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I joined here last year and I have been looking for a while on the forum and have posted a couple of weeks ago on the 'Welcome Wagon'.
When I have been reading the posts - and getting a LOAD of inspiration at the same time - I noticed something that I have to ask.

There are a lot of members with - for example -
an emergency fund
a car repair fund
a gift fund
etc etc.

In a lot of cases there is also a list under this with the various debts
credit card
student loan
etc etc.

Now here are my questions (please be patient with me since I am new to this and I have a LOT to learn).
How do you decide whether or not to put money into paying off a debt or to build up one of the funds.
Also how do you decide which fund needs to be built up at that time?
Say for example I have 10 Euros left over from grocery shopping (I wish!!!) -
where would I put it? Would I split it up over the various 'funds' or just leave it in the account or even put it into a savings account?

(See how much I have to learn - I have no clue - but I DESPERATELY need to get this organized!!!)

Any input would be more than welcome - plus any tips - please!!!!
Thank you.
 

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8,714 Posts
~Welcome to FV! Alot of us follow Dave Ramsey's system. He has written several common sense financial books. I personally read "Total Money Makeover". He breaks down his system into 7 baby steps.
#1 is save $1000 for an emergency fund.(don't know how that translates to Euro)An emergency fund is for car repairs and appliance replacement and deductables on a an insurance claim. Basically a stash of ready cash so you won't have to use a credit card in an emergency.
#2 is pay off all debts other than your mortgage. He uses a technique called snowballing. Start with your smallest debt and throw all your extra money at it while making minimum payments on your other debt. When the small debt is paid, add the payment you used to make to that debt to the next debt and pay that one off.
#3 is saving between 3 months and 1 years worth of living expenses in liquid assets. You decide on the level of security you desire. I'm saving 6 months worth because we have only 1 income and 2 small children.
#4 is saving for retirement.
#5 is saving for college for your children.
#6 is pay down your mortgage.
#7 is to build your wealth now that all your debts and obligations are met and then give it away to those in need.
HTH!!!!~
 

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It depends on how much I have on hand. I see the logic behind Dave Ramsey's method. As a single parent though with unreliable child support I divide mine up by percents- 5% goes into each kid's savings account for unexpected school expenses, 10% goes into my emergency fund (it is at the $1000 DR recommends for baby step one but I keep adding to it as my car is old and the kids have needed a ton of medical and dental care), 60% goes toward debt and 20% I spend. The "spend" fund is usually placed in an envelope until there is enough for me to buy clothes, shoes, etc for the kids. This has helped me walk away from using the credit cards.
 
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