Nervous to go Gazelle Intense

**BertineC** · 08-15-2010, 04:04 PM

Alrighty then!

This weekend I had some downtime and figured now was a good time to start the process of becoming more responsible with my money- knowing where things are going, watching my spending, and being committed to paying off debt with the eventual goal of learning more about retirement planning and personal finances down the road. I have budgeted in time monthly for this task.

I've always been a budgeter and am fairly frugal, but today I sat down and REALLY sorted out my accounts and wrote everything down. The debt balance isn't surprising, and its plenty substantial, though not unmanageable to pay off in the next 8-12 months.

Today I've been working out payoff plans with various scenarios that would allow me to pay off the debt and how fast while still somewhat enjoying life; by that I mean joining an activity or two and learning to sew, not going out drinking!

My question: I am of the understanding that according to Dave you should apply everything above the Emergency Fund to your debts. When I do this I see everything shrink very quickly, with payoff by next March. I can establish a $1000 emergency fund now, and then apply $5200 to my debts, which, amusingly enough, would take out my highest-interest rate card completely.

However, I fear giving up that money. I went through a layoff in 2008, freelanced through up and down months in 2009, and just moved to a new town this year for a new job (that at least pays substantially more than my previous jobs). I don't like the thought of 7 months of only $1000 between me and nothing. One third of my debt came from last year and covering the lean months of freelancing, and I have some back taxes to pay (about $1500 worth). The company I work for now is very large and secure, far better than the previous two, but I know how fast things can change. But on the other hand- I just want this damn debt paid off!

What should I do?

**mateosbaby** · 08-15-2010, 04:29 PM

The baby EF can be whatever you are most comfortable with. We have $1000, but others on here I know have more, sometimes much more. It all depends on your comfort level.

Dave suggests $1000 because it makes you more intense with paying off that debt. It's good to have a little nervousness so you don't get too comfortable still sitting in debt. However, you don't want to stress yourself out and add health problems on top of that debt.

**Vanilla** · 08-15-2010, 04:47 PM

This is just me, IMHO, because of this economy, we (DH & I) have decided to only pay minimum to credit cards, cut back on all expenses, save up as much as we can. Then, later, much later, we can pay off the debt in full.

**frugal is fun** · 08-16-2010, 09:26 AM

I second the "do what makes you comfortable". Double it or even triple it and then start with the debt repayment.

**StanleyJohnson** · 08-16-2010, 09:34 AM

Due to economic conditions, we've made saving toward our 6 month emergency fund a priority over debt pay off this year

**Siebrie** · 08-17-2010, 10:59 AM

Why not go 50/50? I can understand your worries, and I think you should really take it seriously, because anxiety will influence your ability to make money.

However, gazelle-intense means gazelle-intense. Greebo can answer this much better than I can, but I think Dave Ramsey would urge you to take on babysitting jobs rather than joining the local theatre group at this point. (Unless they are paying you....)

**Greebo** · 08-17-2010, 11:34 AM

I would take $1,500 right now and pay off your taxes. The KGB...oops I mean the IRS...has no boundaries and can come in and TAKE your money if you don't address that right away.

If you're concerned about a future layoff, then I would leave the rest of your existing cash in place as your "Toddler Emergency Fund" then apply all otherwise unallocated income in your budget to debt reduction.

**ncarr** · 08-17-2010, 06:44 PM

I kept 2500 bef for the same reasons you stated.

**BertineC** · 08-22-2010, 08:03 PM

Thanks for all the responses everyone!

I decided to go with starting debt repayment with September and holding what I have now in an emergency fund (about 3-4 months worth), saving a few hundred a month, and having an additional few hundred for activities, car maintenance, and all those little expenses that seem to crop up. Obviously there is an incentive to limit those expenses. We will see how this goes until December and if the debt isn't disappearing fast enough then I will redistribute.

Greebo- I set up an automatic debit schedule with the IRS in April to pay the taxes (something like 0.4% interest) so it isn't as though I have been ducking the IRS! But, despite the low interest rate, I want that debt out of my life fast so that will be the first to go in September.

Has anyone noticed if Dave Ramsey has made adjustments to his plan given the state of the economy? It is one thing to create some anxiety to get yourself in gear when you have a relatively stable job or expectations to get another should the worst happen, but it is quite another to create so much anxiety that you can't sleep at night!