Financial Advice

Emergency!!

I think it’s safe to say that many people, millennials mostly, are not set up to financially handle an emergency. If you follow Dave Ramsey, his first Baby Step is to have an emergency fund of $1,000. To be clear, I don’t necessarily follow his steps, but I do agree with having an emergency fund.

For some, $1,000 is a lot to attempt to save, while for others, like myself, $1,000 doesn’t seem like enough to save. If anything, I believe, to start, $2k-$3k is a good place to start. I know for many that will be a struggle, but in all honesty, it’s necessary.

Before beginning a debt free journey, while you’re being all gazelle intense (meaning throwing every cent at debt), it’s wise to have a cushion in case something was to happen. Outside of your bills, of you are throwing every cent to debt and working a $0 budget, that means you have no money left. If you don’t have an emergency fund, you are screwed. To literally have $0 in the bank, that’s ludicrous. This is why it’s best to have an emergency fund before starting this journey.

Things will arise, major things that you didn’t expect or plan for, that will throw a wrench into your progress. That’s life and you need to be prepared at all times for it. Unknown that when I started this journey, I had a car that was causing me problems. I blew threw my emergency fund for repairs. Despite having to empty my EF account, I was glad I had the money to do it. Had I not, I’m not sure how I would’ve been able to get to work and make the money to pay off debts.

I say all this to say, do not start any kind of financial journey that requires significantly large amounts of money to be spent, if you don’t have an emergency fund. Period.

Financial Advice

Financial Friday: How I Got In Debt

DISCLAIMER: I AM NOT A FINANCIAL ADVISOR OR COACH

My goal is to be out of debt by this time next year. This goal is still feasible but I am not going to stress myself trying to make it happen. I owe $21k in student loans and $10k+ to my bank. So, in essence, I owe over $31k. I know that’s a lot and being that I will be a full time teacher in the fall, it’s manageable. Now, you may be wondering how I plan to get out of debt by this time next year. I will save that for next Friday, but first, let’s talk about how I got in debt.

  1. As for student loans, I mean that’s self explanatory. Many of you reading this have four year degrees of some sort and racked in a surplus of loans. We all know what a pain in the ass they are. I know some of you may have more and some of you may have less. But yeah, being the child of parents who made too much money, I did not receive any free money. My four years in college were borrowed. Originally I owed $26k, but now it’s $21k (interest). I will talk about how I paid that down next Friday.
  2. I got my first credit card in college because I heard that was the thing to do. It was a way to get credit and before I know that having a credit score was BS, I wanted to have a line of credit. My limit was $2500 and I maxed it out quickly and not by going on shopping sprees. Soon as I got the credit card, my car broke down. The A/C went out, my fan broke, I had to replace all four tires. That $2500 went fast and not by choice either. It seems every time you get more money, something always happens to where you have to spend it. Just my luck, my car hated me. I eventually had to get a new one. All that money just wasted.
  3. I got my second credit card a few years after the first because I was working for a nonprofit organization and I could not make ends meet. I was legit struggling. I never made it to my next paycheck without being in the negative. That one maxed out pretty quickly due to more unforeseen events. That limit, too, was $2500. So now I am at $5k that I owe my bank.
  4. I then took out a loan for $2500 from my bank because I worked for another nonprofit, and the last month of my contract, they decided to not pay me and it was two months before I got a paycheck from my next job. I was pissed. I had no money to pay bills, buy food, put gas in my car, nothing. So that put me at $7.5k that I owed my bank. Oh, it gets better.
  5. Remember how I had to get a new car? My old car was paid off and I am so sad that I ended up having to get a new car. So, I had to take out an auto loan to get my new car and that was $9500. That put me at owing my bank $17,000! Yes, all to my bank. I cried a lot because I was like on top of loans, how am I going to swing this?

This is how I got in debt, not by careless spending (that’s how I stayed in debt and still am), but by unforeseen events. I couldn’t help any of my situations. Stay tuned for the next Financial Friday post to see how I now only owe my bank $10k and my loans are now $21k, and how I am paying some of my debts down.

xoxo,

Simply Moniqua