Financial Freedom

Financial Freedom

78% of workers live paycheck to paycheck. 69% of Americans have less than $1,000 in savings. One year ago, no one knew the world would be in the COVID-19 pandemic we see today.

Were you prepared? I do not mean like the couponers with 10 years’ worth of toilet paper; I mean you prepared for being told to stay home and not collect a paycheck for 1 or 2 months? I know many families have struggled through the last 6-8 weeks, but many families had savings to rely on. What if you would have saved a little bit from each paycheck one year ago. Would you have been better prepared for this pandemic than you currently are? If the answer is YES, let us start today. We can do it!

A lot of people have a YOLO mentality and do not feel that it is important to save. They are perfectly comfortable living paycheck to paycheck, and I will not knock it. I did that for most of my life. However, since we began investing in real estate, we were forced to manage a reserve account that could support our mortgage payments in the event we did not have renters. Now, we want to save extra because we cannot predict the future. Saving money can help you become financially secure and provide a safety net in case of an emergency. Here is how we can get started.

Saving takes baby steps, and what works for some may not work for others. Here I’ll share our sacred Phillips’ Family idea!

  1. Pull your credit and find out exactly what is out there (loans, credit cards, student loans, vehicles, etc.).
  2. Identify how much money you have left over at the end of the month after expenses.
  3. Next, we must pay ourselves, so divide remaining amount by 3 (if you are single, divide it by 2) and that is allowance for you and your spouse, plus 1/3 for savings and paying off debt.
  4. Divide that 1/3 in half and apply half to savings and half to towards your debt each month.
  5. Start with the smallest debt first and divide the amount owed by how much money you had left above (ex. credit card balance is $1,000 and I have $300 I can pay a month after the above breakdown to pay towards my debt. That means it will take a little over 3 months before this debt is paid off)
  6. Repeat step three until all your debt is paid off.

This is something we had to agree upon. We like our allowance, and we liked the number we had before we began this process, but the sacrifice required us to focus on living a debt-free life. It takes a little adjustment in our everyday habits. It made us start keeping track of our own allowance to identify what we really needed to be spending money on, rather than just wasting money on things that were not mandatory. It will take some getting used to, and there will be some cheating as unexpected life happens.

Testimony: We were at church in California, and our pastor explained that God is always working on a prepared place for each of us. We have held on to that idea over the past 7 1/2 years, and in everything we do, we do it in prayer and refer to it as our Operation Prepared Place. Over the past 12 months, we have paid off $14,400 with this method. We made some adjustments with our spending habits; more frugal. However, God has blessed us, and we continue to have faith that as we bless others, pay our tithes and offerings, we will continue to this process and prepare for debt-free living.


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