Hello, I'm your host, Mr. Chuck, I retired accountant turned truck driver, I reduce my debt in a relatively short period of time, debt reduction to achieve financial freedom takes commitment, confidence, determination. How to Build emergency fund, increase the savings account or emergency fund is important and debt reduction, how do you know when and how much to transfer into savings, so the money can stay there. I have a link in my show notes for an article from the nerdwallet.com emergency fund why it matters. So what is an emergency fund, I'm gonna start there at an emergency fun as a bank account with money set aside to pay for large unexpected expenses, such as unforeseen medical expenses, home appliance repair or replacement, major car fixes unemployment, unemployment is probably the one that you'd least plan for, and need the most money for. So that's all if you want to read the rest of the article, it goes into why you need an emergency fund, and all those other type of things, how to put money aside. And basically the article is suggesting that you set up an automatic transfer, every pay, have a set dollar amount to go into your savings account. But I'm gonna have a warning here. If you put too much money into your savings account or transfer too much money out of your checking account. And you need that money again, to cover your needs for the current period, the period from pay period to pay periods when I'm referring to he can only withdraw money from your savings account six times per month, and then the bank is gonna start charging you a fee to do so. It's your money, I understand they pay very little interest, I understand. But if you transfer money out more than six times, they're gonna be charged a fee. And we do not want that. So how do you determine how much money you can transfer into your savings account from your checking account? And how often can you do that? How do you determine what's the best timing to do it, and the dollar amount to do it. And that's what I'm going to try to explain in this episode. So let's start out, I assume everybody has a checking account and a savings account. If you don't have a savings account, well, why not you need one, go set up a savings account, I believe that you need a minimum of $50. Maybe that's lower. Now I don't know, it's been years since I've done it, set it up with the same bank that you have your checking account, because you have very little money in there, you won't have a lot. So you won't have enough to set up a high yield saving, that's gonna be later on down the road, we're focusing on getting your debt paid down. So we want a savings account that's easy to transfer money into and transfer money back out of when you need to make a payment on that debt. It has my previous episode, I talked about debt reduction, and setting up an emergency fund, you know, quit creating new debt, pay the minimum on all your debt, set up a savings account or emergency fund, accumulate enough money in your emergency fund until you have at least a minimum of $1,000. Keep doing the same thing until you have a couple 1000 more than what your emergency dollar amount should be to start with. And then you take a lump sum and you apply it to one of your debt. And we talked about in the previous episode, I keep saying we'll just put transfer money into your savings, but I don't tell you how to do it. And I know if you're living paycheck to paycheck and you have a lot of debt, and you're making minimum payments on all your credit card accounts and all your debt. I mean I'm talking about minimum payment on every loan, every debt, every credit card that you have, do not pay anything extra. So let's start with the checking account, I recommend that you have a minimum balance in your checking account, not less than $300. So that means after you pay all your bills, you get paid on pay day, you look forward to the next pay day, you set up, you have enough money to pay all the bills that are due from pay period to pay period, you have that covered. And that also includes groceries, entertainment, gasoline for the car, everything that you're going to have to pay for, from payday to payday. So your first step is to make sure that when you pay all your bills, and you have four or five days or two days, or even one day, before the next pay day, everything has cleared your bank, and you still have at least $300 in your checking account. So that's a good start. He accomplished something. But that doesn't include money and your emergency fund. So let's say that same exact scenario, you get paid. You have enough money to cover all your bills from payday to payday, you've gone to the grocery store, you determine you have enough food to last till next payday, your cars are filled up with gasoline, everything you need to pay for has been accounted for and pay for and you have $500 remaining in your checking account. He gotta keep a minimum of $300. So in case something pops up, he didn't expect or unaccounted for a small bill. Or maybe you stopped and had to buy something that the hardware store to fix a faucet, and it was like 10 bucks, you know, whatever, you have a covered. So you have$200 that you can transfer into your savings account. So you transfer that $200 into a savings account. And then you do the same thing every pay period. But the easy way to do this in a nice dress this very much is you need to have your own check, register, a check register that you keep track of everything, going into the checking account and coming out of the checking account. So that you know the exact balance, because maybe you put in your register that you paid for gasoline, but it may not show up from the bank for two or three days. So you know, you want to make sure that's out of that balance before you make any transfer. That's referred to as an outstanding charge or outstanding check or outstanding ATM fee charge or whatever. It's outstanding. Meaning you know about it, you deducted from your balance. But the bank doesn't know about it yet. I know a lot of these debit card transactions are almost instant. But I use a Gas Buddy card, it's linked to my debit card. So I can get a five cent discount every time I fill up for gas that takes two or three days before it shows up in my checking account. But I know the day when I fill up the car, how much it is and how much is gonna be hit my bank, I put that in my roaster, the roaster I use is count about that calm All one word. I don't get paid anything for promoting it. It's a easy to use register as it's you don't have to download anything. It's online, you sign in, you set up an account. It's$9 I believe $9.95 a year. Don't pay for any additional options. You want to manually enter all those transactions yourself and keep track of it and reconcile the balance that you have to the bank balance, then you'll know what's outstanding and what's not. So if you write a check back in the olden days when everybody had to do This, he would write a check, he would mail it in, it would get lost in the mail. And then you'd get another bill saying you're delinquent. And you say, well, I pay that, you know, on this date, I mailed it, but they never received it. So you know, you know what happened and got lost in the mail, or got lost wherever they did with it, who knows it didn't get processed. So now you can go in and answer that check through your bank and write a new one. That was the reason for it, so that you know what was going on. And you did not rely on the bank to tell you, everybody's got lazy. And that's costing everybody a lot. So let's go over this again, you got to check register, and you're doing a budget. So you enter all your transactions, see your deposit from your paycheck, you enter in all the bills, you're gonna have to pay from this pay period to the next pay period. So you're looking at online, you're on the computer and you're looking at and it tells you what your outstanding balances are, your balance should be with all these transactions deducted from your checking account. If that's more than $300, now you can give yourself a bigger Grace $1 amount, he could it could be $500, could be $600. But I'd say just for starting start was $300. Never let your checking account, dip below$300. Now if your bank has a minimum balance that they require, so you don't have to pay a monthly maintenance fee, then that should be the minimum amount you have in your checking account at all times, never go below that dollar amount. So if that dollar amount is $500, you don't you want to have your minimum set of $500. So you look at that, you know what your minimum is he looked let your balances, he subtract, maybe give yourself an extra dollar 150 $200, leeway, and anything above that transfer to your savings account. And you should never have to transfer it back into your check. It's there for good until you need it for an emergency, or until you need it to pay down some debt until you get it built up big enough where you can have a big chunk of money to $3,000 or more to pay down debt. Now, it's also important to recognize when's a good time to apply your excess funds and your emergency fund to a debt. And again, it's the same principle, you get paid, all your bills are paid, ask for money into your savings account. Everything's doing good. You're not expecting anything to happen. Then, if you have a minimum of 2500 to$3,000, above your emergency account, then transfer it and pay it from the savings account. That's what I usually did, and pay it directly to a credit card. That way you have tracking you know all the money going into your savings is coming from your checking. And you know all the money going out of your savings is going to pay down some debt. Keep it clean, keep it nice and easy and you don't have to think about it. I'll be back in one moment with my final thoughts. If you want to contact me to request my spreadsheet for the budget, or leave a comment or ask a question, he can send it using my email, reduce debt, increase well@gmail.com reduce debt increased wealth is all together no spaces. If you'd like to ask a question, quick question in the subject. If you'd like to request my monthly budget, put a spreadsheet in the subject matter if you want to leave a response of any kind is put a comment in the subject manner. I will get back to you as soon as possible. Before you transfer money to save the count of one more thing you should consider before making that transfer. You need to look forward at least two pay periods is a Is there a large expense coming up, that you need to have money in your checking account to pay for, and maybe it's something you need to have two or three pay periods to accumulate enough money to make that payment, an example I use would be, I pay my real estate taxes twice a year, that's roughly $2,600. So I'm about a month before it's due, I'm starting to accumulate money in my checking account. So when the due day comes, I have enough money in my checking account, to pay for my real estate taxes, and the pay for anything else that may be coming up. So there's a note of caution there. Now I'm going to talk about if you have a checking account balance that's less than zero, your debt basically in pretty bad shape. But I bet you if you would go back and look at all the bank fees is probably the bank fees that's keeping that balance below zero. So your first goal, and this particular case, is not to increase your savings account, but you must get your checking account above zero. And then you need to build it up so that you have no less than $300, or whatever the minimum balance requirement for your bank would be. Sometimes it's $100. Sometimes it's 500. Depending on your bank, and the type of checking account that you have even need to quit paying all those overdraft fees, as costs costing you a lot of money, it's gonna be tough, and it's going to take you much longer time to get out of debt. If you're trying to get your checking account above zero to this A note of caution there. For the rest of us that maybe have a positive balance in our checking account, that we're coming down close to zero every month, or maybe only have $50 to spare from pay period to pay period, you just need to stay at it. Have your budget, do your check register, to keep track of all the money going in all the money going out. Set up your budget, I explain that and pass up. So it's easy way to do it. You just create a report by category from your check register. And you can look at the detail. Is there anything that you're paying for in the last two months that you're no longer using? Or is there anything you're paying for the EAD not really need to be paid for, you should go in and cancel those payments quit paying for, if you the next thing you should do is look at anything services you're paying for. Can you reduce what you're paying for services, whether that's your cell phone service, your internet service, your your cable TV or streaming, look for areas that you can reduce down, as far as streaming go, don't have more than two, streaming service at any one time. I talked about that in the past. And what I used to do is would be like three or four months on one service, I would then cancel it and not go to the other service for three or four months. And that was back and forth. And if you do that, enough times not enough time, but soon enough, when you go back in and reset up the old service, everything that you had set up all your favorite stuff, all your save shows, and all that kind of stuff is still gonna be there. So you're going to have been paying for one or the other at any one time. So you cancel one, when it gets close to the end of when you have to pay again. Then you start the next one. And that's a way to save some money and build up your savings account. Remember our goal here is to get rid of debt. We need to look for areas where we're wasting money. And we wasted money by paying bank fees, credit card fees, high interest rates, and things that we're not using install paying for that's a waste of your money. So quit doing that and get serious about getting out of debt. Remember, once you get a credit card paid off, do not cancel the card. Keep it open because if you cancel it, that would hurt your credit score because you have less available credit. So just stay focused, and you'll get it done and get through it. And you need to know what you're paying for, when you're paying for and how much you gotta pay based on your income. And if you don't have enough income he needs to get more income to help speed up this process.