Читать книгу Sort Your Money Out - Glen James - Страница 22

You've come a long way. Yes, it's been small steps — purchasing this book, being keen to change and hopefully being challenged by steps 1 and 2 — but you've decided that enough is enough, and it's time to do things differently.

That's if you have totally agreed with changing your mindset around debt. Remember, there is no rush here and I will celebrate with you on any movement you make. It can take time. It's okay.

You don't want to fall back into debt once the debt repayment campaign has started. The reason why steps 1 and 2 have to be completed before step 3 is because we're about to get drastic.

You are now going to move all your debt repayments (including your mortgage, car loan, personal loans — everything!) to minimum payments only and focus on getting $2000 saved as an emergency fund in a dedicated online savings account.

Once your money system is in place and your debt is on minimal repayments, the leftover money will be going to building your emergency fund of $2000.

It's okay if you're paying a bit of interest while you build your emergency fund as the first step to getting out of debt (step 1) is to not take on any more debt. This emergency fund, or cash buffer (or whatever cute puppy name you want to call it), will be the first line of defence to stop any more debt should unforeseen events arise while you're on the way to setting up your financial plan.

It may seem counterintuitive to slow down the debt repayments and pay a little bit more interest while you build your emergency fund, but believe it or not, interest is not your problem. The fact you have systematically overspent without any systems in place and without self-control is the actual cause of the problem. If you don't believe me, take a look at some of the inaccuracies people believe.

I need a credit card for emergencies.

This is the worst excuse that someone might need to emotionally hang their little debt hat on. The worst time to go into debt is in an emergency. The people who use this excuse literally have no comeback when I say, ‘All you need is your own cash fund for emergencies’. Credit cards aren't the answer — they're a middle-class fallacy.

What if I need access to money quickly?

This one comes soon after I shoot down the ‘credit card for emergencies’ logic. I proceed to ask people, ‘When was the last time you needed, say, $1000 the same day for an emergency?’ It just doesn't happen. ‘But it can take a day to transfer money from my savings!’ Nope, I won't buy that excuse either because the new payment platform that allows instant transfers between banking institutions killed it. If there was an emergency and you did need serious money over your usual daily spend, find some internet access and make a transfer. Call your parents or a good friend. There are many practical solutions to the fictitious emotional crutch of your credit card.

I am picking on credit cards here in particular as they are the usual suspect people hang onto when I talk about emergency funds.

If you're like me and you've reached a point where you find you either can't control yourself with your credit card (hello!) or you have debt that you can't shake, you know that credit cards are not a blessing and you don't give a crap about the ‘points’. Also, most people who play the points game aren't frequent flyers. If you go overseas once every two years, I've got news for you: you're not a frequent flyer.