I hope each of you have been enjoying the holiday season. With 2014 coming to a close, I've been taking time to reflect on the past year and look toward 2015.
The new year is just around the corner, and we all know what that means: time to set some goals!
I've come up with a plan for 2015 that is not only AWESOME, but very important as well.
This time of year, people start gearing up to make all kinds of resolutions and goals happen beginning January 1... Most commonly, physical fitness goals.
Well, I want to make fiscally fit goals... and I want YOU to do this with me!
Throughout the year, we are going to work on improving our financial situations. Some of these goals might be easy for you. Some might be more of a challenge. But I PROMISE that with each goal you complete you are going to feel amazing... and happy... and relieved... and secure... and all things good.
Without further ado, here is our very first Fiscally Fit goal for 2015:
We are going to create a $1000 emergency fund in just 6 months!
It's going to take about 5 minutes of our time on January 1.
Then, VOILA!!! We don't have to worry about it until July 1.
In 6 months, our first goal will be accomplished.
Sound easy? It is... with a little planning and 5 minutes on your bank's website, you'll be ready to go.
Some of you may already have $1000 extra or more in your checking or savings account with the rest of your money.
Good for you!
But I would encourage you to put it somewhere on its own. Let it be money that is not "extra" but specifically a "$1000 emergency fund." Or, just get in the mindset that this is not money that you can dip into and then build up again freely. It is for EMERGENCIES only... to be used in times of dire need.
This is not money to be saved up to buy something. It's not to help pay for a family trip. Not to help pay for Christmas. Not to be used as a downpayment on a new car. Strictly for emergencies.
Something like 75% of Americans live paycheck to paycheck. That means if the timing belt in your car busts, or you fall and break your leg, or you lose your job, you are left at the mercy of a credit card and crazy interest payments.
Unless... you have an emergency fund.
$1000 may not be enough for some emergencies... but it is a GREAT start, and a million times better than having nothing to fall back on.
If you don't have $1000 lying around to be used specifically for an emergency fund, you can follow my method for building up to it.
You'll need a checking and savings account to do this. If you don't have a savings account, you can easily set one up for free... no fees or strings attached. There are several free savings accounts out there that don't require a minimum opening deposit, and have no fees associated. Some even earn around 1% interest.
I'm going to explain my method, and you can feel free to do it my way, or you are welcome to figure out a way that works better for you. There are no "bad" ways to save $1000.
Here's the plan:
IF YOU ALREADY HAVE A CHECKING AND SAVINGS ACCOUNT IN PLACE
Step 1: Log on to your checking account's website.
Step 2: If you have a savings account already, click on the button that says something like, "Payments and Transfers."
Step 3. Schedule a WEEKLY transfer of $38.50 from your checking account to your savings account.
Step 4: DON'T touch this set-up until July 1, 2015! When July 1 rolls around, you can stop the repeating transfer, and either pull out the $1000 to put in a cash emergency fund, keep it in the savings account, or move it to a different fund of your choosing.
IF YOU HAVE A CHECKING ACCOUNT BUT NO SAVINGS ACCOUNT
Step 1: Choose a free savings account with no fees associated. I like Ally, and GE Capital. You can review these banks and others here: Top High Yield Savings Accounts
Step 2: Set up a WEEKLY transfer of $38.50 from your checking account to your new savings account. This may take a few days to process, so if it doesn't work for you starting January 1, don't be discouraged. January 3,4, 5, or much later is fine. Better late than never.
Step 3: DON'T touch this set-up until 6 months have passed! After 6 months, you can stop the repeating transfer, either pull out the $1000 to put in a cash emergency fund, keep it in the savings account, or move it to a different fund.
Are you excited?!
If $38.50 a week seems like a big chunk of change, I understand. It ends up being roughly $167 a month.
Just know that I believe in you.
Get in the right mindset: Think of it as a bill that you MUST pay.
I know you can do this! It doesn't have to be done following my method above. Do what works for you. You can add to your fund ANY time. The important thing is that you just buckle down and do it. You can find a way to make it work:
If you have been given money for Christmas, or if you receive money for your birthday, or if you get a return on your taxes, use it for the emergency fund. Friends and family who gave you money or gift cards will understand that a $1000 emergency fund is a worthy use of their gift money/gift cards.
Drop your cable for 6 months, Get a cheaper phone plan, get a slower internet connection, sell stuff you don't need, sell retail gift cards for cash, skip eating out a couple times a month, hold off on buying that new pair of shoes, or that dress, or that iPhone, or that tablet, or wait till that movie you want to see comes out on Redbox... those things can wait 6 months, and we are going to MAKE THIS HAPPEN!
Peace of mind isn't something that can be bought in an instant... but you can save up for it. (Yeah, I made that up myself... clever, right?)
So, let's kick the New Year off right!
We are going to become Fiscally Fit in 2015, and we're going to start on January 1 by getting our $1000 emergency funds in order.
What do you think? I'd love to hear more strategies, so we can help each other out!
Good luck, everyone!