Weekend Coming to a Close

Great news - I added $.69  to my savings account thanks to using my debit card. That brings my total in savings to $80.01. I haven't spent any money today - Yay me!

You may wonder why I celebrate every time I put something into savings or pay down the slightest of bills. The truth is I'm changing my mindset about money.

Money is often seen as evil. Or the root of all evil. But, how can something that helps us buy food to eat and pay for the roof over our heads be evil? Why is it evil to want to buy something that will make us happy? Money is not evil! If we didn't use money to purchase the things we want, what would we use? The barter system doesn't work because it is the perceived value of one thing vs the perceived value of another thing.

Jen Sincero explains it better. She's written a few books - You are a BadAss, You are a BadAss at Making Money and You are a BadAss Every Day. I haven't read the 3rd book yet, but I plan to. She is powerfully motivating and is helping me change my views on money and why it is perfectly okay to want to be wealthy.

I had one of my friends ask me why I'm saving $5000 before I'm paying off my debt. Shouldn't I do it the other way around?

Every wealth management guru and debt reducing maven agree on one thing - in order to pay off your debts, you first need an emergency fund. If you are living paycheck to paycheck and trying to pay off your debt with every cent you have, what happens when an emergency arises? The furnace breaks down or your car suddenly needs new tires. You don't have a savings account so you put the repair on credit - either by opening a new credit account or putting the total on an existing credit account. - effectively wiping out your progress at reducing your debt and you end up paying interest on the new "loan". You go backwards.

Whereas, if you have the money in an emergency fund, you can use the emergency fund to pay for those unexpected emergencies. You aren't paying interest for using your emergency fund - just straight cash.

Dave Ramsey suggests $1000. Others suggest 6 months of salary. I'm going with $5000 because that is what I will need to pay to replace my air conditioner. I got a couple quotes last summer after my AC tune up.

Now, once I reach $5000, I'm not going to stop saving. Still going to have the $25 every paycheck go into the account. Still going to have my bank round my purchases up to the nearest dollar and deposit the difference into my savings. What will change is everything I earn from my side hustles will go towards my debt. And I will be using the snowball method. Payoff the lowest amount first. Then use that minimum payment towards the next bill in addition to ITS minimum. And going and going until all my debt is paid off so my paycheck now goes towards my house payment and utilities. All the extra money can go towards paying down my principal balance so I pay off my mortgage faster and put aside money for my eventual retirement.

So that's the plan and the reasoning behind my $5000 and why I'm celebrating every penny saved.

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