If you plan to get out of debt as quickly as possible, this may be the fastest road to your goal.
Again, you’ll remember that when we talk about goals, it’s a good idea to work on ONE goal at a time.
If you try to pay off a bill here, and another at the same time, while at the same time saving for a home, it will take you a lot longer time to do so.
Let’s use the example that your living expenses are $3,000 a month –
Lets say that you have been able to put together Debt Relief Cash of $300 a month to bail you out of the mountain of debt, which is about 10% of your monthly take home income.
If you use conventional financial advice that you should build up a six month cash reserve BEFORE you even start to pay off your debt, you would have to save about $18,000 before you even started to pay off your debt.
Even then, if you use your Debt Relief Cash of $300 a month to put towards your Cash Reserve and divide it into the $18,000, you’ll get 60 months –FIVE LONG YEARS JUST TO BUILD UP YOUR CASH RESERVES, and you’ll still have your debt to tackle.
You can see why sometime conventional advice is not always common sense advice.
If you take the conventional road and go about personal finance in the traditional way, you could absolutely save up your cash reserves or emergency fund in about 5 years — but still have most or all of your debt.
Then, if you did indeed need to draw on your emergency fund, say for instance you lose your job, it may take you 8-10 months to find a new job.
And, you will have used up your emergency fund, still have debt and you’re back to square one.
Now let’s say that you’ve followed the instructions and your living expenses are now minimal, just food, utility bills, clothing, taxes and other extras.
If your new living expenses are now $1500 a month and you’re still bringing home $3,000 a month, your six cash reserves are now only $9,000.
It would take you about three months to save up a Cash Reserve and you’ll be debt free to boot!