Now that you are free of all debt apart from any mortgage that you may have it is now time to super charge your emergency fund so that you have 3-6 months of expenses saved. This money again should be placed in a saving instant access account so that in an emergency you can withdraw the money if required without any penalty. Again this money should not be used unless it is a genuine emergency. You should not invest this money in any type of investment as we are really not concerned about this money making you money it is purely to be used for its purpose.
This is the stage we need to make sure that we have enough money for those small inevitable emergencies that happen in life this could be anything from an unexpected car breakdown to some sort of medical problem that you need to pay for. Really this need to be £500-£1000 it may take several months to build up this small emergency fund but it will be one of the keys that will stop you from having to rely on debt again. The whole idea of this stage is that it stops you from having to get in debt ever again.
As you may have seen from our Facebook page I have been wondering if a crash is about to hit the stock market and housing market. At the same time there have been so many articles in the papers recently that it is unlikely that a crash is as close as I first thought.
However it is never to early to prepare.