If you're new here, this blog will give you the tools to become financially independent in 5 years. Here is how I did it and here is how I currently do it. The method is robust and replicable (no need to win the lottery, start a blogging business, or win at real estate), but not easy; much in the same way that a diet results in weight loss but is hard to follow persistently unless you set your mind to it. The key is to save 75%+ of your net income and invest it in income producing assets (bonds and dividend stocks). There is a "21 day" step-by-step plan for how to get to 75% in the left side bar. I try not to be too trite, so if I cover a topic, you will probably not see it again for a very long time, thus you may want to read the older posts here and here. Also, check out my answers to frequently asked questions and while you're at it, don't forget to subscribe to the blog via google or RSS.

Today I went to my new dentist for the first time. I was pleasantly surprised since they did not seem to have a ton of fancy gadgets in their clinic. This generally means that they don’t have huge debts to pay off which should make customers pay less. Not me though, apparently a filling that was done on one of my molars a few years ago now has a cavity below it – botched job – big thanks ex-dentist. This means I need to have a crown put in. It came to $1200!

Now, I’ve written earlier why I don’t have an emergency fund, so how did I deal with this unexpected need for money. Simple. I charged it on my credit card. It’s a capital one card because they were the first company that did not to offer me outrageous (e.g. subprime) terms when I wanted to establish a credit history about a year ago. It was also quite easy to set it up to automatically pay off the balance automatically each month. So when I came home today all I had to do was to transfer the amount from my ING Direct account to the checking account [of my bank] that the credit card draws on. Having cash saved was not an issue. Due to market conditions, I currently maintain a cash position of about 30%. This is useful for picking up stocks on sale or dentist bills as it may be, so there you have it. That’s how my emergency fund system works.

Originally posted 2008-01-28 19:14:49.