– Create a budget. Brown cautions that Horne is in a good position but she must be very shrewd with her next financial steps. “She’s in flux because she closed on her apartment but she hasn’t moved in yet,†Brown says. “She got this really good deal with a $67,000 purchase price and her debt is only $1,400 which is not really a problem. She has a 4.1% rate on her mortgage, which is unbelievably low,†says Brown. However, experts agree that Horne must keep track of all expenses and make cash payments for any new homeowner items such as furniture. “She can use free services such as Mint.com to track spending and use online banking to pay bills and track monthly payments. Mint.com also imports your bank financial data which makes it easier to create a budget,†says Freeman. “I recommend she delay any major furniture expenses. It’s the easiest way to get into debt by buying such items on credit cards. She should pay cash and buy furnishings in stages instead,†adds Freeman.
– Build an emergency fund. Horne’s savings is now depleted, so Brown and Freeman agree she should rebuild her emergency fund to at least six months of expenses, taking into account the purchase of her home. “She should put at least $400 a month in a savings account,†Freeman recommends. “She should move all the money in her savings account to a higher interest savings account such as ING, Ally Bank, Capital One, or Discover Bank,†adds Freeman.
Brown adds that “she should put her savings in a money market or someplace she can’t touch it so easily, although money markets aren’t paying so much right now. It is still better in a separate account or a short-term CD so you don’t have access to it so easily.†Brown and Freeman agree that Horne should use the $2,000 contest winnings toward her emergency fund.
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