Being free of debt and having an emergency fund are just two ways people can achieve financial freedom. But while those goals are easier to attain by people who still have their jobs, it also should be the goal for workers who are now unemployed or have had their hours cut, and for small businesses who have been crippled by the coronavirus pandemic.
So said Jim Adamczyk, a senior executive vice president and chief lending officer for Orlando-based Fairwinds Credit Union, in an interview with The Beacon to get the word out to mark Financial Freedom Day, observed by banks and credit unions every July 1.
“Financial Freedom Day is always important, but especially today for a lot of small businesses who are realizing that being prepared made a big difference in dealing with situations like we’re facing,” Adamczyk said. “It helped them get through the hard times.”
One key in achieving financial freedom is creating an emergency fund to cover things like car repairs or unexpected medical expenses, he said.
Putting just $2.74 a day — about the cost of a cup of coffee — into a designated savings account can result in a $1,000 emergency fund within a year, he said.
Another account should be set up to cover three months of living expenses, to replace lost income from a layoff or extended illness without having to rely on credit cards or dipping into retirement funds, he said.
The goal is to create an ongoing pattern of funding these accounts, Adamczyk said.
“It really is a mindset, a habit of doing things over and over again to achieve these goals,” he said.
Other suggestions include using a budgeting app that lets you categorize transactions, see where your money’s going, and make adjustments; paying off your car or truck, then stashing the equivalent of the monthly payment into an account so you can buy your next vehicle with cash or a sizable down payment; participating in your employer’s 401(k) retirement plan to get any matching funds offered; paying off your home faster by making biweekly payments; and investing at least 15 percent of your household income into retirement accounts or mutual funds.
Another tactic is using the “snowball” method to pay off your unsecured debts, like credit cards, by making payments each month toward your smallest balance first. Then attack the next smallest balance, and so on, until you’ve paid off all outstanding balances, Adamczyk said.
Of course, income is important for those who lost their jobs or suffered pay cuts, Adamczyk said. He encourages such people to contact their creditors to see what kind of help they can get, since many creditors offer relief programs. But people also need to examine their monthly expenses — like Netflix, Starbucks or their cable bill — to determine what can be cut or reduced.
“It’s a perfect time to start putting money away to create that $1,000 emergency fund,” Adamczyk said. “This also applies to small businesses. They may need an emergency fund that’s larger than $1,000, but it’s still important to have one.”
Three of Fairwinds Credit Union’s 35 branches are in West Volusia: 302 E. New York Ave. in DeLand, 2487 Enterprise Road in Orange City, and 111 Howland Blvd. in Deltona.
Fairwinds also has branches in East Volusia, as well as Lake, Seminole, Orange and Osceola counties.
For more information and tips, visit fairwinds.org.