Getting out of Debt: Expect the unexpected

My wife and I were driving home from my in-laws a few months ago when I hit a pothole. Lo and behold, the darn thing blew out my tire and put a nasty dent in my wheel rim. That little pothole cost me nearly $600! You know what, though? I knew it was going to happen before it ever did.

Sorry, no Magic 8-Ball here. Money magazine says that 78% of us will experience a major negative event in any given 10-year period. Now, busting up my tire and wheel don't qualify as "major" in my book, but because we know that life happens - usually unexpectedly - my wife and I have an emergency fund in place for when the rain comes.

Remember that the first part of getting out of debt is changing the way we view debt and making the choice not to go into debt any more. If you have an emergency, you have to cover it with your emergency fund - not your VISA. Putting emergencies on credit cards will keep you locked in the vicious cycle of debt.

For most of us, having $1,000 in a savings or money market account is the First Step on the road to freedom!