Tuesday, August 25, 2009

Christmas is Not An Emergency- Financial Peace Friday on Tuesday

I previously have posted about the Total Money Makeover Simulcast on Saturday September 19th and the Financial Peace University class starting September 21st we are going to be holding at New Season. You can always sign up for those events at our website. Leading up to those events I had hoped (though I made no promises) to do a Financial Peace Friday on this blog. Well it is Tuesday but better late than never. I will be sharing some things I am learning about biblical principles for handling the resources God has given. I am no expert, I have a long way to go in living out some of these principles, but I am confident that I can do all things through Christ who strengthens me (and so can you!).

Today I wanted to talk about credit cards. If you are like me then maybe you first got a credit card for emergencies. Perhaps, like me, you justify keeping those things around because of course you need them for emergencies like a car repair, a new furnace, or en emergency trip across the country to attend a funeral.

If you are like me, then your problem comes when you do not use them for emergencies. You end up using them to get something you "need" when you have more month than money left and the balance builds. Or, have you ever found yourself using your credit card for Christmas gifts or vacation?

Maybe you are one of the few who do not get caught up in these traps. Consider yourself among the minority in the US. I am learning that Christmas and vacations are not emergencies. I actually know they are coming. I know Christmas comes at least once a year and I know I will have en expenditure for gifts. I know I am going to take a summer vacation and it will mean an outlay of cash. I am learning that the key to these things is to save for them thus avoiding using the plastic. This is nothing new under the sun. Remember the Christmas club the bank used to offer?

Also, I am learning about how to manage these other emergencies that cannot be anticipated like things breaking or having to go away quickly. The effect of these emergencies can be alleviated with the saving of an emergency fund. In any plan to get out of debt the first step after providing for the necessities (food, utilities, rent) and being current on all your current bills is to save a $1,000 emergency fund. In Financial Peace University this is described as Baby Step 1. Baby Step 2 is to then work on paying off all your debt except for your home. Baby Step 3 is then to build up your emergency fund again this time saving 3 to 6 months of expenses (notice not salary). You can see then whether you have finished baby step 1 or baby step 3 you are more prepared for the emergencies. If you have a big car repair for $500 you take it out of your emergency fund instead of putting it on your credit card. You then rebuild your emergency fund. If you are able to get to baby step 3 where you have saved 3 to 6 months worth of expenses then if you lose your job for whatever reason then you have a little cushion before you find another one and you don't have to go into credit card debt to keep food on the table.

You can learn about the rest of these baby steps and begin to come up with your own plan for financial peace by attending the Total Money Makeover Simulcast or the Financial Peace University Class.

1 comment:

Muhammad Saeed said...

Yes of course The Christmas is not an emergency. Many people spent in Christmas days but after they face critical financial problems. They fall in the trap of the credit card.
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