The book cover: Outsmart Your Paycheck, by Charles Wainer

Chapter 11 · Companion tool

The Safety Net, the Debt Payoff Race, and the Insurance Audit

Your three buffer stages, sized from your real spending. Then the debt tool: enter your balances and watch avalanche race snowball on your own numbers.

The order of operations

The three stages

Monthly spending (from Chapter 3) Monthly amount you can save toward the buffer Already saved toward the buffer, $

The debt payoff race

List every double-digit debt. Minimums on everything; every spare dollar goes to the target, and when a debt is gone its minimum joins the attack. Before you send an extra dollar, try to lower the rate: call the issuer, ask about a 0 percent balance transfer only if you can clear it before the promotion ends (count the 3 to 5 percent fee), or ask a credit union about a lower-rate loan. Federal Direct Loans and a full-time government or 501(c)(3) job? Look up Public Service Loan Forgiveness at studentaid.gov before paying a dollar extra.

Extra dollars per month for the attack

Where the buffer actually sits

In two places, matched to the speed of the problem. The first month of expenses sits in plain savings at the bank where you already keep checking, so you can move it in minutes on a Friday night. Everything past the first month sits in a high-yield savings account at a different, online bank, so moving it takes a day and a decision instead of a tap.

fdic.gov Federal Deposit Insurance Corporation · confirm the bank is actually insured, and for how much, before you move money into it

I am not printing an interest rate here. Savings rates move month to month, and a rate printed on a page you read once becomes a promise nobody made you. Compare the rate on the day you open it, confirm the FDIC coverage, and then stop shopping. The gap between the best rate and a good rate is worth far less than the buffer existing at all.

The insurance audit

Ten minutes, five questions. Take the answers to your next insurance review. This page remembers what you tick.

Health. What is my plan’s annual out-of-pocket maximum, and could I pay it from the buffer?

Auto and umbrella. Does my auto liability cover my net worth plus about five years of income, and at what point should an umbrella policy sit on top?

Home or renters. Am I covered at replacement cost, and does the policy carry liability for accidents at home?

Disability. Am I enrolled in long-term disability through work, and how much of my pay would it replace?

Term life, if anyone depends on my income. How much, about ten times income as a starting point, and for how long, until the youngest is grown and the mortgage is paid?

A plain-English orientation, not a recommendation for your situation. A licensed broker walks you through the specifics.

Keep the streak going

Finish the chapter in the book, then come back for the next tool. If something here did not land, bring it to Open Mic and I will walk through it live.

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