Get Out of Debt! Book Four: Putting Your Financial Life Back Together by David Rye & Marcia Rye

Author:David Rye & Marcia Rye
Language: eng
Format: epub
Tags: Personal Finance, Business and Economics
Publisher: An imprint of Adams Media, Inc.
Published: 2009-07-15T00:00:00+00:00

Chapter 3

STAYING AHEAD

OF THE GAME

Congratulations—you have made it to the final chapter in the book. You’re not done however, because steering clear of debt and building financial independence is a lifelong endeavor. The key to your ongoing success is keeping your head above water and staying ahead of the game. This chapter addresses several important issues that will help you make the right financial decisions and protect what you have built.

#21. We all want to stay ahead in the money management game. What does that mean, anyway?

Debt is a tough opponent to play against. It has beaten more good people than we will ever know about. You are now at the end of the Get Out of Debt! series, and if it helped you eliminate all your debt along the way, congratulations. If you are not yet out of debt, but you were able to free up some cash and put it where it will do you the most good, then you are winning the game, but you’re still in it. Just remember that managing your money is an ongoing necessity to achieve your goals. If you continue to make good financial decisions, and develop good spending, saving, and investment habits, you will be the ultimate winner.

#22. What is the key to staying out of debt?

The key ingredient is making your money last. However, once you get out of debt, do not discard your plan. You’ll need it to make sure you stay out of debt and continue to invest your money so that it will last you a lifetime.

#23. Do I need separate funds to cover financial emergencies?

The emergency fund is the most important savings category that you can have. It is created to cover expenses related to emergencies such as the loss of a job, unexpected medical expenses, car repairs, or other crisis situations that cost money. It should be an important part of your financial plan because the last thing you want is to be forced to go back into debt to cover emergency expenses. How much you need in emergency reserves depends on you. A minimum of three months’ salary is recommended. Set a monetary target and begin making deposits into a separate savings account for this purpose. Short-term savings funds are used for planned expenses and emergency expenses. Regular recurring contributions are essential to assure that your “nest egg” builds at a consistent rate. Long-term savings are typically invested in equities that can provide long-term growth.

#24. Do I need insurance to cover financial emergencies?

Failing to protect your financial well-being without adequate insurance is like jumping out of an airplane without a parachute. You will eventually hit the ground. The question is, how hard do you want to hit it? Your emergency fund plan should include a list of insurance policies you currently have, complete with policy numbers, the amount of coverage, and what exactly is covered. Identify any policies where you believe coverage needs to be increased, decreased, or eliminated. Next, list any additional insurance coverage you may need (e.

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