11 January 2008

The Travel Fund

Confession: I've never had an ANYTHING fund. Including, and not limited to, an emergency fund, a car fund, even a cute shoe fund. How have I manged to avoid financial ruin due to any or all of the above so far? Credit cards. Which really isn't avoiding -- only delaying -- the inevitable crash that comes when the plastic runs out.

So, part of being able to travel in a year means not only saving money for the actual travel, but getting myself in financial shape all the way around. I mean, what good is it to take off for three months only to come back and find myself as deep - if not deeper - in the hole? So the travel plan involves three big financial steps for yours truly.

1. Create a Travel Fund. My goal is to start with a 10% saving plan, which will come off the top of every paycheck and going directly into the highest interest savings account I can find. At first the 10% will be divided between two funds - more on that in a minute - and in six months I'd like to ramp that up to between 11 & 15% to meet an end savings goal of $5000

2. Create an Emergency Fund - This is the other will be the split for the first few months of the 10% savings plan. I'll be content with about $1000. Looking over the past year or so, none of my major emergencies have cost over that amount. Knock on wood.

3. Eliminate Debt. Compared to a lot of my friends, I'm carrying a lot less debt. Not knowing what I wanted to do when I grew up, at least I had the good sense to go to a state school. My biggest concern is an absurdly high interest rate on one card carrying a high balance (the aforementioned "cute shoe fund"). I'd also like to finish paying off my car. The goal is to knock down as much debt as possible so that I won't be pressured by bills while looking for my next contract.

Phew, just writing it all out I feel a little better, and a little overwhelmed all at once. I know I can do it though. At least, what better to do with my paycheck during my year under contract than to try this? Spending it on shoes and partying really hasn't got me much so far!

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