The American Dollar
OUR FAMILY. OUR MONEY. ONE PERSONAL FINANCE BLOG.
One industrious American family's focus on a financial goal of freedom. Through worldly personal finance education, here is our story.
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Our Story: Both my wife and I are 27 years old and have gone through financial hell and back. Now we are on track to financial freedom, however we are not financial advisors or professionals, just everyday people. Share our journey from a negative networth and email us if you have questions or comments! :)



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Thursday, January 19, 2006

My Savings Defined.

Saving for tomorrow. The financial actions that we handle today, within this hour, this minute, will affect us for the rest of our lives. I wasn't brought up in this world knowing about compounding interest or saving for the future. My parents (not my spouse's) were just making ends meet and we had 8 people living under a 3 BR house. They probably didn't have time for the financial principles talk, because they were too busy working. We must have an understanding that savings isn't inherited but rather a learned action.

Our savings goes through a rigorous budget "washing" before it goes into its designated account. Here's how I see it: Every month we set aside what we need to live throughout the month including birthdays, holidays, other gifts, food, etc. I derive a maximum amount needed in those 30 days. All bills are already paid for in advance and because there are only a couple I need to really be aware of (mortgage, school loans), that is already budgeted. Since we put the max in our 401ks, we don't see that in our bottom line paychecks. Net income after 401k, Roth IRAs, and monthly budget, equate to the amount of savings we can allocate every month. We then filter the savings to what catagories need to be fulfilled. Simple budget and it takes us no more than 30 min a month. Saving for tomorrow allows us to have the freedom for later. Ahhh blissful savings! I really need to pick up the savings though because we are spending our holiday bonuses like crazy and its almost gone!

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Emergency Fund
40%
$25,000
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$8,000 Total



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