Well before you think that is a license to spend, do remember that you have to declare that as an income the next tax season comes around. In short, Uncle Sam also wants a piece of that too, not to mention the sales tax you have to pay on whatever you fantasized on spending it on.
If you are reading this then we can assume that you still have some debt to settle. So how about set aside a $1,000 of that tax refund to start you off to your journey towards being debt free!
- Emergency Money
A young girl at a martial arts studio I go to, recently injured herself. She lost her balance and popped out her knee! Our instructor called 911 while the dad called the mom. While the instructor was giving the 911 operator details of the situation, the dad was on the phone, having a discussion with the mom. It looked liked the dad was in more pain than his daughter. His face just expressed frustration. It turns out, the mom was saying to the dad that they can’t afford EMS to bring their daughter to the hospital. We found this out when the dad hanged up and asked the instructor to call back and cancel the 911 call.
Fortunately, paramedics still came and assessed the girl. The dad immediately told them of their financial situation. The paramedics stabilized the girl and showed compassion to the dad by suggesting that they would assist in bringing the girl to their family car and let the dad drive her to the hospital himself so that the city would not have to charge them for transport.
The dad even asked if he should bring his daughter through the Emergency Department or Urgent Care Department. That wasn’t a question about which would give the fastest care for his daughter but was about co-pays. Emergency co-pays range from $50 to $200 dollars. (You can blame Obama for that)
Well it apparently cost somewhere around a thousand dollars, more or less for EMS to transport you or your family member to the nearest hospital. So consider it as your “Emergency Money”
By God’s grace you will never have to use it for that.
How about if your tires got damaged and you need your car to get to work? A decent set of tires will cost you a thousand dollars including installation. How about if you had engine troubles, and you had to bring your car to the mechanic? On average, a thousand dollars will be enough to cover the minimal repairs to get your car running again.
The money is to be used to bridge you over unexpected “Emergencies”. Now, I know the definition of the word “emergency” may vary to different people. Some have fashion emergencies, where they need to buy the latest clothes in order to fit in. Some have tech emergencies, where they need to buy the latest gadgets to impress people they don’t even care about and so on. You get the gist.
The “emergencies” I refer to here, are the life and death kind. Yes even death, since the minimal cost to cremate a body without viewing or any funeral services is at least a thousand dollars.
- It primes the well
Back in the days of deep wells, before all the chlorinated, pressured tap water; deep wells were dug as water source for a single family or the whole community. Manual pumps were installed on top of it to bring the water up from the deep hole. If the pump wasn’t used for a few hours, pressure leaks, and the next time someone uses the pump, there is not enough pressure to pull the water up. So the user has to pour in some water to prime the well to fetch water below.
The thousand dollars that you set aside will prime your mind to fetch more of it, where ever it came from.
Interestingly, what happens after you have put away that thousand dollars, is that it gives you a sense of accomplishment.
I just saved a thousand dollars!
That didn’t hurt much?
I can actually do it!
How else could I save more?
If I can do a thousand, why not two!
After a few months, of the same mind set, what you previously thought were emergencies becomes not so urgent anymore. You begin to save up for stuff before actually buying or paying for it, even your bills.
The thousand dollars may not pay for all your debt in an instant, but it is your first step to your journey to living debt free. As the cliché goes, all journey starts with a single step, so consider this your first step.