Introduction 2

If you have debt instead of savings, when disasters strike, you will end-up in a grave situation. The kind of disaster I am referring to is the loss of a job, the reduction in pay, a serious illness, a car breaking down, etc.
Emergency Fund

Photo by Dawn Armfield on Unsplash

If you have debt instead of savings, when disasters strike, you will end-up in a grave situation. The kind of disaster I am referring to is the loss of a job, the reduction in pay, a serious illness, a car breaking down, etc. In our current economic situation, the likelihood of being laid-off or having your income reduced is extremely high. For those who do not have any emergency savings, this means they will get further and further in debt.

Before, the recommendation was to have three to six months in emergency savings. Now, the recommendation is to have six to eight months in emergency savings. However, even that amount might be too low. Look at how long the unemployment rate continues to rise. How long does it take someone to find a new job? It’s often not months, it’s now years.

Currently, there are some 300 million Americans, 154.4 million of whom are in the workforce. Of these, 14 million are unemployed. If you add those that are underemployed or have simply given up the search, the number rises to 15 million. The current unemployment rate is 9.1%. In 1930, during the Great Depression, there were 123 million Americans. At the height of the Depression in 1933, were unemployed. Some economists are predicting the unemployment level will rise to 10%. This does not bode well for those in debt and unemployed.

Do not look at U.S. manufacturing companies to re-open factories. They have shuttered their doors and windows because it cost them too much to make goods in the U.S. Instead, they exported the bulk of our manufacturing jobs overseas. Have you wondered why China has so much money? It’s because we are imported their products. No longer do you see a plethora of tags that read “Made in the USA”. Instead, you see “Made in China” or “Made in India”. I guess if you want a job you’ll have to move to one of those countries.

I hope this has opened your eyes and you can see why you cannot afford to be in debt or to believe in debt. Stop buying into the instant gratification. You must learn to not believe in debt. Get that out of the instant gratification mentality and get into the savings mentality.

Dave Ramsey says in his Financial Peace University videos, “You must learn to live like no one else, so that later you can live like no one else.” That means forgoing things by not using debt now and saving, so that later you can afford what you need and want. Suze Orman says in her Money Class book, “You need to learn to live below your means but within your needs”

Great advice right, but how do you accomplish this goal? Basically, it’s through a series of processes. This is like climbing a ladder that will lead you out of the quagmire of debt into the light of debt freedom!

RH

RH

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About Me

Hi, I’m Rosie. A Jesus Freak, wife, mother, and a Certified Financial Coach. 

This site is dedicated to you, our reader. Within the site you will find tools that will help you achieve financial freedom, so that someday you will become debt-free and be a generous giver.

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