Get out of debt

 Step #3: Get some emergency savings

Next it's a good idea to build up some emergency savings.  Three to six months of income that is in a safe investment that you can get to.  A money market account is a good place for this money, but you should ask your financial advisor on the best place for this money.  Emergency savings are to be used for just that, emergencies.  This way you don't have to run up your credit card again if your car breaks down or you lose your job or whatever. It will allow you some breathing room.  Get this savings, it's key to staying out of debt when those crisis occur.

Getting 6 months of savings is no easy task. If this proves too daunting at first then try for 1 month. Save a little at a time. Then work for 3 months and eventually you will get to 6. Having this money in the bank as a security blanket will give you some peace of mind and should be worth the effort.

Once you get this savings you must use discipline in not spending it every time you want something. It has to be saved for times when you have no other choice. Things like paying the rent, medical bills, mortgage, gas bill, phone bill, etc. If you use this for getting a new couch or TV, then you're not using it the correct way and it won't be there when you really need it.

Hopefully you will never need to use this savings and it will come in handy for early retirement or for something fun later in life when you are fiscally secure.


Go to Step #4: IRA and 401k 

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6 Steps to no Debt 

Step #1:  Renegotiate debt, consolidate debt, and settle debt

2) Pay off your credit card

3) Get some emergency savings

4) Start investing in 401k plan or IRA

5) Pay off other debt

6) Invest conservatively

Controlling Expenses 

1) Utilities

2) Food

3) Clothing

4) Entertainment

5) Gas

6) Other "Stuff"

Financial Mistakes to Avoid

Holding Loser Investments and Stocks

Not saving for Retirement

Interest Free

Interest Only Home Mortgages

Cash Value Life Insurance

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