Are you currently in debt, but trying to get out of debt? If so, you first need to analyze and see how you got into debt. Sometimes people get into debt because the circumstances are out of their hands like being laid off from work, or having a sudden illness. But more times than not getting into debt is usually due to that person’s own doing.
This isn’t meant to place guilt or blame you for your debt problems, but here’s the reality. Everyone should have an emergency fund to cover at least three to six months of their household expenses. This should be done before spending money on things like summer vacations, expensive clothes, cable and pay per view television, or just dining out 3-4 times a week. Having an emergency savings fund is a necessity, not a luxury.
An emergency fund is a sacrifice you have to make in the short term, but there’s so much long term potential and insurance when one is established. So when someone in the household gets laid off or sick with a short term illness, its just a minor setback and not a financial disaster.
But let’s be honest, most individuals these days don’t get into debt because of the financial setbacks I just mentioned. Most people get into debt because of poor budgeting, immediate gratification, and bad spending habits. Living every day in this free world we call America, it’s at times very hard to distinguish between your needs and wants.
You see it everyday from people who have these McMansions for homes, flat screen televisions in every room, Ipods , Ipads, and everything you can dream of. These people usually have enormous amounts of debt because there charging all this stuff on credit cards and lines of equity. If they don’t stop with their frivolous spending, many are usually facing foreclosure and homelessness.
So what am I really trying to tell you? What I’m really trying to tell you is if you want to be financially independent and debt free anytime in the near future then you really have consider creating an emergency fund as a priority. If may take up to a year, it may take two years, but when you get there you’ll be much better off financially.
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