Checks and Balances…..

Hopefully, you were able to eliminate all (or at least some) of your outstanding debt. Doing so will bring your Credit Score up, which means that you are more likely to qualify for a car loan or mortgage, or secure that apartment before someone with a lower score does.

And, of course, …… you have peace of mind knowing that your bills are caught up and you don’t have those dreaded balances and finance charges to deal with any longer.  A good feeling.

Kudos to you if you’re all caught up…. with zero outstanding debt on your credit cards. And if you’re still whittling them down, keep doing that…. they too will be a zero balance.

Now is a good time to skim over your budget. Tweak anything you can so that you can put more into your savings…..

Remember to keep your savings accounts separate so you can easily check to see what is in each and where you could add more.

You need that Emergency Account…… at least $1,000.  But preferably $2,000. or $3,000. to cover any emergency that may arise (and they do)…… If it’s there, you don’t have the added worry of “How am I going to pay for that???”  If you do have to use it for an emergency, remember to replace it as soon as possible so it’s always available.

The 6 – 9 month Income Reserve Account……  It may sound ominous, but it can be done….. because if you are suddenly out of work with no income, this is the account that will see you through until you can get back to work.  It will cover only the absolute necessities…. rent/mortgage, utilities, medical, car loan, food…..   no take out, or eating out, no entertaining, live on what you have and live frugally.  You will be glad you did. And this would have to be replaced if it were needed…… so replace any portion of it that was needed as soon as possible.

The Retirement Account….. put as much as you possibly can ….. maybe 5% of your income into an IRA, a Roth, or some other type of Retirement account so it can stay there and gain interest until you retire, or at least age 59 1/2.  This is crucial as you can only depend upon yourself for your retirement income as Social Security may not be available for you.

How well you budget will show up on the totals of these accounts.  You work hard for your money, so don’t waste it spending frivolously.