The other day, when I was able to share with everyone that our debt was under $21,000, it felt so good. I felt like we were making some progress again.
For quite a while there, it seemed like I was sending oodles of money towards our credit cards. I felt like I was showing the debt beast a thing or two and then I even started wondering if we could pay off our debt way before our goal date. Life was good.
Things stalled a bit when I decided that we should have a rainy day savings of $2,500. We were no longer was sending $500 payments toward our cards. Instead, for a while there we was paying the minimum payment and that was it. To put it into words, I felt like we were treading water again when it came to our debt. I knew that having some money in savings was a good thing, but it did hamper our debt reduction progress.
Then our income took a hit…we owed for 2006 taxes…we owed for a mistake in our 2005 taxes. BAM…BAM…BAM. Talk about trying to keep it together. I’ve never been one that could handle a whole bunch of setbacks at once with grace.
But I did this time.
Sure, I did break down and had a good cry. I was upset and I had to get it out of my system. The biggest difference was that we had a little over $2,000 in our savings at that point. We paid our 2006 taxes with that. We paid our state 2005 taxes in full with that and sent a partial payment to the IRS (the other portion of the IRS debt we are going into a payment plan for). Our savings account did dwindle down, but we were able to do something we have never been able to do before…we were able to handle some of these financial set-backs with cash.
No filling out a credit card cash advance check. No putting the groceries on our credit cards because we needed the cash in our checking account for other things. None of that this time around.
It felt pretty darn good.
It’s funny because for the longest time I have been against saving up money in an emergency fund. I wanted to attack the debt so hard and to take away funds to put in a savings account was crazy to me. Heck, if there was an emergency I could always rely on my credit cards…right?
As time passed, I started thinking more about it. Thanks to the lure of a $20 bonus at Virtual Bank, I made the plunge and saved $100. In January, our health insurance bill made me decide to at least save $350 in our rainy day fund. Then, in February I suddenly decided it was time to save more money in there and set a goal of $2,500.
I’m not sure what prompted me to suddenly decide it was time to beef up our savings. But I can say that I am very thankful things worked out the way they did.
I think most of you know it’s not my style to tell you what you need to do because everyone’s situation is different. For us, though, I believe having that emergency fund saved me from really losing it and getting too discouraged.
Next step? Time to get our savings account replenished 😉