Lending Club Blog

Declare Your Financial Independence: Pay Off Debt, Start aRainy-day Fund

Celebrate Independence Day, but start saving todayIt’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

@RobGarciaSJ
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Image courtesy of Beverly & Pack.

Saturday, July 3rd, 2010 at 9:13 am

Comments (6)

  1. Aaron:

    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.

    July 3rd, 2010 at 9:59 am

  2. 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).

    July 10th, 2010 at 11:28 pm

  3. Pakblogger:

    Yeah paying off debts is a good way to start getting rid of
    financial “slavery”.

    July 11th, 2010 at 10:22 pm

  4. 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..

    July 20th, 2010 at 8:12 am

  5. 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.

    July 26th, 2010 at 1:03 am

  6. Jonathan:

    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

    September 25th, 2010 at 3:00 pm

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