If you don’t have a good defense the other team is just going to run all over you. In the case of your finances the opposing team is spending and emergencies. If you don’t have a good defense it is going to be an offensive battle that can go either way.
Build Up Your Defensive Line
Your immediate defensive line is your emergency fund, these stores of cash can help you prevent a break away run. Everybody has an opinion on how best to plan for emergencies. Dave Ramsey wants you to sock away $1000 to start with, and then build it up once you eliminate all consumer debt. A lot of people think you need 3-6 months to be safe. Some people even use calculations based on the current unemployment rate to determine the magic number at which their emergency fund is complete.
It doesn’t matter what school of thought you buy into, you need to be prepared for emergencies. The last thing you want to do is be caught unprepared when a car tire blows, your brakes go out, or a tree falls in your backyard. For more on emergency funds check out my Back to the Basics post on emergency funds.
Plan for the Opposing Teams Offense
If you fail to adequately prepare for the offense you are going to end up lining up in the wrong package and the offense is going to roll over you like a steam roller. You need to create plays that will ensure you don’t get caught with the wrong defense on the field. The key to this part of the defense is to spend less than you earn and live within your means.
In order to spend less you need to first understand how much you are actually spending, then you can build a budget, and live frugally to save more while still enjoying the now. If you find you are still having a hard time adapting and keep running out of cash before you can sock any of it away you probably need to start paying yourself first and if you can make it automatic then you won’t even miss it.
Get an Interception and go Back on Offense
There are times on defense where the best defense is a good offense. If you can get your corners and your safety’s to where they play like wide receivers and you make the play you can get the team back on offense. That training is the working towards eliminating your debt. Debt is dragging you down and keeping you from being able to run away with the game. Sure you are still making plays and getting in the end zone every so often, but that debt keeps you from reaching your full potential. Reduce your debt and you increase your chances of scoring on offense and on defense.
Photo: (Evan S.)
This post is part of a series of posts where I relate personal finance to the game of American Football. Be sure to check out the other posts in this series:
Take it Ten Yards at a Time
You are Nothing without a Good Defense
Special Teams can Make or Break You
It’s All About Teamwork