Pay Off Credit Card Debts

I know perfectly well that life is unpredictable, and there is a need to have an emergency fund. But I am sad to tell you that I haven’t set up any emergency fund yet.

There are just too many credit card bills to settle and too little income I have. My income is barely enough for the credit card debts, car and home installments, daily expenses, utility bills and grocery.

Trying the ‘Pay Yourself First’ method is easier said than done. Each time, I withdrew all the money from bank to pay off the debts and use for daily expenses. Of course, I will try this ‘Pay Yourself First’ once my hubby gets his debit card. By using only his debit card, I can save some of my income in my own debit card. I guess I shouldn’t give any excuse. What about keeping at least $30 to $50 in my debit card? Okay, start from today.

You need to start your emergency fund if you can. Emergency fund is crucial because it gives you fund to fall back on if you become ill or disabled and can’t work, or if you or your spouse lose your job, incur large medical bills, or have an unexpected large bill such as a major car or home repair.

Here are simple ways of setting up an emergency fund:

1. Start Small. You should start small if you find it hard to save money.

It is overwhelming to create a fund to cover all your expenses for any contingency. So pick a reasonable amount that is manageable for you to set aside every week.

2. Establish a Regular Saving Schedule. You must regular and consistent when saving money. If you save as little as $5 a week, you’ll be amazed at how quickly cash can add up once saving becomes a routine.

3. Set a Realistic Goal. According to experts, you should have three to six months of expenses in reserve just in case you lose your job. You’re living on the edge if you don’t have an emergency fund equal to three to six months worth of basic living expenses.

Always start small. Pick a small goal - maybe $500 or $1,000 - and aim to have that much by a certain date. Once you’ve achieved that, set a new goal.

4. Define “Emergency”. Use only the money for medical emergencies, or someone in the family loses a job or is unable to work or in the event of an accident or disaster.

5. Don’t Fall Back on Your Credit Cards. Using credit cards to pay for necessities in a crisis is a costly way. You will have to pay interest on the debt rather than earn interest on your emergency cash in an interest-bearing account.

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