Debt

How to Start Taking Control of Your Money

The task of getting your money and life together is almost always a daunting one. Especially when you don’t know where to start!

I know I personally ran through the gamut when I was sorting out how to get my finances in order. There were questions like: how much money should I be saving every month, what do I do in the event of an emergency, how do I keep my funds separated for their intended uses, and about a hundred other questions.

Overall, where do I start to ensure I’m in control of my money?!

This post is meant to serve as a basis of knowledge and a start to make sure your ass will be covered! Let’s do it!


Ya need a small(ish) emergency fund

Listen, what the balls are you going to do when your air conditioner goes out and it’s 100 degrees out?! If you don’t have a small-ish emergency fund, you’re putting that shite on your credit card and then paying insane interest rates while you pay it off.

Avoid all that nonsense and save yourself a little fund of money for when these occasions come up, and they will, eventually. And they are called ‘emergencies’ because you’re never planning for the brakes to go out in your car and have to rent a car so you can get to work and back, you don’t plan to chip your tooth and need to get that baby fixed so you don’t look like a hillbilly for too long, and you don’t plan for your dog to eat a 100 piece puzzle and need to go to the vet.

A good basis, a la Dave Ramsay, is to save $1,000. This is a good amount to cover your butt when these things come up, and a small enough amount that you should be able to save up $1,000 fairly quickly.

Once you need to stick your hand in that emergency fund and feel that relief of it no longer being an emergency, you’ll understand how vital it is! And after you get all those puzzle pieces out of your dog’s stomach, get that fund back up to $1,000 for the next time something stupid happens.

Pay off those credit cards

AFTER you save a small-ish emergency fund, you need to tackle them credit cards and debts! Why after, you say?

So you don’t have to rely on that damn credit card if an emergency comes up! Think about how annoying it would be to be on that last little bit of paying off your credit card and then you need new brakes and calipers on your car (hellllo, this is what happened to me!) and you have to re-dip into that credit card debt. From experience, it’s fucking annoying.

If, at the time, I had had my $1,000 emergency fund set up, I could have easily paid that $561 bill to the mechanic and moved on with my life — and had money to spare to build that $1,000 fund again!

Okay, so I’ve written a small bit about getting out of credit card debt, you can find those here:

5 Tips for Paying Off Credit Card Debt

The Road to Getting Out of Debt + Saving For Retirement

And, of course, I cannot take credit for this method, or the order in which they should be done! I am not that smart or clever. You can thank Dave Ramsay for this method — if you don’t know about his “Baby Steps,” do yourself a favor and make sure you read through and understand them. I am barely touching the surface of them here and just giving my take and experience with implementing them.

You can find the ‘Baby Steps’ here: Dave Ramsay’s Seven Baby Steps

GET YO’SELF THAT REALLLL EMERGENCY FUND

This happens third, meaning after you’ve saved that small-ish fund, annnnd you’ve paid of ALL your debt, it’s time to move on to that real emergency fund.

What’s a REAL emergency? You unexpectedly lose your job, your car craps out on you and you need to buy a new one, you have a health emergency, your home floods…basically shit hits the fan and you need some money to get you through for 3-6 months, if needed. That means, for example, if you were to lose your job, you can tap into this fund for the time you need to get back on your feet.

The goal is to make sure you’re financially INDEPENDENT, in all areas of your life, no matter what comes up. It’s to ensure you do not have to rely on credit cards, or family members for personal loans, and you don’t have to stress the shit out of yourself when these things happen, because again, they WILL happen!

There’s a reason chronic stress contributes to six of the major causes of death in America. Take care of yourself, in part, by taking care of your finances and ensuring it won’t feel like the end of the world when a real emergency hits.

Okay, so how much money should you save?

This has to be calculated by you, as it is a different amount for each person and family. First and most importantly, you should have a budget. This way, you know how much money you are bringing in and spending every single month.

You can read what I wrote about budgeting here: Why Having a Budget is Crucial

Once you have your budget nailed down, you know you need, for example, $2,500 a month to cover the basic expenses.

That means, for 3-6 months, you would need $7,500 - $15,000.

So, yeahhh that’s a shitload of money, especially since it’ll probably be one of the biggest funds you have ever saved. BUT, my goodness the feeling of having that amount of money to rely on when shit hits the fan is an amazing feeling.

You have to dedicate yourself, your money, and your effort to saving for these funds; it is certainly not easy, but it is a major step in making sure you’ll be okay when life throws those fucking wrenches at ya!

How to separate these funds from your spending money

Most people have a checking account and a savings account at the same bank. Here are some options so you aren’t attempted to spend that hard-earned money when you don’t need to.

  1. Open an account at a second bank

    If you feel like it would be helpful, open another account at a separate bank from the one where you have a checking account. This way, when that emergency hits, you can just head over to that bank and grab that money to help ya out. I am always tempted if the money is in the same account as my other money and I’ll tell ya why!

    Humans are ah-mazing at justifying things. We also have been immersed in a culture of instant gratification, so it’s kinda hard for us to be disciplined to have money just sitting somewhere accessible and not touch it when we feel like it.

    Understanding your weaknesses with money is crucial and you can’t be afraid to address those areas. If you, like me, can’t have that much money just sittin’ there and not be tempted by it, or think, ‘ahhh, what difference will it make if I skim a hundred bucks off that big fund?’ Then put that shit somewhere where you’ll not be tempted and just forget about it until you need it.

  2. Open a second Savings account at your current bank

    I have TWO savings accounts at one bank. One of them has my little + big emergency funds in it and the other is where I put other money for expenses I know will be coming up. For example, I know in two months, I’ll need to pay my car registration for the year and I need to get my car smog checked, so I have been budgeting to save for that and storing those chunks of money each month in that second savings account.

    This way, that money for my car stuff is not just mixed in there with my daily money in my checking account and I won’t accidentally (or be tempted to) spend it. When it comes time to pay that, I’ll just hop in my online banking and transfer it over to my checking account.

  3. Bury it in a metal box in your yard

    I will not say if I do, or do not, have a box of currency buried somewhere in the Continental US (or somewhere else worldwide), but it’s not a bad idea if you are not 100% trusting of banks! I don’t care what you do with your emergency fund money, bury it in a concrete slab for all I care, just make sure you can access that son of a bitch when you need to.

Other tips + notes

Before I learned about the correct order to do these steps, I was just kinda doing whatever I thought might work and never really thought about a logical method. Now that I have read and learned what I can, I can understand the order is part of the magic. That is, save your small emergency fund, pay off all your debt, and then proceed to save for your big emergency fund of 3-6 months.

As I almost have all my debt paid off, and I didn’t have a ton of debt to pay down in the first place, I was able to make it work, but would have found it much easier if I had done it the correct way.

This means, as of now, I have both my emergency funds, but I also have some debt leftover (less than $100) before I am on the correct track here! If you are at the beginning of this process, doing it in the right order will help you immensely!


Current total debt: $93.98

Are you at the beginning of this process and/or what money issue are you currently struggling with at the moment?