Interest rate, Type of debts and any offers) they may have provided you with.
You can also request a free credit report once a year.
Putting a number to how much you owe can be a scary thing but breathe.
From there, make a list from smallest to largest, and start paying all minimum payment. STOP! If you don't already have a payment arrangement with someone, Do not start one until you have your list organised, look at the date of the debt and any additional information provided without contracting with the debt collectors involved.
Once you have your minimum payments organised. Starting from Smallest to largest and tackle that one first. Once you have made your minimum payments, you take any extra money you have or that might come your way straight to that debt FIRST, until this debt is paid off. Once it’s gone, you will be able to roll that minimum payment and extra payment down to the next smallest debt.
You need to know exactly how much money is coming in and going out each month. Remember that paying off debt is a marathon not a sprint. Making small steps every week is how you will one day become debt free and I can tell you there is no better feeling.
Once you have your budget written you can look at some simple ways to reduce your expenses and increase your income. Look at different deals on your fixed expenses, there is no need to be loyal to your bill because they certainly won't be loyal to you. I regularly check to see if I can get a better bang for my buck on our phone bills, internet, insurances and utilities.
Remember this is a temporary phase in your money journey and you will soon move on to bigger things.
You are making sacrifices and working hard to get clear of debt, you need to become debt averse. This is not the time to take out new credit cards or upgrade your Home or Car.
Once you have Paid off your Debts, It is IMPORTANT to celebrate it! Acknowledge what you've done but don't slip back into old habits.
I hope you find this information Helpful, let me know if you use any of this information below!
By Aussie Debt Free Girl :)
Disclaimer: The author is not a financial advisor and the information provided is general in nature and was prepared for information purposes only. This article should not be considered to constitute financial advice. Accordingly, reliance should not be placed on this article as the basis for making an investment, financial or other decision. This information does not take into account your investment objectives, particular needs or financial situation.
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