
In my case, one of my student loan interest rate is 2.8%. Pay any loans with interest rates greater than 5%. Pay off your credit cards if you still haven’t paid it off in step 1. My strategy is to pay off high-interest debt. Thankfully, I picked up a few shifts that helped me catch up. I had to dip into my credit card briefly to survive. It felt like an avalanche of money spending. The cost of the flight, rental car and hotel were close to 3,000 dollars. My wife, kids and I flew down to our new location to look for housing.
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In one month, I had to pay for my medical license (about 500 dollars), DEA license (~700 dollars) and critical care board exam (2400 dollars). Why that much? Although not the norm, I do have high miscellaneous expenses as a doctor.įor example, towards the ending of my fellowship training, I wiped out all of my emergency savings.

When credit cards are paid, it is then important to begin building your emergency fund.ġ000 dollars is a good start, but aim for around 5,000 dollars. There are also many credit card offers nowadays that wave interest rate for up to a year or more for a new card. If you are really devoted to improving your finance, you are less likely to use the credit card.

If you pay off credit cards, you are no longer paying interest, and can still use the available balance in the case of an emergency. I believe that credit card debt should be prioritized over the emergency fund. The Total Money Makeover: Classic Edition: A Proven Plan for Financial Fitness Baby step 1 Save a mini emergency fund. Here is an affiliate link to buy the book. Let’s use Dave Ramsey’s 7 baby steps as a framework since he has more authority on the subject matter than I do. Give – at any stage above too if able to.Build wealth – Save 1/3 of your income or at least strive to.Invest in your children’s future education.Boost up your emergency savings to 3-6 months of living expenses.Utilize your employer 401 k up to the match and if you have money left, then Invest in Roth IRA.Pay off any loan with interest rate >5%.

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Free Budget Template To Save Your Emergency fund.Step up your emergency savings to an optimum level of 3-6 months.Here are my 12 toddler steps after reading multiple blogs and books over the years.Dave Ramsey’s 7 baby steps to financial freedom are as listed below for a recap.

