The first major step in the process of becoming debt free and to build your wealth is to jump start your emergency fund with either $500 or $1,000. In this article, I will give you a step by step checklist on building your initial emergency fund. Why do I say initial? I say it to get something set aside, while in step two of the process, you’ll be focused like never before in getting your debt paid in full. The initial emergency fund acts like a little security blanket.
So with the above said, let’s get started. Here are the steps for building your emergency fund, while just maintaining your current status on your debt. That is right, all I want to have you do while building your emergency fund is to maintain current status on your debt and any other accounts you are paying monthly to.
- If they are NOT current, get ALL of your accounts brought to current status.
- Once current, just pay the minimum amount due to maintain their current status.
- Establish a liquid money market account, separate from your main account(s) as your Emergency Fund Account.
- Begin depositing money into the new EFA up to either $500 (if you net <$25,000 annually), or $1,000 (if you net >$25,000 annually).
Once you have completed the steps above, I will then ask you to move on to step 2 of your debt free journey, Pay off your Debt. This information will come in a forthcoming post coming next week.