To help me put more money toward my debt, I also cut costs. And there’s no magic trick here. I cut cable and got rid of a few subscriptions. I started planning my meals, shopping for the week, and eating out less. Basically, I used the same old budgeting tips we’ve all heard before—and they worked!
In less than 2 years I was debt free and switched gears to creating an emergency fund.
Creating an emergency fund—and achieving peace of mind
I made it my goal to create an emergency fund that would cover my expenses for 3 months. For me, that was about $5,000. I started searching online for savings accounts with the best interest rates. That’s when I decided to go with an online bank.
Something like a high-yield savings account or money market account works great for an emergency fund.
I was in the process of switching jobs and found myself with a little extra income, so I used that to kick-start my emergency fund. I directed a set amount of my paycheck into savings each week—so I never even had a chance to miss it.
It didn’t take long before I reached my $5,000 goal. And it’s a good thing I did! When a storm damaged my fence, I needed to repair it right away to keep my dogs safe. It cost about $1,800. So I was able to pay for the repairs and then work to build up my emergency fund again.
What I learned from paying off my debt
The experience of paying off debt and creating a budget changed how I view my finances forever. Now I have a save-then-spend mentality and I give every dollar a job—whether it’s going toward my emergency fund or another goal, like a European vacation. The best part of all is how empowered I feel.