Emergency Fund question

**mom2hancj** · 01-25-2007, 06:44 PM

Ok would it be wise to start and EF and start saving if we have a ton of debt? Most of our debt has come b/c we didn't have $$ for emergencies...like car repairs or a washer and dryer. I thought of maybe putting away $100 a month for an EF and about a $1000 on debt...which is doable in our budget.

**tlenad** · 01-25-2007, 07:15 PM

I have a lot of debt too and I have have an EF. I figure I need a little insurance for when things happen. I'm currently trying to get it to $1000.00 that's what Dave Ramsey suggests. I found when I didn't have an EF, something would happen and I'd have to resort to the CCs again and I never seemed to make any progress.

**cheappearls** · 01-25-2007, 07:46 PM

You should be putting money into a EF but only a small amount until you get debt paid off. The interest rates for debt are a lot higher then interest on a savings account.

**Amanda W** · 01-25-2007, 09:25 PM

We've been following the Dave Ramsey plan, and he suggests establishing a $1000 emergency fund before paying down any debt. Then you can snowball all extra money towards paying down your debt without having to worry about emergencies. After paying off all debt except the mortgage, you can complete your EF with 3 to 6 months worth of expenses. It's really worked well for us so far.

**FrugalMomof3** · 01-25-2007, 09:32 PM

If your doing the TMMO, Dave suggests that you do the EF FIRST then the snowballing debt, but you personally have to do what you feel is right for you, if you can snowball $1000 a month debt, that shouldn't be hard to build the EF to $1,000 then start getting that yucky debt outta the way

Once you've got your EF to $1000, take that $1000 + $100 and put it all towards debt/CC's every month, wow you could get rid of those CC's/Loans in no time flat, we are rooting for ya!

**mom2hancj** · 01-25-2007, 10:20 PM

Thanks you all! I know I can get there...just gotta buckle down.

Ok on Dave Ramsey..I went to his website and it looks like the only info I can get is if I buy a book or something...can I get any info for free?

**dcompton** · 01-25-2007, 10:27 PM

See if you can get his Total Money Makeover from your library. There's often a waiting list for it, but you'll find it worth the wait.

**Emerald_Mommy** · 01-25-2007, 10:36 PM

You can also listen to his show online for free (or it may be on a radio station near you.) I highly recommend his strategy - it has worked for us!

**mom2three** · 01-25-2007, 10:37 PM

Check out the library for the Total Money Makeover or another of his books. Check under Dace Ramsey in this section of Frugal Village. You can listen to him for free from his site (the free version has commercials) and the baby steps can be found at http://www.daveramsey.com/etc/cms/in...ContentID=2867. My hubby and I had this discussion as well. In the end we agreed to save $1000 in an EF. When the first emergency came, we had ~$500 saved, but paid cash for the rest ($900 total). We decided to go for a little more and had $2300 put away when the transmission on the van went and another minor repair (just over $2000 total). In the past this would have been added to our debt and we would have been really discouraged causing more issues and the feeling that the hole is only getting deeper. Having an EF really helps my peace! My recommendation is to pay minimums on your cards until baby EF is funded,then snowball, snowball, snowball!

**Ani** · 01-26-2007, 10:55 AM

I would definitely recommend saving an emergency fund of at least $1000 right off the bat. That pretty much erases your need to ever use your credit cards again. Once you've done that, start paying off your debts. It's much easier to pay off debt and cut up those cards when you know that you have your own little safety net saved there for you.

**mom2hancj** · 01-26-2007, 11:43 AM

Our library has the Dave Ramsey book and it is checked in

DH is gonna pick it up on his way home for lunch.

We chatted last night and decided to build the EF first. We have done the same thing...where we try to buckle down and then have an emergency...dryer and washer needed to be replaced, and van needed repairs and we had to use cc. I think the EF would be wise...so instead of extra on cc and loan this month we will put $500 into EF and pay only minimums on the rest and then next month do the same. Til the $1000 is fully funded then snowball to the first cc or one of the loans...haven't decided yet...one is low interest and one is 0% interest for 9 mos but is a bigger balance.

**Leahmom** · 01-29-2007, 02:25 PM

Hi Guys
I would like to weighin here. We too thought no we need to pay debt etc. interest on debt is more expensive than interest paid on savings etc.
BUT...
If you have an emergency (a ? of when not if) and you have /0/ in EF and debt paid down. What can you do? Go Hat in hand and ask for more credit on the basis you have already paid XYZ? it does not work-trust me ..much to my dismay and horror.
We have a special needs child in family and this kids birth and hospital stay wiped us out and killed killed our credit. We spent every dime we had. Lost my job over my inability (or unwillingness according to boss) to market from childrens ICU ward. Gave up nice townhouse, let repairs on car go until kabloom car was a financial blackhole to repair. We moved into teeny apt and began taking the bus. We were living on charity-cash money people handed to us to buy food for other children. I was then unable to work because hey daycare for a medically failing child? Please We made 24.00 to much to qualify for financial assistance, could not move to cheaper area because dh was able to walk to job here and not need car. Let me tell you i am absolutely scarred from this. Not whining-just informing of the sheer difficulty. My other children were in a private school at the time- applied for scholarship and truly thought of taking them out and putting them in public-however considering that mom was living at the hospital, New apt- no friends here, dad was working round the clock and other families were watching them because we could not care ourselves for our family-they were emotionally freakin out LITERALLY! I make the decision to owe and keep them with the one familiar thing left to them. The scholarship committee informed us we literally had to have 0 in saving to get scholarship. Now..fast forward a few years (thank g-d- child is doing better and attending free public school, I am on 1/2 scholarship with school I work at a not so fancy job to pay my 1/2., As for saving- You Bet you TOOKUS we now have an EF. Because when it came down to it. You have to take care of yourself. Without an EF you are dependent on the kindness of credit organization and charity organization. The 20 or so dollars I pay interest is not offset my savings earning and who cares. Thats MY money- I can get it at any time, and the cost of it is morethan paid out in peace of mind and self suffiency. PLEASE hear me and get your EF in place. It is all you have between you and the rabid, hungry wolf at the door. Really...
Leah
Stronger and Wiser now...