011: Chicken & the Egg: Debt vs Curveball Account
In previous episodes we talked about establishing an emergency fund, or what I call a Curveball account. And how important that is to your overall financial success. I was listening to a podcast the other day and a host brought a good point about how many americans struggle with debt and the idea of finding extra money to put in their rainy day fund was just not realistic and he used the analogy of “Chicken and the egg”. Well, I do like this analogy, but the question shouldn’t be what comes first. It should how can I work on paying off my debt and build an emergency savings at the same time. That’s what I call a real financial plan.
I’ve always been a big supporter of establishing a healthy Curveball account, but I also know that debt can get in the way. What I don’t want to happen to you is that you work really hard on paying off your debt and not fund Curveball account and all of the sudden an emergency comes up (you lost your job!) and now what you going to do? How are you going to pay for your lifestyle?
My advice to you is to do the following:
- Allocate 50% of your funds towards paying off your debt
- And the other 50% should be funding your Curveball account
That way, if unexpected event takes place, you will be prepared to deploy your Curveball account!