Extra income, all to EF or 1/3 rule?

[greenism3]

Hello,

Thankfully I have been receiving extra income, but am confused about how to allocate it. I currently have 150/1000 in EF. I also have things that I am saving up for. Should I just pour all extra income to EF or 1/3 to EF and 1/3 to other things I am saving for?

Thao

[StanleyJohnson]

I'd try to get your EF fully funded before moving on to the next step.

[nodmicks]

I'd go all EF unless those other things are things that can't be put off like brakes, tires, medicine etc. If it can be put off EF all the way.

[mndtrp]

Your emergency fund should come before you allocate money to unnecessary items. Personally, I feel an emergency fund should have 6 months, or more, of living expenses.

Once you have your emergency fund as stocked as you feel comfortable, I advise to start paying off any debt as quickly as possible, while putting aside some money to a savings account. This savings account would be for upcoming expenses; oil changes, tire replacements, doctor appointments, things that you can plan on in the relatively near future.

Mortgages, and student loans to a lesser extent, can be an exception to the paying debt off quickly aspect. If you're the type that is happier getting a better return on your money in some sort of investment, go for it.

Retirement fund should also be in the middle of all of that somewhere, as well.

[greenism3]

I allocate funds from each paycheck to go into envelopes for anticipated car expenses (tires, registration, oil changes, etc). Should that be going into EF instead?

[nodmicks]

I allocate funds from each paycheck to go into envelopes for anticipated car expenses (tires, registration, oil changes, etc). Should that be going into EF instead?

Nope your right with the envelopes. I was just try to point out whatever else you are saving for besides the ef had to be pretty, important, a safety issue etc before you save for something besides the ef first.

Its kind of hard to answer because we don't know what the other things are.

[Greebo]

Allocate a set amount each month for your essential sinking funds - but when you have EXTRA money over and above the normal income, that extra goes towards whatever baby step you are currently on.

[Greebo]

Your emergency fund should come before you allocate money to unnecessary items. Personally, I feel an emergency fund should have 6 months, or more, of living expenses.

But this is the Dave Ramsey forum, and on the DR plan, BS1 is $1000.

[qsaver704]

Thanks Greebo!