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Final destination financial security: Where are you on your journey?

Do you have $500 to handle a minor emergency?

Most people don’t. A Money Pulse survey found 62 percent of Americans cannot cover a $500 unexpected expense. This level of financial insecurity can make minor emergencies a major stress point. Financial security is a far better place to live. With careful planning, you can leave behind the days of sweating small expenses.

Financial security is full of choices and opportunities – a place where relaxation abounds. You’ll know you’re there when you see:

An emergency fund equal to three to six months of living expenses.

A paid-off home mortgage.

Investment income sufficient to pay for food, utilities, insurance, home maintenance, clothing and entertainment. (If you rent, you’ll want to cover that expense with your investment income.)

The route to financial security can be long and winding, taking as long as 30 years. Where are you on the journey? Answer these questions to determine your location:

Dreaming

1. Do you believe financial security is possible for you?

2. What would you do with your life if you didn’t have to work?

3. What age do you think you can realistically reach financial security?

Planning

1. Do you have a budget – one that you follow?

2. Do you accumulate money for less-than-monthly expenses?

3. Do you have a system to protect yourself from careless overspending?

Preparing

1. Do you have an emergency fund?

2. Do you have $500 or $1,000 in that fund?

3. Do you have three months or more of living expenses in that fund? (Note: Credit cards or other sources of borrowing money are not an emergency fund.)

Departing

1. Are you debt-free other than your mortgage?

2. Are you on track to pay off your non-mortgage debt within the next 12 to 18 months?

3. If you have a mortgage, are you on pace to pay it off in fewer than 15 years?

Arriving

1. Do you know how much money you must accumulate to reach financial security?

2. Are you investing each month?

3. Are you investing enough to reach financial security by your goal age?

You likely answered yes to some questions and no to others. Find your first no. The title of this section is where you are on your journey.

For an expanded assessment of where you are on the path to financial security, visit http://www.personalfinancecoaching.com/money-savvy-resources.

In my next column, I’ll break down the action steps you need to take to reach financial security based on your current location.

matt.kelly.durango@gmail.com. Durango resident and personal finance coach Matt Kelly owns Momentum: Personal Finance. www.personalfinancecoaching.com.



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