Beating Broke

Personal Finance from the Broke Perspective

Beating Broke Rules: Emergency Fund

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If I could use only one word to describe my thoughts on this it would be the word yes.  I went the first 26 years of my life without an emergency fund and I’ll never go another day without one.

The purpose of an emergency fund is to give you available funds in case of an emergency.  Your car breaks down and needs repair.  You fall and break an arm and have to take some unpaid leave.  Whatever the emergency is, your fund is there to see you through it.  It’s a great thing, and can take an immense weight off of your mind that you didn’t even know was there.

So where do you put your emergency fund?  A fluid account that you have nearly immediate access to.  I prefer to have it in a secondary account that is separate from my everyday account because that makes it that much harder to spend on silly non-emergencies, but where it’s still available if I need it for an emergency.  At the moment, I keep my e-fund(my pet name for it) in an Ally Bank interest checking account.  The interest rate is consistently in the top 10 or so and the service has been superb.

How much do you put in it?  Ideally, you’ll keep 3-6 months of expenses in your emergency savings.  If you’re just starting out with your debt plan, try for something between $1000 and 1 month of expenses.

Make your emergency savings a priority.  Until your reach your $1000 balance goal, you should be paying as much as you can into it.  The peace of mind that you’ll get by having the account is well worth the extra interest you’ll pay on your debt while your building it.

Beating Broke Rules: What Are They?

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What are the “Beating Broke Rules”?

They are a mantra.  Living debt free is a lifestyle and living the Beating Broke lifestyle requires some lifestyle changes.  The Beating Broke Rules are meant to establish some simple guidelines on which to build the foundation of a debt free financial life.

Many people look at their debt and imagine what it would be like to be without it.  The Beating Broke rules can help them get on their way to that new life.  And along the way, we think they’ll experience some life changing things that will make their old lifestyle and financial habits a thing of the past permanently.

So, when you see a Beating Broke rule pop up, read it carefully and consider using it in your everyday financial life.

*I should note that there are no financial planners or financial advisors here at Beating Broke, so none of what we write here can be taken as financial gospel.  Please consider seeking the advice of a qualified financial planner or advisor before making any major financial decisions.

Beating Broke Rules: Credit Cards

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When it comes to Credit Cards, we have little patience.  The companies that administer the cards and their accounts will do just about anything to try and get your money.  Very few of them will do anything that isn’t in the interest of the company.

BB Rule: Debt Free means Credit Card Debt Free too!

Destroy as many credit cards as you can.  If you do use a credit card, keep the receipt and then send a payment for that amount immediately.  Our goal is to no longer use any credit cards and only use Debit Cards.  Debit cards will only allow you to spend what you have.  You’re not taking out a personal loan with each purchase as you are with a credit card and as a result, you are not creating more debt.

Credit card companieS! © by eliazar

The only way to use credit cards is to treat them exactly as you would a debit card.  Only charge what you can send as a payment.  Pay them off in whole each month, and stop worrying about the interest rates.  If used responsibly, and paid off in whole, credit cards can be a useful tool, and are necessary for plenty of online transactions.  It does require self-control, and the ability to stop yourself from using them for everything, and for things that you can’t afford to pay for.

If you can’t pay them off immediately, or can’t control yourself from using them above your means, stop using them altogether!