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Write down all the things you spent money on last month and then eliminate anything that isn’t a necessity. Whatever remains is your essentials.
If you’re typical, your necessities probably total up to something around $2000 or $3000 a month. Multiply this by three and then divide it by 12. This is how much you will need to save each month to create a three-month emergency fund in one year.
If you can't create a three-month emergency fund in a year, then you're driving a car you can’t afford or living in a home that's too expensive. Or maybe the problem is that you just can't differentiate between "wants" and "needs". Go back to that list, scrutinize each of your categories and ruthlessly eliminate whatever it is that’s keeping you from creating a three-month emergency fund.
You can probably repay your debt faster than you think
When you start concentrating on paying off your debt a strange thing happens to your finances. Your debt will start going down faster. Why is this? It's due to the fact that once you commit to becoming debt-free you will start looking for any way that will get you there as soon as possible. You may decide to start taking your lunch to work so that you won't have to buy one every day and maybe you'll decide not to spend that income tax refund on a beach vacation. You might decide to put off getting a new cell phone or laptop computer until the old ones just don’t work anymore. You'll end up putting every cent you have towards your debt because you'll see that every cent counts.
If your biggest debt is federal student loan debts, you should put every penny you can towards paying it off. You were automatically put on 10-year payment plan after you graduated but that doesn't mean you necessarily have to take 10 years to repay the money. If you got really aggressive on those payments, you could get that debt paid off in as few as three years. You would then have money available to save for retirement or some other long-term goal.
There are a number of ways to repay student loan debt and this video explains some of the best ways to do it.
Do the numbers before you give up
If you have a goal that looks unachievable – like paying off that student loan debt in three years – don't give up until you crunch the numbers and break it down into small weekly or monthly or steps. There are times when you will be laid off but there will also be times when you get a promotion or a raise. You may sometimes squander money on bad investments or carelessness but there will also be times when you get unexpected raises, inheritances and bonuses. Another cold, hard fact is that the moments in your life that financially define you will probably catch unawares, which is yet another reason why it's critical that you manage those variables that you control.
You'll become stronger with your finances
When you focus on your goals and your finances you become stronger. Once you start going in the right direction you will find things easier to achieve. What it usually boils down to is that you only to do one thing right at a time with your money. That right thing might be to commit 10% of your earnings to saving for retirement or to build a three-month emergency fund in the year. But the important thing is to isolate one thing as a goal and then do the right thing with your money to achieve it.