To me, financial preparedness is having all your finances organized and easily accessible in case of an emergency. It is also being financially ready in case of a life changing event which can cause a loss of income. Loss of employment, disaster, long term injury or illness, or death of spouse can all contribute to a loss of income.
Other reasons to be financially prepared are more personal.
I like not needing to worry about money. When my husband lost his job this last time, we had his unemployment to lean on, but it was still half what he was making while working. If it wasn’t for our food stores, and the fact that we had already begun paying off our credit cards, I don’t know that we would have made it with our credit still in tact. I had to check our bank accounts several times per month, and take my bills off auto payment because I wasn’t sure if I could make them at their dates, or move the money around. Not fun.
I want to be self reliant. We will have practically no income when we move, so we need to get our debt paid off now. The less we have to pay out, the more time we will have to do what we want.
It’s more important for me to be financially stable than have the best of everything. If you ask my husband he will tell you the same thing. We joke about how he practically has to force me to buy new clothes. I also research a purchase over and and over before I buy to make sure I am getting what I want for what I am willing to pay for it. My husband says the thinks money is made round so it can roll, and I think money is make flat so it can stack. 🙂
The most likely “emergency” to happen to us is a financial hardship. Despite everything that could happen – from massive storms, to the collapse of the economy, to the zombie apocalypse – the most likely scenario to happen is one that I mentioned above. So why not prepare for those first?
When I was in the military, I began putting money toward a mutual fund. Not much, but enough that I was able to draw on it to pay off a debt here and there, or help salvage my father in law’s property tax and save that home.
Over the years, however, we have managed to rack up a bit of debt.
- Credit cards
- Student Loans
- 2 Car Payments
Now, with our homesteading dream only 5 years away, we need to get ourselves into a financial situation where we can afford to leave our jobs and live on a VERY limited income.
Budgeting is VERY important. If we want to achieve our goals of being financially prepared, and ready for emergencies or homestead living, we will need to budget our expenses now. Making lists of what we want or need and prioritizing that list will help us achieve our goals.
Part of budgeting is working out a viable plan to pay off your current debts. I found a really easy to use and probably the best formulated debt reduction program out there. This is NOT one of those where people handle your bills for you. It is an excel spreadsheet you can download and fill in for yourself. It will then tell you how much to pay on each bill, and how long it will take to pay them off based on info you provide. I highly recommend it to everyone seeking help balancing their finances.