"And Alexander wept, for there were no more worlds to conquer"

[jamethiel]

(Yes, I do realise that's the most pretentious subject line ever. Moving on)

I am in an unusual position at the moment. I am two months away from getting out of credit card debt. Easily, with no extra repayments beyond what I'd already budgeted for. My other short-term goal, a yearly train ticket has been achieved. It's sitting in my wallet right now and I've got an automatic debit into an account that I can't touch that empties once a year so I've got next year's ticket set up.

What do I do now?.

I do have longterm goals. Of course I do. But the thing with longterm goals is that I can't concentrate on them too much or I go crazy. They're so far away! My short-term goals are finished, my medium term goals are now short-term goals and they're either achieved or a blink away from being achieved.

I do have another medium-term goal which I'm going to start--building a cushion of three months salary as savings. I think I can make progress on that but it's going to take a while. I could break that down into smaller goals and then look into places where I can shove the money so I can't touch it? Term deposit or the like? Does anyone have any suggestions?

I suppose I could start saving for a computer as I think my laptop is getting to the end of its life? I might also set aside a small amount of money for a celebration of some sort, only I've retrained my brain to such an extent that I don't really WANT anything. Maybe I should save for a good suit.

I don't know! Tell me what to do!

Comments

[jumpuphigh]

I think saving for a computer is a great idea. You don't want it to die and you not have the money available to replace it.

[holyschist]

I agree. My computer is in a "It might need <$200 in repairs or it might need a logic board, in which case I should get a new computer" and it is a STRESSFUL place. It is a good idea to know you have a fund in case something goes horribly wrong, as happens with computers.

[jamethiel]

You're right. I have just set up another savings account titled "Computer"

[exhausted_pigeon]

Seconding the computer suggestion, especially after my laptop's genius adventure last week. (The screen stopped working for a few minutes. It was scary.)

[merrily]

First, congrats on paying down your credit card debt! That's fabulous! (And it feels good to have that monkey off your back, isn't it?)

Second, your emergency fund belongs in a savings account - at least, a month's worth of it does. You need it to be super-liquid so that if an emergency comes up, you don't have to wait 3 to 5 days to get access to your cash. I assume you're thinking about term deposits because you want a higher interest rate -- when you've got enough cash together, you can set up something like Trent Hamm's CD ladder, so that one month's cash is liquid at all times, and the rest is earning higher interest. (That said, the emergencies I've faced have had a higher bill than 1 month's worth of expenses, so figure out what works best for you.)

As for building the emergency fund, what worked best for me was putting aside a monthly amount (automatically deducted from my paycheque), and then using the snowflake method to divert all extra cash to my emergency fund so it would grow faster.

Good luck! Yay, financial sufficiency!

[jamethiel]

oh my god, I NEVER thought it would happen. In August of last year, I was 3.5 GRAND in debt. To have it down to $407 and KNOW that no matter what happens it's gone in 2 months time is incredible.

That CD ladder is a good idea. They're called Term Deposits here, but the formula still applies. I think I'll do it in $1000 increments

I.. don't think the second link lead where you wanted it to. But when my internet is not playing up I will google the snowflake method.

[merrily]

Whoops! I accidentally added an extra quotation mark to the end of the link re: snowflaking. It should've gone here, to the website Get Rich Slowly. (That website has lots of great "what do I do next?" help, too.)

What I was trying to say was that the CD ladder (or Term Deposits) are a good idea AFTER you've got a comfortable liquid amount. If you're worried about your cash being somewhere that you can access [and that therefore you may break into it for non-emergencies, like pizza (not that you'd do that! ... I did, though)], try putting it into an online bank like ING Direct, where you can't directly withdraw the cash.

Anyway. Good luck!

[jamethiel]

Sorry, I should have been clearer. I'm basically dividing my spare money into three right now. One third goes into the homeloan account, and the remaining 2/3 is divided between "Computer" and "Emergency savings"

(I would totally break into my savings for pizza. Om Nom Nom Pizza)

Anyrate, once I have $1000 each in Emergency savings and computer, I keep saving. And then when I have $2000 in there, $1000 gets shoved away into a CD.

(I don't know what would come up that I would need more than $1000 but I suspect I don't want to find out)

[merrily]

Good plan! Brava!

[mab_browne]

An emergency slush fund and a computer replacement fund are both good ideas. :-)

[jamethiel]

Yes! I have my new goals! \o/ Thank you!

[white_aster]

Congrats! ^_^d

I say set up an automatic withdrawal of a reasonable amount out of your main account into a high interest savings account and...let it do its thing. When it gets you your three months' emergency cushion, STILL LET IT DO ITS THING. Then, really, you don't have to have a goal, you don't have to stay motivated....all the saving is being done for you!

Smartypig's not a bad place to shove the money. They actually give better interest rates (2.01% on up to $50,000) than anything but an insanely long-term CD right now. Also, if the goal is to keep you from touching it, I find that the inability to take out just PART of the savings (you can get the money back anytime you want, but have to take the whole thing, all or nothing) keeps me from messing with what I've got in there. Once you've got a cushion you feel good about, maybe start saving up enough to get the minimum to buy into a mutual fund or something similar? Take the leap from just saving to actually investing for down the road?

[jamethiel]

Yeah, I've got my online accounts set up. Australia's got quite good interest at the moment. I just need to set up regular debits. And not touch it :(

[white_aster]

Great! Maybe you can limit your own access to the account? Give someone you trust the debit card, or freeze it in a block of ice so you have trouble getting to it. Or, create a random password you can't remember for your online account, write it down, and put it somewhere hard to get to, like a safe deposit box. Or, like you said, a CD would tie it up nicely so you couldn't get to it.... Having it be a savings rather than a checking account might help, too, if you haven't already done that. That way all you have to do is put the debit card out of easy reach, and you don't really have a way to GET at it....

[bewize]

Awesome!

Congratulations! That's such a wonderful achievement.

I agree that an emergency savings account is imperative. That way, if you do have a problem, you don't run up your credit cards again.

But, I would save at least some money for a computer, too. (In my book, a dead comp actually equals an emergency, but then I work from my laptop.)

[juliet]

Ditto: right now my saving ability is highly limited (made redundant, building up the self-employment stuff again slowly, but also focussing on other non-paying things that I do with my time), but I am eyeballing my existing savings with an eye to making sure that my laptop-replacement-fund is fully in credit at all times. No computer = no worky = no money.

(I also am fully in favour of not replacing till I *have* to; but that means that when I do have to it'll be an immediate emergency! I note that I do have good backups :) )

[jamethiel]

Yeah. I know it's important, it's just hard to get up the motivation. I think if I break it down into smaller goals and stash some away in CDs ASAP, that will help.

[indywind]

I have nothing original to say :-)
Just: yes to the emergency fund, and also-yes to the computer--though you may decide to contribute more heavily to the emergency fund with the understanding that when the comp dies, that will be an emergency.

I have been flat broke (I mean, bills due and no $ to pay them), but never more than a post-dated check in debt... being able to assemble savings for emergencies made me feel so much safer.

[jamethiel]

*nods* I've never had big bills, but boy howdy did I get in debt. It's going to be a challenge making sure things go better this time around