Need input on direction of snowball...

**mom2hancj** · 04-13-2007, 07:33 PM

Ok so we are current on all bills, we have $1000 in BEF, and now will without cc or any other type of debt. My question is do we next do the Bigger EF then move to college and retirement? Ok on top of that we will be trying to save as much as possible to buy this house from my inlaws in a year. So do we focus soley on the house fund (they have given us a year to live rent free) or do we do the big EF at the same time or the big EF then work on the house savings. We can put about $3000 a month toward savings. Thanks.

**FrugalMomof3** · 04-13-2007, 07:59 PM

$3000 a month towards savings? Holy Moly, we dont even bring in that much a month, just about half that!

According to DR you need 3-6 months of living expenses then go on to retirement, college, etc...

I would split the $3000 a month 1/2 to saving for the house, 1/2 to the EF for 3-6 months of living expenses, you can even cut it to 3/4 house fund & 1/4 EF since you said you are living rent free for 1 year and assuming you only have regular bills like phone, cable, internet, electric, gas, etc...

**dcompton** · 04-14-2007, 09:30 PM

I agree with Tracy. I would split it between EF and house savings, in any proportion you want. Or maybe even put it all into EF for a month or two, until you build a comfortable cushion there, and then work more aggressively on the house. You know you have a year before the house is critical -- but you could, God forbid, need that emergency fund next week. I am a firm believer in the EF -- it can save your life. Retirement and college can wait a bit. These others are both more immediate needs.

**guest56464** · 04-14-2007, 10:56 PM

...wait let me pick my mandible off the floor.

$3000/mo. for savings?

I envy you.

**bumplett** · 04-14-2007, 11:12 PM

Baby Step #3 is: 6/12 months of living expenses
Baby Step #6 is: mortgage

I'd save at least 9 months of living expenses, then move onto the house.

good luck!

**mom2hancj** · 04-15-2007, 10:37 AM

LOL @ picking your mandible off the floor. Yeah our income is $5300 a month. With no mortgage payment that frees up a lot for savings. I need to come up with a budget once I know our expenses in the new house. The $3000 was just a ballpark, it could be more. The only expenses we will have are water, gas, electric, phone, groceries etc. I am not thinking that will add up to $2000 but it could.

I know DR says to go with mortgage as BS #6 but since we will be wanting to assume as small as mortgage as possible and put down as much cash as possible at the end of the year.

As I sit here, I am thinking we will work on EF first then mortgage. It is kinda like the snowball thing....if you focus on the one thing then that is knocked out faster. Thanks so much you all.

**Jill B.** · 04-15-2007, 01:28 PM

I just wanted to tell you that when I thought we were going to move within a year, I was told on another forum, that we should put everything towards that move. When a major life event happens or will happen, you should interrupt your debt snowball (or other plans) and save for that event. I did do that and was able to move without any problems. So, my advice would be $2500 towards moving and $500 towards Big EF.

**dcompton** · 04-15-2007, 05:18 PM

If you build a big EF, there aren't any EF police that say you can't use part of it for the house if you need too. Or for that matter, that you can't use the "house money" for emergencies should you need to do that. I think it is mostly important that you keep enough of it, whatever you earmark it for, where you can get to it quickly and without hassle for emergencies -- not all of it in CD's or something like that.

**my4littlebuffaloes** · 04-15-2007, 08:18 PM

I would put it all into one big savings account. If you have a true emergency before you purchase the house, you will have that savings there to use if needed. If you do not end up needing it, then you will have it for the house. When it comes time to purchase the house though, make sure you leave some in the account to be an emergency fund. I think 3 months should be fine, unless you are in a very volatile industry.