How Close Are You to Being Broke? Here’s a Hint; You’re Closer Than You Think!

Rainy Day Image How Close Are You to Being Broke? Here’s a Hint; You’re Closer Than You Think!

How’s your “rainy day” fund looking these days? If you just laughed at that question, you probably already know the answer to how close you are to being broke.

If you read the question and asked yourself, “what the hell is he talking about – rainy day fund?”, then you’re about to get rained on!

Not Your Father’s Rainy Day Fund

20 years ago the financial experts said you should have 3 to 6 months’ worth of expenses in reserves. Now the personal finance experts and guru’s say you should keep 6 to 9 months in reserves. I say that’s not nearly enough!

In fact, where did they get those numbers from anyway? A lot of people are out of work for as long as nine months or more and they can’t spell the word save if you spotted them the s and the e. Guess what happens if they lose their job or suffer some economic hardship? They live on credit!

More in Credit Card Debt than Savings

Is this you? Do you have more in credit card debt than savings? Then you’re one good wind-gust of a financial storm away from being broke! According to Bankrate’s February Financial Security Index, one in 4 Americans has more credit card debt than emergency savings so I’ll venture to say I’m talking to a lot of you!

Stop Listening to the Experts

Here’s my unbiased opinion from personal experience; if you don’t have, at minimum, one year’s worth of total monthly expenditures in savings, you could be in trouble if “life” and “misfortune” happens upon you.

But the real number is 18 months! So if your total monthly expenditures, meaning every single penny that you spend for housing, transportation, food, etc. is $4000 dollars a month, then $72,000 dollars is the number that will keep you from eviction or foreclosure, repossession, and bankruptcy! This is the new economy and a new world we live in. The only person you can count on is you!

Can That Really Be?

Hell yes it can! If you are making $6000 dollars a month and put away 10% every month, that’s $600 dollars a month for savings. It will take you 10 years to save $72,000 dollars (not counting interest) and bullet-proof yourself from financial devastation.

Could you save more and accelerate that time period? Hell yes you can! Could you look at your budget and see where you could cut spending and accelerate that process even more? Hell yes you can. Can you simplify your life and sell what you don’t need or downsize? Hell yes you can!

Wait a minute; what’s that you say? You don’t use a budget? Oh yeah, your closer to being broke than you think!

How ready are you if the winds of a financial storm blow your way? Could you fight off long-term unemployment without filing for bankruptcy or suffering foreclosure?  Are you spending your way into not saving?  Leave your comment below.

Liberation Video Series Image1 How Close Are You to Being Broke? Here’s a Hint; You’re Closer Than You Think!



  1. I think much depends on your field, as well. My husband lost 3 jobs in one year, but the longest he went between jobs was 3 weeks. His skills are enough in demand that companies that shouldn’t have hired him–because they didn’t have the money to afford it–stretched to do so. And then let him go when they almost couldn’t make payroll, but still, even when companies were really, really hurting, they were pretty desperate for people with his job skills and willing to take a gamble in hopes of being able to retain him through into the good times.

    • Thanks for the comment Jenny. Actually, there are a lot of variables here. Before you can start saving and building that ‘rainy day’ fund, you have to get your financial house in order. That means attacking debt, creating a budget, watching every penny and expenditures, and getting on solid footing financially.

      It took me 7 years to get to this point again and when I hit the reset button, the first thing I had to learn was to get out of my own way. This is why you read in my posts so much about financial literacy. I was financially literate, yet that didn’t stop me from crashing and burning.

      I don’t know what your personal situation is, but one of the things I meant and was referring to when I said “this is the new economy” was exactly what your husband went through with jobs.; no one works at the same company for 30 years anymore. It’s a constant hustle and you have to learn to play the game to survive.

      For me, part of that equation in gaining financial stability is learning how to stop being an amateur consumer and start becoming a liberated consumer. Edward Way Teale said it best: “Reduce the complexity of life by eliminating the needless wants of life, and the labors of life reduce themselves.”

      No one is a better steward of your economic future than you! :)

  2. One of the things that I noticed, too, was that the more that I trimmed away as far as my debts, the more that the things that were left became very noticeable. I’m at the point where I’m down to my credit card debt alone – paying it down – and it’s like… is there something further that I can do to get this stuff out of the way? Crazy Crazy. Thank you for keeping it real – what you need to survive always seems to be more than what you expect. :)

    • That’s awesome Emily. It’s rather liberating, isn’t it? Now you have to start addressing the mindset that helped get you in that jam in the first place if you haven’t done so already. What could you change that would make sure you say what my motto is; Never Again?

      Just like me, what got you into that mess was being an amateur consumer. With the great job you’re doing in becoming debt free, imagine if you bullet-proof your mind to the psychology of consumerism and learn to live a consciously frugal life?

      You would be more liberated than you ever knew was possible and living an advanced life! Thanks for the comment and stay committed to your success :)

  3. We used to be in the camp of having more credit card debt than savings, but with lots of hard work, we’ve changed sides, and I feel we’d be OK with a job loss for quite some time. So many people live right on the edge and you never know what will tip you over. Living within your means and paying off debt is really the only way to ensure you won’t be wiped out in a crisis.

    • Indeed Kim! I bet you feel a lot better now knowing you can take a financial punch to the gut and keep on. Almost no one thinks “what if”. What if I lose my job and I’m unemployed for more than a year; could we still keep our house, our cars, and keep living the way we do?

      And for many, once they become debt free, can they remain that way? There’s a mindset to making that happen and I teach it in my free Liberation Video series. Do check it out and thanks for the comment :)

  4. Jason Bushey says:

    Pretty shocking stat in regards to 1-in-4 having more credit card debt than savings. And I agree – 6-to-9 months isn’t nearly enough to prep for financial hard times, especially when you consider how long some Americans have been unemployed after the recession.

    Great post all around!

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