Thornhill Wealth Forum 
 
It's a common dilemma: Should you put all your spare cash toward paying down debt, or build up your emergency savings-or a little of both?

It's a serious question now. If you lost your job, the average length of unemployment is about 33 weeks-or eight months. That means your emergency fund must be a priority.
But should it come first? Let's run some numbers.

Your monthly expenses: $4,000 
Your debt: $5,000 on a card at 14% interest 
You have: $500 to apply to debt, savings or both each month.

If you stashed $400 each month in your emergency fund, and made only the minimum payment on your card-that's $100, assuming a 2% minimum payment-it would take you more than six years to build up eight months' of expenses ($32,000).
And you'd still owe about $2700 on your card.

Now let's flip it. If you put $400 per month toward your card, and $100 toward savings, you'd be debt free in about 14 months-and you'd have a tidy $1,400 start to your emergency fund.

Now that's real savings, on every front.
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If you would like to become an avid saver, download the Save-to-Spend plan below. While most budgets are designed to control spending, this one is designed to expand your saving. 

Here's the plan, based on a monthly income of $4,000. 
1.Set aside 10% per month for retirement. ($4,000 x .10 = $400)
2.Save 10% for long-term needs, i.e. a new car, a down payment.
3.Save 10% for short-term and unexpected expenses, i.e. a friend's wedding this spring, replacing a lost cell phone.
4.Stash a final 10% for fun, frivolous, pleasure.
Total saved: $1,600 

The beauty of this system is three-fold:
1.By creating stashes of cash, you will be able to cover all your expenses—especially the curveballs—and avoid relying on little Ms. Visa.
2.As you ramp up your savings, you'll pare down your spending, because you'll want to save.
3.You never feel like you're on a budget. You feel rich, because you have cash growing in your accounts.
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