Winning with money. You can do anything in baby steps. Start with Baby Step 1 which is a $1000 emergency fund.
Why is Baby Step 1 just $1000.00?
That is a great question. Is $1000 enough money for an emergency? Well to answer your question based upon our experience of being in Baby Step 2 for just over two years. It is just enough money to keep you motivated to pay off your debt and out of trouble. However, it is not enough for you to feel at peace with your finances. In the last two years, more than once we used out $1000 emergency fund and a good chunk of our debt payment for the month to cover a car breaking down or some other emergency. We would then paused our debt snowball and refunded the $1000 emergency fund. The good news is that we didn’t go back into debt, the bad news is it slowed our debt snowball down a bit.
What is the key to Baby Step 1?
Save up the money fast-in 1-2 months. Sell something, get a side job, stop all your subscriptions like Netflix, raid the change jar, etc. Get a win under your belt by knocking out this baby step super-fast. Buy getting this done fast you get a win that will help you build momentum in Baby Step 2. It also puts space between you and Murphy’s Law with this baby step. Don’t be surprised if you get tested on your resolve to engage in the baby steps when you start out. The moment we committed to this baby step two years ago, our transmission went out on our VW CC. We took a deep breath used our $1000 emergency fund and the money we were going to use to pay off our first few small debts. However, the next month got Baby Step 1 done and paid off those small debts when had planned on the month before.
If you need help. I am accepting new financial coaching clients. The first session is free. Please contact me at info@mcfas.com for more information.
