TMMO Step 1 / EF Fund question?

**FrugalMomof3** · 11-07-2006, 07:36 PM

Ok I am on step one of the TMMO and I have a question, Dave says that if you have an income of less than $20,000 to just have a $500 EF, did he mean take home/net or gross per year?

I ask because DH take home is just a tiny bit over $19,000 and if I make my EF $500 then I only have $60 more to go to fully fund my EF and go to step 2.

Now about Step 2 that is about Snowballing debt, I dont have any CC so should I go to Step 3? Finishing the EF?

Any ideas on this?

**my4littlebuffaloes** · 11-07-2006, 07:47 PM

I would keep a $500 EF for now, unless for some reason you feel $1000 would be more adequate. I know I started with $2000 in mine, my kids seem to have medical issues. But if you have had no EF up until now, $500 would probably be OK.

What are your debts? Do you have any - like car payments, student loans, etc? Those would also be included in your debt snowball. If you have no debt except your mortgage, then the next step is to build a fully funded Ef.

Congrats on getting your EF started!

**FrugalMomof3** · 11-07-2006, 07:50 PM

Hiya and thanks!

Right now I have $440 in my EF (I am so proud) and the only payments we have is the mortgage, no car payments, no student loans, no CC's right now I feel comfy with $500 and then when income tax comes I will put an additional $500 in there, I mean I WONT stop saving I will continue to put $40 bi-weekly in but to know I am at $500 makes me feel comfortable.

**Gotonenerveleft** · 11-07-2006, 10:07 PM

Step 2 is non mortgage debt, so you would be moving on to Step 3 which would be the Fully Funded Emergency Fund. Paying off the mortgage is Step 6 coming after Retirement and College Funding. After the Emergency fund you could start paying off the house if you chose not to work on the other two right away. I probably would be so antsy to get the house paid off.

You need to be proud of yourself. It wasn't so long ago that you started your BEF and look at you now!. So very close to where the rest of us long to be......DEBT FREE!!!! Keep pluggin away!

**emily_hope** · 11-07-2006, 11:40 PM

Great job on the BEF! And wonderful that you have no debt besides your mortgage. We have our BEF and don't have any car payments or CC debt now either. So I am going to work on the fully funded EF. Good luck!

**Dolores** · 11-08-2006, 05:07 AM

I always consider it to be your net pay - a.k.a. after Uncle Same has had his way with you. I think you are fine with the $500. You are on track and that is the most important part of the process. I think the $1000 is just a nice round number and can be achieved without too much effort by most people. If he said that you need a $5k EF for Step 1, that would turn off a lot of people because it seems too far out of reach.

Dolores

**pammy** · 11-08-2006, 09:04 AM

No other debt besides the mortgage? COOL! Shoot, you're almost past step 1, gonna just jump over step 2 cause you have no other debt besides the mortgage, and you move on to step 3, fully funding the emergency fund (of 3-6 months worth of expenses). Congrats on not having consumer debt, you're ahead of the game already.

Been working on our fully funded emergency fund for a few months, gonna take a few more months. With step 3 done you can start hitting 4, 5 and 6 all at once. Can't wait for that (we are hoping to hit those starting January).

Love this plan!

**FrugalMomof3** · 11-08-2006, 09:20 AM

I am soooo excited about this, I think it's what keeps me motivated, I mean I am putting in an additional $30 into the EF today for a grand total of $470 WOO HOO! $30 more dollars to go.... I might even put that in on Friday if I have some extra cash, my goal is to put atleast $40 in the EF every 2 weeks.

What I do is act like it's another bill I have to pay. It's working too!

**northernmom2boys** · 11-08-2006, 09:57 AM

Does you dh have credit card debt?
Im not farmiliar with all the David Ramsey stuff but wouldnt it be better once you have your 500 in ef to pay off his debt if any?

**Buckeye5** · 11-08-2006, 11:05 AM

Great job, with no other debt than your house, start putting $$ aside for Step3. A little bit at a time does add up, and before you know it you have all of the EF Funds in place. Sounds like you are on the right path!!! I wish I was at your point, I 'm jealous!!!Anyway, great job.

**suzysaver** · 11-08-2006, 11:28 AM

Nice job Tracy, You even sound a bit more relaxed...and less stressed.

**FrugalMomof3** · 11-08-2006, 11:34 AM

Hiya everyone,

Well here's the deal with DH debt, I am not counting that BECAUSE I am saving up to move on, so I am trying to worry about myself and my kids right now and not his debt (He has $1500 in CC debt only and the mortgage). I am sure now understand why I dont account for his debts.

**northernmom2boys** · 11-08-2006, 02:23 PM

ohhhhhhhh now I understand .Good for you being able to get that much into ef.Sounds like your life is in for a big change soon
Hope everything goes well

**northernmom2boys** · 11-08-2006, 02:23 PM

One more question is the mortgage in your name too?

**FrugalMomof3** · 11-08-2006, 02:32 PM

northernmom2boys - Nope the mortgage is in his name only, although the deed is in my name I am not liable for the mortgage (I even asked the mortgage company this as well). If he doesnt pay the mortgage then they take the house, but it doesnt show on my credit since the note is in his name only. (I got myself covered, I made him refinance and I wasn't working so they only took his SSN and pay into consideration, I did this to get my name OFF the previous note).