Wednesday, September 20, 2006


How to Get Through a Cash Pinch

This post is an update to the Million Dollar Savings Club. If you are not familiar with this club, you can learn more by reading my post describing it.

Here we are at day 29 of the Million Dollar Savings Club. Today I want to talk about the savings pile.

Obviously, the savings pile is for saving money. But what should you use this money for? Specifically the savings pile is to protect you from yourself.

For each of us there are times in life when you come up a short on money. Maybe it’s the end of the month. Your house payment is due and you’re stretching every dollar. You suddenly find you pushed your checking account a little too far and you have no money until your next paycheck. If you don’t think this happens a lot, look at how many pay-day-advance services have appeared in recent years.

Most people have a quick fix. They turn to credit cards to buy a tank of gas, or charge the groceries (Yes, there are people that finance food).

Your savings pile will protect you against turning to the credit card trap. It will also protect you from dipping into your investing pile. Do you see the difference? The investing pile is for investing money. For making your money work hard for you because you’ve worked hard for it. Saving money is for a rainy day. You don’t need to gain high returns on your savings; you need it for a financial cushion.

So here we are at $29 in our savings pile today. You have a small cushion for probably a tank of gas and a few meals. It’s not much, but it’s a start. The next major hurdle will be having enough in savings for a utility bill, then an unexpected car repair and ultimately a few months of living expenses.

Of course that’s a ways off. In the meantime, You can sleep better knowing the savings pile will protect you from life’s unexpected twists and turns. Best of all it’s growing every single day because you’re adding money to it.

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