Married Money Management Step 5: Prepare for a Real Financial Emergency

What stands between you and major financial trouble?

Hopefully, it’s not just a credit card, a HELOC or some other form of debt that you killed in Step 4.  And if you have any significant issues, that starter emergency fund we set up back in Step 3 is not going to go very far.

Now that you’ve taken care of the symptoms of your past financial troubles by paying off all non-mortgage debts, it’s time to prepare for those inevitable rocky times that lay ahead.  After you complete Step 5, you’ll be ready to face those costly home repairs, unexpected medical bills and periods of unemployment.

You won’t like it when an emergency strikes, but you’ll be prepared and ready to cover the financial impacts without resorting to debt.  Let’s build our full emergency fund!

How Much Should We Save?

As a general rule, most families should have approximately 3-6 months worth of expenses in an emergency fund.  It’s important to understand that this not 3-6 months of income, and it’s not inclusive of all the money you spend in a typical, non-emergency month.  



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Married Money Management Step 4: Pay Off Your Debt (Damn It!)

Do you want to be debt free?  Seriously, do you really want to have freedom from monthly payments, calls from creditors and the feeling of being a slave to your lenders?

Well, I can tell you it’s absolutely worth the effort, but for most couples the journey toward debt freedom will be a difficult one.  It simply requires a lot of hard work and sacrifice, and you have to be fired up and passionate to make it happen.

If you can say, “I want to pay off my debts” and you don’t yet feel the urge to follow by screaming “DAMN IT!” then you may not be ready yet to make it happen.  If you think you have the burning desire required to kill your debts without mercy, then read on.

Why I Care So (Damn) Much

There are few topics that get me fired up as much as the idea of helping other couples experience the freedom and power of a debt-free marriage.  Bethany and I have been right where you are, and we may have been in worse shape.  Several years back, we found ourselves over $54,000 in non-mortgage debt and pregnant with our first child.  



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Married Money Management Step 3: Build A Starter Emergency Fund

Welcome to Step 3 in our journey to financial success in your marriage!  Today’s lesson is pretty basic and extremely important.

We are ready to start increasing our net worth directly while putting our budget into practice to extract every last penny that we can to apply to our first major goal.  It’s time to build a starter emergency fund.

In most cases, your starter emergency fund should consist of $1,000 in a local savings or checking account that you can access quickly if you need it.  If you make over $100,000 in your household annually or you feel particularly vulnerable financially (such as having a single income or uncertainty with your career), then I’d suggest bumping this up to $2,000.

The idea is to have just enough money on-hand so that you can draw a line in the sand and stop depending on debt to deal with your “emergencies” once and for all.  If you aren’t willing to quit borrowing money, then I’d suggest you stop reading the Married Money Management series at this point because the rest of our plan for financial success simply won’t apply to those who want to live the rest of their lives in debt.  



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Married Money Management Step 2: Take Inventory and Get Current

In Step One, we looked at the importance of making a budget as the critical first action to achieving financial success in your marriage.

Today, we’ll take a look at the next “baby step” on your journey to meeting your goals with money.  If you find that you are beyond these early milestones, please share your success in the comments below and stay tuned as we’ll catch up with you soon.

After your budget is in place, it’s time to stare into the face of your financial reality.  For many of us, this can be a scary proposition as we’ve conveniently put aside any real thought about our money management and the current status of our accounts, bills and debts.  It’s time to figure out exactly where we stand in our family finances.

Take a Financial Inventory

If you haven’t paid much attention to where you stand, I know it can be intimidating, especially if you have significant debt.  Fortunately, Bethany and I were never behind with our bills or late on any accounts.  However, I still remember the day I totaled up our outstanding consumer debts (debts other than a mortgage) and had a short panic attack when the calculator showed more than $54,500!  



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Married Money Management Step 1: Make a Budget

Welcome to the first installment of the Married Money Management series here at Engaged Marriage where we will be looking at the keys to financial success for married couples.  Please be sure to subscribe by email or RSS so you don’t miss out on the tips, strategies and personal experiences that will be shared over the next nine (or more) weeks.

The first and most important step to achieving financial success in your marriage is to make a budget.  Put simply, a budget allows you to tell your money where to go instead of wondering where it went.

Some couples are reluctant to create a budget for their household finances because they think it’s too difficult, too confining or they honestly just don’t want to know how poorly they’ve been handling their money.  While I can definitely relate to these feelings, the fact remains that creating a budget and living with a plan are absolutely essential.

Our First Big Mistake!

In the first few years of our marriage, we thought we could live just fine without a budget.  Believe it or not, I actually read Dave Ramsey’s Financial Peace right after we got married when a co-worker suggested I give it a look.  



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