Archive for April 2013

Is time your friend or enemy? On the path to saving and paying off debt

Time is a very crucial concept when it comes to saving money and paying off debt. It could be your friend or enemy, depending on how much of it (time) you have. Generally and simply put, the more time you have, the more you are able to save money and pay off debt. Having said that, is it really as simple as that? Other than having a time machine, how can I make sure I have more time to be prepared financially? The key is to be prepared and able to anticipate upcoming situations where money is needed. Let us go through this checklist which ensures you are prepared, whether you have little or a lot of time on your side.


Planning ahead

You know you tend to go on vacations at least once a year, so why leave it to the last minute to save money for an upcoming vacation? Even if you don’t know when or where you will be going next (Vegas in August?) you should still have an idea of how much you need to save.  In fact, travel for some of us is such a big and routine part of our lives, we have integrated it within our financial budgets (see next point.)  Same goes with general life savings. You know you need to save money for the future (retirement, new house, etc.) so why not give yourself more time and start early? one of the most asked financial questions by by baby boomers is whether they will have enough time to save for retirement. Had they started early (in their 20s or even 30s) they wouldn’t have to ask that question.

Budget for it

Like we mentioned, the solution to having little time on your side is to use your budget. For example, if you have to make a down-payment on a car in 3 weeks, and you don’t already have the money, you can either borrow money or use your credit card and then use your budget to pay off this money that you have to borrow.  This is why it is crucial to start early so you are not faced with a situation like this.  The sooner you know about an upcoming purchase or debt repayment the better it is of course. So your forecasting has to be pretty good, to give yourself enough time. And when you have an idea of what you have coming, it will allow you more time to integrate it into your budget.

Emergency Fund

In the finance literature, the important of an emergency fund can’t be underestimated. It is of vast importance, especially in situations where time is not on your side. Such a fund can be used to pay for an unforeseen or unexpected financial emergency.  Obviously, it wouldn’t be an emergency if you had enough time to deal with it. If you car breaks down, that is an emergency that you have to deal with almost immediately, unless you had a second car to use.


So while you may not be able to create, bend or pause time to work in your favour, you can still do a few things to be prepared, even
when you don’t have a lot of time on your side. The key is to be prepared and realize that time will not always be on your side and there will be situations when your past preparations will help you deal with the immediate situation.

And remember: time is, you got it, money!