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If You Make One Resolution, Make It Living Below Your Means

The concept of spending less than we earn seems simple enough, yet many of us struggle to put the idea into practice. Living within your means is a great start to financial stability, but living below your means is a way to ensure that this path isn't disrupted.

Step one is eliminating a reliance on credit cards for anything but emergencies. Step two is creating an emergency fund so that you don't have to pay interest when an unexpected expense arises. This year, I suggest resolving to live below your means so that you have money left over for a substantial emergency fund.

Create small goals for yourself so the overall idea doesn't seem overwhelming. For example, instead of setting a goal to save $3,000 in 2009, aim to save $500 by March and so on. You're more likely to achieve your goal when the end doesn't seem so far away.

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muchacha muchacha 6 years
Savvy, in your opinion, is an emergency fund different from any other savings? I already have significant retirement savings that I could dip into in case of emergency, but do you see the emergency fund as on its own, separate from any retirement planning?
natachadelosangeles natachadelosangeles 6 years
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Spectra Spectra 6 years
We already do this, but our resolution this year is to pay off our house entirely. That way, we'll have a lot of money to put toward our savings/retirement/investing that we won't be paying toward a mortgage. Being debt free is definitely the way to be.
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