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I had a big, fat debt payoff goal to pay off $18K in 2018. That’s not gonna happen. Instead of sending that money to FedLoan Servicing for extra payments, I’m going to build up substantial savings for myself.
Some folks may say you shouldn’t save several thousands of dollars until after you’ve paid off all of your non-mortgage debt. But I’ve realized having a large emergency fund will give me peace of mind and enough cash to cover several scenarios without having to sell something or get deeper into debt.
Check out this post to find 10 questions to ask to determine your savings goal: Emergency Funds: Why, Where and How Much to Save.
How much will I save in my emergency fund?
I’ve carefully considered real numbers from previous budgets to come up with these savings subgoals. The emergency fund could cover 5 things:
- $1,500 – 3 months of my current bills in the U.S. (This includes my student loan minimum payment, insurance premiums and a few monthly subscriptions)
- $1,500 – flight from China to U.S. (I padded this amount to account for needing to book a flight at the drop of a dime)
- $2,000 – starter savings
- $2,200 – 3 months of Chinese rent (If I have to move out, Chinese landlords usually require 3 months of the rent to sign a lease. This price is for rent in a hip location with Westen amenities.)
- $2,300 – 3 months of Chinese expenses (This amount is based on spending about $150 on average a week for 15 weeks. That’s how much I spent on a summer staycation challenge for 5 weeks.)
The grand total is…..$10,000! It’s a big goal, so I’m going to save for 1 subgoal at a time. Each subgoal has a purpose, so that should help me stay motivated.
Have I set a deadline?
I sure have! Check it out in my detailed plan for Operation: Sock Away $10K.
As of April 30, 2019 (previously Feb. 28, 2019), I have $10,000 in savings because I set aside money at a bank that doesn’t house my spending and bill money, took the debit card connected to the savings account out of my wallet, went without some wants and prioritized savings in my budget.
Why? I want to have more peace of mind and be able to cover 3 months of living expenses.
Written or typed? Both.
Shared with: BFF in China and Instagram family.
Daily reminder: On phone and nightstand.
Obstacles: Dipping into the account for wants or other goals.
Solutions: Remember my “why” and
put money at a bank separate from my spending and bills money.
Rewards: To be determined later. Must cost less than $100.
How will I build the emergency fund?
Between 60% and 75% of my 9-to-5 salary will cover most of the savings. I’ll get the rest from working side gigs. Obviously, I’ll forgo some wants like traveling, too.
How will I track my savings?
I’m a visual learner, so I’ll track my savings using a handy-dandy chart and making graphics to share my progress on Instagram. I’ll celebrate a little whenever I cross 1 on my 5 sub-goals off the list to stay motivated.
Download your own goal planner and tracker here. It looks similar to the one below.
Where will I house my savings?
I have several bank accounts in the U.S. and China. I’ll save the money for Chinese expenses locally and wire home the money for U.S. expenses. The cash in my U.S. account with Capital One 360 will earn 1% APY without any monthly fees and is connected to my checking for relatively easy access. I put the majority of the U.S. cash in my Marcus by Goldman Sachs Account to earn 2% interest. It’s not connected to a checking account, so I can’t access it immediately.
Getting high off saving instead of “paid in full” statements is gonna be tough. But I’m ready for the challenge. Let’s go!