Emergency savings. Building one can seem daunting for anyone living paycheck to paycheck …

When I was 27, I went to an outlet mall because I just felt like getting something new. I remember being pretty happy with the jeans and shoes I found. I also remember calculating in my head that payday was two days away, I had a full tank of gas and my team was going out to lunch the next day – so lunch was covered. Which, in my mind, meant I technically had the money for it. And honestly, at the time, this reasoning didn’t feel wildly irresponsible.

At least, that was until I got into my car and discovered the car battery had died.

My immediate reflex was to grab my shopping bag, march back into the store and return both items. Before I even called a towing company. This was a reality check I desperately needed: I had no business buying anything that day.

I’d love to say I learned my lesson then, but I didn’t. I had experienced this before and would experience it again. I was living on the edge with my finances, constantly calculating the days until pay day with how much gas I had, how much food I needed and when my bills were due. It was a lot of work and it was exhausting. As my career progressed and my income went up, so did my debt. And I was deeply ashamed to the point my cheeks would burn any time I thought of money.

Flash forward to two years ago:

When I met my fiancé, he was appalled at how poorly I managed my money, especially considering from the outside I appeared to be a fully functioning adult. I could recite all the things I knew I should be doing, but none of it showed in my actions. Not only did I have debt, I could never get past the $2,000 mark in my savings account. Every time I got close to exceeding $2,000, something would happen: my dog would get sick, it was my family’s birthday season (so many Virgos!), or I had mindlessly shopped online and spent too much. I was in better shape than I was in my 20’s, but no doubt about it, I was still mismanaging my cash flow.

There are several times in my life I have made big decisions and changed habitual behavior. And having to share my current financial state with this individual I so respected and wanted to share my life with, was finally enough to push me over the edge and, in all honesty, financially “grow up.”

Here are the steps I took to finally get out of debt and build a meaningful emergency fund.

Note: The steps I took may not directly apply to your situation. But the message is to be resourceful with what’s available to you, educate yourself on how to use it and why you might need to make yourself uncomfortable in order to accomplish your goal.

Step One: I got a roommate.

It’s no secret living in the Bay Area is expensive. Being in my 30’s, I prioritized having my own space and privacy above building an emergency savings. Rent was taking up about 44% of my total take-home pay. If you know the 50/30/20 rule, that left about 6% for the rest of my essentials, which included car expenses (no payment, but it was older and had a ton of issues), utilities, gas and food (grocery store). Using a 50 30 20 budgeting calculator, I realized that my rent was just way too high.

In my situation the solution was an emotionally easy one to make. My boyfriend moved in with me and my rent payment was cut in half. This was absolutely essential in order for me to accomplish the second step. Had I gone through this same realization and was single, I would have had to wait another three months to find a place with a roommate as I was on a lease. In that situation, I hope I would have done the best I could to follow the remaining two steps.

Step Two: I reduced my take home pay.

“Wait, what?! You want me to reduce the amount of money I get every month??” – scariest realization ever. Why would I put myself in a position to have less cash every month when I was already feeling like I could barely make ends meet?

Simple: I was spending too much on non-essentials. I had the biggest cable package, an actual online shopping routine (morning flash deals along with my morning coffee), DoorDash deliveries, etc. Spending money was easy, it felt good (in the moment) and convenience was key.

In order to really buckle down and stop these spending behaviors, I HAD to reduce my take home pay to force myself into better habits. I did this by investing in myself and my future:

Make sure I was contributing the right amount to my 401K Max out my Employee Stock Purchase Plan Automate 20% of my savings to an account that was not the same bank as my checking account.

The first two of these are pretty specific to my situation. I fully recognize I am lucky to work at a company that offers these types of benefits. (If your company doesn’t offer 401K, check out Farnoosh Torabi’s response to a user in a similar situation.)

The fact that I wasn’t taking advantage of them meant I was throwing money away.

On “throwing money away”: this term gets used a lot when referencing unused 401Ks, but think about it. If someone were to say to you, “Hey! If you set aside $100 every month, I’ll give you another $100.” You would do it, right?

This scenario is not an analogy, that’s what actually happens when your employer matches your 401K contributions at 100%. Of course, there are nuances and limits – be sure to read the details of your company’s offering (match rates vary, there are tax limits to how much you can put away each year, etc) but the take-home message is: you’re actually missing out on a good amount of money if your company offers 401K matching and you are not taking full advantage. Read more about 401Ks here.



As for the Employee Stock Purchase Plan (or ESPP) – which you can read about here – this was absolutely key in my strategy to getting out of debt quickly, so I could focus on building my emergency savings. Every time the stock trading window opened at my company, I would sell my shares to pay off my credit card debt. This is not usually advisable given the tax implications can be really high; but for me, at this moment, it was the right thing to do. Once I paid off all of my debt, I was able to leverage the ESPP program as another savings opportunity.

Automating my savings was another phrase I heard repeatedly and never really listened to. But it is genius and for anyone open and willing to hear the message: automated savings is the best way to build your savings without ever having to take any action on your own. Now, I stipulated the account had to be at a completely different bank than my checking account. This was crucial for my own peace of mind that I was not going to start transferring money right back into my checking account (been there, done that!).

Step Three: I got stubborn about it.

As I mentioned, there have been a few times in my life when I have really made the decision to change something habitual in my life and a few times I thought I made that decision, but it didn’t stick. How do I mimic the first and not the second?

I got stubborn about it.

My mantras included:

This is not a game.

I’m not going to allow this type of behavior anymore.

I will not carry any revolving credit card debt (this was after I paid it off).

Getting stubborn about not spending money can be more gratifying than you might think. You just have to see the gratification in a different light. In the morning, when I picked up my phone to start doing my online shopping, I would suddenly put it down and think, “NOPE. Not today!” And allowed myself to soak up the gratification of willpower. I also changed up my morning routine by journaling along with my morning coffee. This is not for everyone, and it didn’t stick forever with me, but at the time – it was exactly what I needed.

And of course, to make it easier on myself, I did do a few things to help ensure I stayed on course with this new behavior: I tracked my spending and budgets with Mint. I tend to check certain apps on my phone in the same order – FitBit, Instagram, Facebook. I just added Mint into this mix so it was always on my mind.

In addition, I deleted my credit card information from all of the shopping sites, unsubscribed from subscriptions (including Amazon Prime – that one was hard, but the instant gratification was too tempting), cut out cable, and only ate out on Friday nights – which was fun because it became something I looked forward to all week. There are tons of tips out there on ways you can make not spending easier for you. But you’ll never do them unless you drop the drama and just get stubborn about it.

Now just because I got out of debt and started building an emergency fund did not mean life gave me a break and big expenses did not come up. It did become apparent my car was on its last leg and I had to make that big decision. When it came time, I am proud to say I did not give in to my new-found sense of financial security and take on a huge monthly payment. I did a good amount of research, optimizing for a car’s affordability and value over its luxury and brand name and found a car that suited my needs perfectly without the big brand name or monthly payment. Another moment of great gratification.

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