The following episode transcript has been generated automatically.
Today, we are going to do the follow up episode to the strategic short term savings episode that we did in season one. And originally, when I decided to record the strategic short term savings episode, I was going to do both of them as a forward looking thing I wanted to, you know, set my goals for my strategic short term savings, and then set the goals for the strategic long term savings. However, we had a delay in recording.
And we’re finally back. And I’m pleased to announce that this episode is actually spilling forward looking episode. But as of right now, we have our strategic short term savings already done. That episode has been completed, it’s been published. And, and the few months since I’ve recorded that episode, I’ve actually was able to get my strategic short term savings back to where they should have been before I did the episode. And I was able to build up enough reserves to where I can actually start thinking about the long term savings and start building some long term savings.
So just a quick recap on what the short term savings was. And the short term savings episode, we just finished talking about all the 500,000 emergencies. And we wanted to learn how to prevent the $500 emergencies by keeping a reserve of money. And all of these amounts, all of these topics that I give are just topics for me, and they are at my financial level, if you are a low income earner, you may be able to reach some of these goals. But I don’t want anybody to judge themselves based on my milestones.
But in this podcast, I use myself as an example because it’s not always fun or comfortable to have fun to use. For our examples that don’t relate to anything, you know, I don’t like using hypotheticals, and I don’t like to use other people’s financial situations as examples gave her. So out of necessity, I use my own financial standing financial situation to explain to you things that you can apply to your situation. And you can actually lower or raise the amounts to whatever is tailor made for your budget. Because financial finance, personal finance is personal.
You have to create goals and you have to create financial plans. And all you have to move at your own pace, you don’t ever want to, you know, try and keep up with the Joneses. You don’t ever want to take anybody else’s financial plan and try and move it around for life because everybody’s financial situation is different. And everybody has a different opinion of discretionary or recreation, okay, because then they can just, you know, literally live on fire if they want to add for me, I’m not going to get into how much I make or how much you know, my bills cost those exact numbers.
But I can’t tell you that having a cushion of $500 solves most of my life’s problems and allows me to use my discretionary income for actual fun stuff. And it actually allows me to use my recreational income in any way that I choose. Most most of my recreational income is invested and saved. But I’m not approved that Buddhist monk as much as I would like to be if I decided to have a wild weekend, or if I decided to celebrate my birthday, which just so happens to be on the first for 30 days brought the whole month or 31 days throughout the whole month.
I can do that because that’s the way my budget is set up. And we did that in season one went over the budget. And a purpose of the budget is to figure out how much money you have left over after you pay your bills. We didn’t really do a traditional budget we did a spending plan and that from our spending plan episode, we did our strategic savings. And we covered the $500 emergency. So now that we have our bills figured out now that we have our savings and investment money, or recreational money figured out. And now that we have a cushion of short term savings, now we move on to the long term savings.
And like I said, my goal is, for my long term savings is to acquire and put aside $10,000, just in long term savings. So that, if something happens to me, I could afford to take a couple months off of work. And I don’t have to worry about unemployment and all of that. And this is separate from the $500 in my savings account, that I built up just in case, my car breaks down or something like that. So what I want to have, in an ideal world, I would have $500 in my savings account, and then my long term savings, I would have at least $10,000 and liquid assets. And when I say liquid assets, I mean assets, they can be easily converted to cash.
And that’s money that’s been spoken for, that’s money that’s not going to have to be used for rent or anything else. It’s just money just sitting there. And, you know, it’s really a bad idea to keep, you know, large amounts of money in your savings account. I really disagree with anybody does that because you know, bank accounts can get hacked. So I like to put money in places where it’s a little more difficult to, for me to get and for one, that takes me a couple of days like the stock or the the stock market that is a cash like asset, because I can always take it out of the stock market.
But it may take you know, three to five business days for me to actually process the sale and have it go to my camera, and then it may take another three to five business days for the money, you know, due to the ACH processing will tend to take time to clear and may take about two or three to five days for the money to get from my brokerage account. To available spending money in my account, but I’m really hoping and praying that I have an emergency that cost $10,000. And I wouldn’t just you know, have all of my long term savings in the stock market anyway.
But I’m really hoping and praying that if I ever have an emergency that I would have available credit to cover my short term needs, along with my short term savings. And this is one of the reasons why I’m aggressively paying off my debt as we speak. Because the more credit you have, the more available credit, the more prepared you are for emergencies. So if I get into emergency, in a perfect world, I would be able to swipe my credit cards and so they don’t swipe them. And then I would be able to in the next 10 days, take my money from my long term savings be that a, you know my stock, or my CDs or bonds or anything else like that, that is a long term saving tool,
I’ll be able to take that money from there and either pay off my credit card bills, or I will be able to take that money from there and finish handling my financial needs for whatever type of emergency situation I’m at. And when I say long term savings. This isn’t just like I said money that’s sitting in your bank account. I mean, for me, my long term savings would include my HSA. So if something happened to me in a medical emergency, the first thing that I would tap is my HSA because that money is a tax advantage. My health care savings account is tax advantage. So if I had a medical emergency, I’ll take the money out of my HSA.
And that money would come in handy to help me in a medical situation if it’s anything else. Like I said, I’ll put my credit cards I’ll go pull money from my stocks, I will pull money from a CDs or bonds open this peer to peer loans and my five to nine and my rock our Ira you know when it’s an emergency, I don’t care if I’m getting penalized. I don’t care about the IRS penalties. If it’s an emergency. This is where the money is going to come from. But I see all of that, to stress that when you start saving, you need to have liquid assets that you can live with.
For long term savings, you need to have liquid assets that you can pull from different accounts. And it’s always a credit is a lifesaver if you have available credit. If not, when mail is the time to use it when you’re in an emergency, because it’s always better to spend someone else’s money and an emergency, and then, you know, reimburse that creditor with your money that you’ve had saved up because your money might not be accessed. So that’s all therapists mean long term and short term they exist that you want to have money about for your long term savings.
And this is the money that you saved when people say money for a rainy day. We’re not talking about you know, waiting for the rainy day to need money. We’re talking about making sure that we have our life right beforehand, you know, make sure that we have our debts paid off. So we have global credit, and making sure that we have some type of assets that we can convert to cash quickly that are liquid assets. Like I said, cash equivalents, stocks, bonds,