Pigs Can Fly!

Ok so you may not believe that pigs can fly but you better believe that once you make it as far as this post in your own journey you will be DEBT FREE!!

DEBT FREE!!

If you are buying a house it should be the only debt you have as that wasn't part of step two. If you rent then scream it to the world " We're debt free!"

So what now You ask?

Step three is next and step three is pretty darn important. This is where we build up on our $1000 emergency fund creating a fund that covers 3 to 6 months of expenses.

This isn't a house deposit for those who rent or a month long trip to Europe for those with a mortgage. This is a fully loaded emergency fund so that you NEVER HAVE TO BORROW AGAIN!

We just finished paying off our debt we don't want to go back there. To make sure we stay debt free we need the cash at hand to cover living costs should we lose a job, or to buy a new fridge if the current one breaks down on Christmas Day, or to get a new timing belt for the car - I have no clue what those are by the way but I do know they cost a lot of money.
The length of time you choose to save for depends entirely upon your or your spouses level of anxiety - or paranoia. I'm a pretty anxious - read paranoid - person so we personally will be going for 6 months of expenses.

It's easy to calculate how much you would need. Add up what you spend a month on rent/mortgage, groceries, insurances and utilities then multiply by how many months you want to be covered for. That total is what you will need in your emergency fund.

This should be fairly easy, after all you have no debt and just spent around two years living on bangers and mash to get debt free, going another few months to fill that emergency fund should be a piece of cake. You will have all that money that you were paying on debt payments at your disposal.

Now I am no investment expert, I'm barely a beginner, but I do know this: once you've got the ball rolling on your emergency fund, see your bank about the best type of account to keep your emergency fund in.

You want to be able to access the money without penalty of huge bank fees and without having to wait. It's an emergency fund you need to be able to get to it quickly. However you also want that large sum of money to work for you if it can so an account with a high interest rate for long term savings is what you are looking for, but like I said speak to someone who knows their stuff!

Now if you are renting like me, we're lucky, we get a step 3B.

3B is where you save for a house deposit, preferably 20%.

There is nothing fancy that you do here. Just keep on keeping on!

Stick with your budget. You are debt free and have built a fully funded emergency fund. YOU CAN DO THIS!

While saving this house deposit do your research. Find first home buyers tips wherever you can and the tips you see everywhere hold onto them, they must be good if everyone is saying it.

People have been buying homes for decades, use their knowledge to get it right. We've come so far. We are debt free. The last thing we want is for a rookie mistake to send us back to the bottom, back to step one.

So read up on buying a home, talk to family and friends, invest in an appointment with a professional, just learn as much as you can so that when you have that house deposit saved you can buy the house with ease and move into step four with no worries.

Skye



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