Posted by Lending Club :: July 3, 2010 @ 9:13 am
It's Fourth of July weekend once more: time to celebrate the independence of this grand nation we live in.
Independence Day is a holiday to look forward to. After all, it is arguably the most fun of them all: fireworks, picnics with friends, parades, barbecues, carnivals and fairs, concerts, baseball (and world cup soccer) games, special sales (cars, mattresses and more), and many other events celebrating the history and government of the United States.
While we celebrate such an important holiday, I can't help think about the millions of Americans who cannot claim their financial independence: 27 percent of workers have less than $1,000 in savings (excluding the value of homes and pensions if any) according to the latest stats from the Employee Benefit Research Institute (download full report in PDF format). Another 27 percent have under $25,000. In addition, most Americans (76%) have some debt, with 87% of them saying they carry debt other than a home mortgage, according to a recent survey by Lending Club.
Clearly, the best way to declare your financial independence this weekend is to take decisive steps to pay off your current debt and start a rainy-day emergency fund.
Pay off Debt
To pay off your debt, start by negotiating rates with your credit card issuer while setting up a budget for getting rid of debt balances, starting with the most costly first. You can also obtain a peer-to-peer personal loan with Lending Club at better rates.
Start an Emergency Fund
To build your emergency fund, start by setting aside a monthly amount that you can commit to stash away consistently: plan to build up a cash cushion capable of covering three to six months of living expenses.
So what are you waiting for? Get started today! Declare your financial independence.
Want to learn more? Read on with this collection of articles on the subject by top personal finance bloggers:
Get Rich Slowly: How and Why to Start an Emergency Fund
Wise Bread: Figuring the Size of Your Emergency Fund
One Money Design: Emergency Fund Versus Getting Out of Debt
Hundred Goals: Debt or Savings?
20 Something Finance: Emergency Savings Fund: Why, How Much, and Where?
Zen Habits: 21 Strategies for Creating an Emergency Fund and Why It's Critical
Financial Highway: Factors to Consider When Setting Up an Emergency Fund
Consumerism Commentary: What Comes First? Paying Off Debt or Starting Emergency Fund?
Free Money Finance: The Ten Worst Money Mistakes Anyone Can Make
Generation X Finance: The Importance of Creating a Savings Account
Image courtesy of Beverly & Pack.
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6 Comments
Great post Rob. I find that with paying off old balances, that I
stick with the "pay 3x minimum payment" rule, and it generally
works very well if you can stick with it.
I agree with this: "To pay off your debt, start by negotiating
rates with your credit card issuer while setting up a budget for
getting rid of debt balances, starting with the most costly first."
Another way is to just get rid of the biggest debts first (instead
of most costly).
Yeah paying off debts is a good way to start getting rid of
financial "slavery".
I borrowed $10,000 from my sister after Christmas to pay off credit
cards and just finished paying her back this month! Feels great. I
am using the debt snowball system..
Great initiative. Building an emergency fund was one of my biggest
reliefs last year. I hope more and more people will realize how
relaxing it is not to worry about money.
Paying off debts in the shortest time is always a great option. I
remember that my parents grew up with the philosophy that loans
were for life and only made the essential payments, but now it is
becoming more and more valuable to pay down debt quicker. Getting
capital amounts reduced on mortgages can save you huge chunks of
money in the long term
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