IN CASE OF AN EMERGENCY, BREAK GLASS!
Most individuals do not know what to do if an emergency came into their life. They tend to break the glass and use whatever is inside? Usually what is inside is a credit card or a bank loan because the individual is not ready when life happens. The problem with this tactic is that it leads to an endless cycle of debt that keeps the person from achieving generational wealth. The main reason that someone would have to turn to debt to cover an emergency is because they were not prepared in the first place. An emergency fund is essential in building wealth because it turns potential catastrophe into an inconvenience and it erases stress from the situation.
I always advise clients to have at least an emergency fund of $1000 if they are trying to get out of debt and four to six months emergency fund if they are out of debt. Once I make this request I usually get the following request, “How am I going to find $1000 to put into an emergency fund?” Once I have this push back I have to point out to the individual that it is not going to be simple and they will have to sacrifice to get this emergency fund fully funded. If they are serious about getting out of debt they soon realize that life as they know it has to change temporarily in order to get ahead. I must admit that it is a fair question that they put before me about the “HOW” and so I make sure I give them various money finding options to get them started.
Journey to $1000:
1. Sell everything and anything: I am actually about to list a living room set on Craigslist for $1500 and if it sells I would have my emergency fund with one sell if I was in debt. Also most households have more televisions than people living there. SELL THEM! You get the picture sell, sell, sell.
2.Cut off some services: house phones are ancient so if you have a cell phone cut the house phone off and add the savings to your quest for $1000. Cable TV is also not a necessity when you are getting out of debt so cancel that service and save over $100 a month. Haven’t been to the gym in the month? Get rid of the membership!
3.Don’t eat out at all. I am talking about all restaurants big and small. No McDonalds, Burger King, Wendy’s, etc.
4.The shopping mall and retail store are not your friends if you are in debt. Wear the clothes and shoes you already have in your closet and don’t buy new items!
5.Have multiple yard sales. It is unusually warm right now so why not get an early start on selling some items out of your home. If this weekend is too soon start getting out the items that you would like to sell and put them all together so that they are ready to sell in the summer months.
These five suggestions are just scratching the surface of what an individual can do to get the emergency fund fully funded over the next couple of months, but in order for this to be possible the person has to be sick and tired of being sick and tired and is ready for a change. It won’t be easy, but I promise it will be worth it!
How would you come up with a quick $1000?
Till next Wednesday!