I remember learning how to play chess when I was a young boy. Even though I knew the rules, I was not very good. I’m still not great, but every game teaches me something new.
Every great chess player was once a beginner
That headline is an aphorism for so many things in life. Maybe you’re starting a new exercise program. Maybe you’re learning how to follow a ketogenic lifestyle. Whatever you’re doing, the journey of 1000 miles begins with a single step.
Personal finances are no different. Whatever program you may be following — I like The Total Money Makeover — you have to start at the beginning. For TMMO, that’s Baby Step 1: $1000 Emergency Fund. Or as I now call it a Freedom Fund.
Taking the first step is often the hardest part of the journey. Like me, you may be wondering where you are ever going to get $1000. But having this rainy day fund will make what might have been a financial disasters into the minor inconvenience of writing a check from your money market account.
1. Taking a Time-out
The toughest pill to swallow for us was taking a break from our lifestyle. We were in financial distress, because we had a spending problem. We had to call a time-out on our life to gather up the $1000 to deposit in that money market.
'For the moment all discipline seems painful rather than pleasant, but later it yields the peaceful fruit of righteousness to those who have been trained by it.' Hebrews 12:11 Click To Tweet2. Sell Stuff
Dave Ramsey jokes about selling so much stuff the kids think they’re next! Most people have things they no longer want or need, if they were ever even used when purchased. You know that Freestyle Gazelle you have that doubles as a clothes rack in the basement? How about those P90X DVDs?
You can use the eBay or Let It Go apps to knock this $1000 emergency fund step as fast as you can.
3. Revisit the Written Budget from Step 0.
Depending on your income level, the Baby Steps can be modified. It is recommended with incomes less than $20,000 to start with a $500 Baby Emergency Fund. Cutting things down to the proper size is sometimes what is needed to get the ball rolling.
Although the trip can be daunting, the road to anyplace worth going isn’t always easy.