DeafCaroline, we are definitely two peas in a pod re: your method of staying out of debt!
Michelle Singletary is a financial columnist for the Washington Post. She has two or three columns a week, plus a web chat. She is EXCELLENT for discussing the sort of problems most people have.
Her basic guidelines for saving:
1) set up a "life happens" fund. This should have around $2,000 - $3,000 in it. This money would be to cover stuff like you suddenly need new tires, or the furnace gives out, or you have an unexpected medical or vet cost. Cuz "life happens" to all of us, and if you have the funds, then you don't have to put these minor emergencies on a credit card.
Do I pay off old existing bills at the same time, or do one before the other?
2) Emergency savings. This should be a sum large enough to cover 3 to 6 months of living expenses, should you lose your job or have a serious emergency (your house gets flooded, say, or you have a kitchen fire that does serious damage, that sort of thing). This money should be in a CD or other vehicle that is accessible, but not TOO accessible, because the idea is that this is for SERIOUS emergencies only. Not "gotta have this newest, greatest, PC, pair of shoes, handbag," sort of emergency.
Same question here. Do this at the same time when paying off, or pay off first then do this, or do this and then pay off?
3) Retirement savings, through IRAs, or work-related plans, whatever. Whatever your age, start saving for your retirement as soon as possible.
Hubby has this, but stupidly, he used his to move back to Florida. I never had one.
Then in addition to that, depending on your lifestyle, you might have savings accounts to buy a car, or for family vacations, or to fund your kids' education, that sort of thing.
Luckily, we are working on a saving account, but it gets used once a month when paychecks are short. It was son's with me joint, but he cleaned out all his money already.
Then, hurrah! If there's anything left, you can spend it!
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In practical terms, what I did years ago: with my first car loan, I rounded up what I owed to the next $100. So every month I was paying it off a little faster than I absolutely had to. After it was paid off, since I was already used to living without that money, I kept putting the same amount into my "car savings" account. The next car, I didn't have to take out much of a loan. Did the same thing to get that loan paid off.
After that one, I've never had another car loan; have paid cash for all my cars since 1986. Also I try to keep my cars for as long as possible.
Same principle worked for paying off our mortgage early.
Day to day stuff: some people find it easier to just have a certain amount in cash for the week, to pay for groceries, drugstores, whatever, and not charge anything at all. That gives you a good handle on what you're really spending.