The Total Money Makeover: Save $1,000 Fast

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This is the fifth of twelve parts of a “book club” reading and discussion of Dave Ramsey’s The Total Money Makeover, where this book on debt reduction is teased apart and looked at in detail. This entry covers the sixth chapter, finishing on page 108. The next entry, covering the seventh chapter, will appear on Saturday.

ttmmOne thing that Ramsey excels at is urgency. His entire persona, from his written words in the book to the things he says on the radio, practically demand urgency. “You have to do this now.”

He’s right, though. If you’ve found yourself in a personal finance situation where everything falls apart if you lose your job tomorrow, fixing the problem is urgent. You’re being utterly held hostage by your job and by Lady Luck. Too many people find themselves in this situation and view it as normal.

If you lost your job tomorrow and had the engine fall out of your car the day after that, could you survive for three months without work and still hit all of your bills and get that car on the road? If the answer’s no, it is urgent. You’ve got to change something.

Baby Steps?
Dave lays out the importance of baby steps for pretty much any major life initiative, on page 93:

They way you eat an elephant is one bite at a time. Find something to do and do that with vigor until it is complete; then and only then do you move to the next step. If you try to do everything at once, you will fail. If you woke up this morning and realized you needed to lose 100 pounds, build your cardiovascular system, and tone your muscles, what would you do? If on the first day of your new plan you quit eating, run three miles, and lift all the weight you can lift with every muscle group, you will collapse. If you don’t collapse the first day, wait forty-eight hours for the muscle groups to lock up and the cardio to go crazy, and you will be bingeing on food shortly thereafter.

I’ve written about this phenomenon on my personal blog, where I sometimes write about the challenges I face getting in shape. It’s absolutely true: you’re far better off taking steps that are too small than steps that are too big, because those giant steps are the ones that are likely to make you trip and fall.

This basic idea applies to anything you want to do in life. Want to be a writer? If you get up and start in on a schedule of pumping out 4,000 words a day, you’re going to burn out quickly. Instead, just practice the craft and write short things. My writing practice, to tell the truth, is often on Twitter – can I get across an interesting idea in 140 characters? Doing so improves me as a writer.

Want to be a golfer? If you start playing 72 holes a day, you’re going to get sick of it fast (and probably tear something). Instead, just focus on smaller tasks – go to the driving range for two buckets. Build your skills slowly and don’t burn out.

It’s true over and over again: baby steps work. I think the big reason people don’t do this is that they want results now and then they way overdo it, undoing any good they might have done.

The Power of Clear, Written Goals
Written goals are vital at every stage and in every aspect in life. From page 98:

Brian Tracy, motivational speaker, says, “What does it take to succeed on a big scale? A tremendous God-given talent? Inherited wealth? A decade of postgraduate education? Connections? Fortunately for most of us, what it takes is something very simple and accessible: clear, written goals.” According to Brian Tracy, a study of Harvard graduates found that after two years, the 3 percent who had written goals achieved more financially than the other 97 percent combined!

Writing down your goals makes them real – and makes them powerful.

I’m going to admit something here, something fairly goofy. I usually have somewhere between five and ten personal goals going at any one time. Each of them are very action-specific: “I am going to run a 5K by the end of the year.” “I’m going to write a truly great book.” … and so on.

Each day, I write down each of those goals, pen on paper. Seriously. Doing this every day hammers those goals into my mind and I see those goals in every action I do. Three of my goals are health-related right now and I can’t help but see them when I make a decision about what to eat or what to drink. I look in the fridge, the goals float through my mind, and I choose a spinach salad for lunch instead of a grease-filed choice.

It works. Without this, I wouldn’t have made The Simple Dollar work. I wouldn’t have written a book last year, and I wouldn’t have been well into writing another book this year. I wouldn’t be able to read two challenging books a week. I wouldn’t be a good father – or at least not as involved as I am.

Get Current
There’s a big baby step before you dive in on the $1,000. On page 101:

Before we get to Baby Step One, you will have to do one other thing. You will have to be current with all your creditors. If you are behind on payments, the first goal will be to become current. If you are far behind, do necessities first, which are basic food, shelter, utilities, clothing, and transportation.

If you’re behind on your bills, you have to get caught up before doing anything else. Doing anything else puts the cart completely before the horse.

Many people think it’s “impossible” to get current once they reach a certain disastrous level. That’s usually not true, but you’ve got to be proactive. Call up the people you owe that you’re late with and start negotiating. They’re going to listen because it’s in their best interest to listen – if they don’t, they’re not going to get anything out of the money they owe you if you run away or declare bankruptcy.

No situation is impossible, particularly if you’re willing to step up to the plate and try to take things on head first.

Baby Step One: Save $1,000 Cash As a Starter Emergency Fund
Why $1,000? Why not dive into paying off debts? Dave makes a good case for emergency funds on page 102:

It is going to rain. You need a rainy-day fund. You need an umbrella. Money magazine says that 78% of us will have a major negative event in a given ten-year period of time. The job is downsized, rightsized, reorganized, or you just plain get fired. There’s an unexpected pregnancy [...] Car blows up. Transmission goes out. You bury a loved one. Grown kids move home again. Life happens, so be ready. [...] Now, obviously, $1,000 isn’t going to catch all these big things, but it will catch the little ones until the emergency fund is fully funded.

One of the most frequent things I hear from readers is that they don’t see any reason to not use their credit card as an emergency fund. “I have tons of credit left, so that’s my emergency fund,” they’ll say.

Here’s the problem with that: credit is not cash. Your credit line is completely at the mercy of the credit card company. Sometimes they slash credit limits. Sometimes they outright cancel cards. These things often happen right at the moment when you’re in trouble and most “need” that limit.

On the other hand, cash is constant. A big company can’t take your savings away from you on a numerical whim. If everything goes bad, your credit cards can go poof – but if you’ve saved up an emergency fund, it’s there for you.

What Isn’t an Emergency?
Another “problem” is that people substitute irregular bills for emergencies. On page 104:

Most of America uses credit cards to catch all of life’s “emergencies.” Some of these so-called emergencies are events like Christmas. Christmas is not an emergency; it doesn’t sneak up on you. [...] Your car will need repairs, and your kids will outgrow their clothes. These are not emergencies; they are items that belong in your budget. If you don’t budget for them, they will feel like emergencies.

An expense that you know is coming isn’t an emergency. You know that your car will need maintenance, so an oil change or a minor repair isn’t an emergency. You know your father’s birthday is coming up, so a gift isn’t an emergency.

The real problem here is information management. I think many people wind up treating expected things as emergencies because they simply lose track of that information. They forget that their father’s birthday is coming up, so they don’t put aside cash for it. They forget that their car needs regular maintenance.

What’s the solution to that? Dave points to a budget, but I don’t think that’s really enough for many people. I suggest using a calendar – if an irregular bill is coming up, write it on the calendar. Even better, write a reminder a few weeks ahead of it on the calendar, too. This way, you can see that irregular expense coming and can plan for it instead of going “OH NO!” on the day of the event and just throwing plastic at it.

Get It Fast
On page 105:

Twist and wring out the budget, work extra hours, sell something, or have a garage sale, but quickly get your $1,000. Most of you should hit this step in less than a month. If it looks as though it’s going to take longer, do something radical. Deliver pizzas, work part time, or sell something else. Get crazy. You are way too close to the edge of falling over a major money cliff here.

You’ve got to get hardcore, in other words. I think this works well for a short-term burst – like getting that $1,000 – but it’s not sustainable because to do it you have to upset the apple cart on a lot of behaviors and routines in your life – and that runs completely contrary to the idea of taking little steps.

For me, selling things worked well for this step. I had a big, fat DVD collection full of movies that I rarely watched, so I sold most of them off. I had a ton of video games that I either didn’t enjoy or had already defeated, so I sold them all off. I had a lot of CDs that I knew I’d never listen to again – off they went!

Those moves not only gave me that emergency fund, but it also kicked out some of the debt that was floating around. Even better, it freed up a lot of room in our tiny apartment – eliminating a bunch of non-decorative stuff that just caught dust did wonders for things!

On Saturday, we’ll tackle the seventh chapter – The Debt Snowball.

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29 thoughts on “The Total Money Makeover: Save $1,000 Fast

  1. Although I have yet to read this book… all the concepts are the very ones I have been implementing into my financial life as of late.

    The two biggest helps to me were establishing goals, and automating my savings.

    The wife & I sat down and formulated goals in all areas of our personal finances including, savings, debt reduction, budgeting, side income, cutting expenses. Reliance upon GOd, and successfully setting and maintaining these goals are the cornerstone of our successful financial 180.

    I thank Dave Ramsey for spreading these concepts like wildfire across the U.S. of A.

  2. I’m thinking about buying a 42″ Plasma TV.

    nevermind I change my mind. There, I just saved $1k.

  3. We personally found $1,000 to be small for a family of four living on one income. We built up our savings to a more comfortable level before starting the debt snowball, but it is still well short of a fully-funded emergency fund.

    I don’t think there is anything wrong with making slight customizations to Ramsey’s plan to fit your specific needs, but agree that to get the most out of TMMO one needs to stick to the majority of it as written.

    Looking forward to discussions on the debt snowball – my favorite section of the book!

  4. There is NOTHING like having a true emergency happen (the apartment flooding and having to be out of it for a while, my grandmother passing away and me needing to be at the funeral and away from work for a week) and being able to worry about the things that matter (Can I get a plumber? Is it safe to get to my bedroom? Is Granddaddy ok?) instead of worrying about how to pay for it.

    On the other hand, there’s nothing worse than having a true emergency and NOT having money for it (getting hit by a car while biking and not knowing if I could afford the copay at the ER, so I just went home and figured I’d go to my regular doctor in the morning).

  5. My brother comes home and over dinner starts to tell my family about how his classmate wants him to join her church. So he asks my family, all gathered around the table this question “if Jesus was the son of God, why did he send him to be crucified?” Being a non religious family we all kind of look at each other stunned and then my father says “it’s complicated, but let me show you my bible.” He then goes into his office and returns with this book. Dave Ramsey’s Total Money Makeover. Hilarious, and a damn good book.

  6. “I’m thinking about buying a 42″ Plasma TV.

    nevermind I change my mind. There, I just saved $1k.”

    That’s only true if you actually had the $1k in hand to spend on that television and then chose to put it towards some other goal instead.

  7. After reading this book earlier this year, the EF of $1000 was our first step (we were current on our debts, just have too much). We got a tax refund this year and put it into our new EF. It has already come in handy this year. Needed four new tires for the truck (thankfully got a good deal, $460 for four) and then the water heater went (another $300). Our mindset has been changed. Instead of using a CC, which we would have done in the past, we were able to pay CASH because we had an EF. Almost got it back up to $1000 again. It was a wonderful feeling being able to do that and not use the CC. Once we get our non-mortgage debt paid off (2011 is the goal) we will start beefing up our EF, but I’m really glad we at least have one now to take some of the worry off of us when certain situations pop up.

  8. It was amazing for my wife and I to see how fast we could save $1000 once we really made it a priority. The key to this is understanding it’s importance is keeping a minor incident from being a major tragedy by having something stashed away.

  9. Excellent post!

    I am so eager and desperate to pay off my bills that I wasn’t concerned about my savings. I actually just transfered all my ING savings into my regular checking account with the intention of paying down my highest interest credit card.

    After some consideration I realize that as important it is to lower my balance, it is more important for me to survive on a day to day basis if something goes wrong. If I lose my job tommorow and I don’t have a dime in saving, I’d actually be late on my rent. (Can’t use a credit card for that!)

    Thanks again for the post!

  10. The first time I built an emergency fund, it seemed difficult. I had to break some habits and redirect money to my savings.

    After different emergencies have popped up, it has gotten a lot easier. I sold some of my DVDs and games, set aside tuition refunds, and took on some side projects to get it done. It’s worth the sacrifice. Having an emergency fund has reduced stress.

  11. Although I’ve never been in debt before I’m a huge Dave Ramsey fan. His baby steps totally match with my views on money.

    I think the first baby step is probably the hardest for many people. It really breaks the habit of relying on debt and starts you in the right direction.

    -Gen Y Investor

  12. I think whether you successfully use baby steps or giant leaps has a lot to do with your personality and how much you end up enjoying this type of stuff. I skipped baby steps.

    When I became serious at the end of October last year, I minimized my expenses as much as possible without hurting my diet or health. This all became a point of pride and even a game to see how much remaining debt I could clear each month. There was also a vindictive element to my motivation. I imagined that every $1300 payment that made it to my card card account before the interest charge was like twisting the knife in the bank’s viscera.

    More than that I think keeping careful track of my expenses, making my monthly expenses and grocery shopping very routine in order to keep costs stable, and carefully tracking my debt repayment of all accounts on a single spreadsheet have been vital to my ability to keep it all going. That debt repayment sheet gave me an easy way to take satisfaction in the progress I made from paycheck to paycheck.

    If you can plan like this, leap into it. But also, our society encourages us to live extremely comfortable and complacent lives. By taking a truly honest look at what you need and don’t need while trimming expenses you can turn this kind of thing into a reinvention of yourself. That generates a lot of momentum.

  13. I think the $1000 is a bit low. This book is about 5 years old. I’d recommend $1500 and maybe and extra $250 on top of that for each child you have. I know this is just a band-aid emergency fund to stop the biggest disasters, but in these uncertain economic times you can’t live too close to the edge, even if its supposedly for the short term (until you pay off your debt and start saving a real emergency fund).

  14. We already had $1,000 saved, but I added another $500 just in case. I agree with the other posts that $1,000 is low. We also just sold our Tivo & Wii on Ebay to make another $500. After selling those big ticket items it’s hard to raise decent cash with smaller items to make it worth the time.

  15. I actually think the $1000 is high for some people. When I was a teenager, I went sailing with my borther & his room mate for a weekend. They loked at their wallets and counted about $40. They asked “Can we get into more trouble than that” (Hey, it was a long time ago).

    That’s what the $1000 is for. How much trouble can you get into in a short time? Blown tire on a car, doctor bill, etc. For people who are renting a home and such, $500 is probably enough. For a couple who own a home, truly require two cars, etc. $1000 might not be enough…

  16. Perfect timing!
    I was considering paying off my debt this month, but something has happened, or may happen, that has made me reconsider. May be it is better to pay that $20 in interest this month while beefing up the emergency fund. If no emergency happens, then I will have bought time (a month) or “insurance” at $20/month until I am sure that things will be okay and/or I wont regret paying off the debt instead of having enough cash on hand.
    Lifesaver, you!

  17. Another thing about the Baby Emergency Fund is that it needs to be agreed upon by both parties (for married couples).

    I’m pretty sure it’s in the Total Money Makeover, but it bears repeating. Your circumstances will affect how much of a baby emergency fund you build. Someone who works on 100% commission might want a slightly larger fund than a desk jockey. Women especially have a security gland that twinges when money gets low. My wife wanted a $2000 baby emergency fund. So that’s what we did.

    I realize that Trent can’t go into the fine detail of the book (after all, he has a life outside of blogging!), but I’ve heard too many people complain that $1000 is a) unattainable or b) too low to let this pass without comment.

    The point is to give your life an umbrella for when (not if) the rainy day comes. Later, you’ll build a hurricane-proof shelter.

  18. I have really been enjoying this series of posts!

    My husband and I have an “Independence Fund.” We used to call it the Emergency Fund, but it’s sort of a combo.

    The first few thousand dollars are an Emergency Fund, but everything we save in there after that is money that we think of as building our financial independence.

    When our jobs stabilize a bit (we’re new to our fields), we will invest more and keep less as liquid cash, but for now, it feels better knowing that we have a lot to spare as things come up.

    My latest post touches on the concept of choosing Financial Liberty, or “Not Always Living On The Edge Because That’s What Happens When I Don’t Make Actively Positive Choices.”

  19. I have been working the Dave Ramsey plan since Jan 2008. Starting with 13k in debt. First built the $1000 emergency fund and started attacking the debt. The beginning of this year I felt worried about my job security so I put on hold the debt payments and built up my EF to $5K (just about five months of living). I have only $2600 to go on the $13K before I call Dave and give my screem.

  20. Doug,

    You are exactly right! There is definately no “cookie-cutter” amount to be saved for an emergency fund. In our particular case we choose to work with $1000.

    We had over $90,000 in consumer debt back in 2003 when we started the Dave Ramsey plan. Within 3 years we had it all paid off, had a “fully funded” emergency fund, and had saved enough for a down payment on our new home!

    The plan really does work.!

  21. Trent-
    2 questions/ 1comment:

    1) We’ve begun the process, but do you have any resources that can help determine a more accurate amount for EF? $1000, though a good amount, seems inadequate to start with. I’m looking for info that might say; you have a washer and dryer, anticipate $100 of service, 2 cars, $500, and so on so that I can somewhat itemize my EF based on what I have that might cause the need to use it…understand me?

    2) I’m also at the point where I’m ready to “sell” things to get some extra cash…problem is overcoming the “this might be worth something” syndrome and the “it is too much effort to list all this stuff on ebay” syndrome. Any tips on overcoming that step?

    3) I’m also doing the “pay cash” approach to life now, but have hit a few snags. I’m gathering a list of things where “pay cash” hasn’t worked…my goal is to identify these things, then figure out how to get around them without using credit….here’s a few places where “pay cash” caused me grief;

    -gas station (I wanted to fill up with cash, but the station would only release the pump if I prepaid…but how do I know what to prepay if I haven’t pumped yet….this irritates me….I don’t want to ‘underfill’ and have to make another stop later….

    -post office after hours (I wanted to buy a book of stamps, but their after hours machine only takes credit/debit—grrrrr, I only carry cash now…wasted trip)

    -taking out cash for envelopes. (sometimes i need an ‘off’ amount like $5 or $10, but the ATM only allows you to take in multiples of $20…so it throws off the envelope a bit)

  22. @Dan – we were not comfortable with the $1K emergency fund, so we picked $5K, which is a lot closer to the “3-6 months” idea a lot of financial people recommend, and we feel it’s more appropriate for our life situation. When we started the program, though, we were current on all bills and had the ability (income) to save the $5K in a few months. If you have done a monthly budget, you should have an idea of what your monthly expenses are and can go from there.

    Also, if you are anticipating something, it’s NOT an emergency — it’s a budget item. For car repair, add up what you spent last year and divide by 12. Obviously, if you know you have something big coming up (tires, timing belt, other major service), the amount should be higher. We’ve found historically that car maintenance (not including gas) runs somewhere around $50-75/month per car over the car’s lifetime, and that’s with me doing a lot of the work myself. Tires, timing belts and brake parts are major factors in that number!

    We use the “pay cash” option combined with our debit card. Cash is great for controlling expenses you used to mindlessly charge. For example, I had a “Home Depot habit” once, and keeping a budget for home repair in cash has largely curtailed that. When we need to do a larger home project, we budget for it.

    For us, gas is more like electricity or heating oil — you use what you use, and the amount it usually pretty consistent month to month. Ditto for the post office. If you had a problem with buying too many stamps in the past, then I’d worry, but if you didn’t have a stamp-buying problem, I’d not really sweat it.

    For cash envelopes, we actually moved from an Internet bank to one with local branches. After we do our monthly budget, we withdraw the cash for the month from the bank using the human teller, and we can get whatever combination of bills we need. The bank we use has branches in the grocery store we shop at most often, and Saturday/Sunday teller hours, so this is not a problem since we usually go grocery shopping on those days, anyway, and the cash withdrawal is once a month.

    Also, once you start getting some change in your envelopes, the problem starts to take care of itself, as well. You can also ask a cashier to break a $20 bill when they have the cash drawer open, as well. Some places won’t do it, but most will. We also used post-it notes to indicate when an envelope was over or under, so as the month progressed, we could even things out.

    I think overall the most important part of the Ramsey plan is that it gets you thinking about your spending — and talking with your spouse (if you have one) about the financial goals. We deviate from the plan only after we talk about why we deviate from the plan, and understanding the trade offs. In the case of the emergency fund, saving more in it is trading time for more security.

    You might want to listen to the radio show or podcast for some other ideas. Dave sticks pretty close to the principles in the book, but will deviate from them when appropriate. For example, if your employer is not doing well and is threatening layoffs, he might advise you have a bigger emergency fund. Or if you know a big expense is coming up (you have to move, you will owe taxes, a child is being born, etc), he might advise saving for that and then resuming the debt payoff.

  23. Thanks J!!!

    Dave Ramsey’s plan ‘clicked’ for me when I found a free ‘snowball’ Excel spreadsheet, entered EVERYTHING, and realized I could have everything paid off in 7 years (including the house) without much effort.

    My biggest “LEARNS” were;

    1-I spent waaaay too much on food
    2-I was using CCs because I had no EF- I had no EF because I never budgeted- I never budgeted because my wife and I somehow grew accustomed to buying whatever whenever- YIKES! (that’s changed now, and spousal communication is getting better than ever- too bad it took 10yrs)
    3-We were current, but never getting ahead because I would always pay more than minimum on all cards, but would still have ALL cards with balances, very depressing! Then when CC companies started ‘violating’ terms (like raising interest rates on balance transfer offers, and removing the credit line) we felt the pinch. Dave Ramsey has it right, NEVER USE CCs AGAIN
    4-I modified our snowball- I’m attacking highest interest first on 2 cards, then a family member we owe (they like to guilt us all the time), then student loans, then the last couple CC’s with extremely low rates and low balances…and had to figure out what to do with all the “12 months 0% cards” we had (Lowe’s and Home Depot mostly) where all the offers expired at different points in the future.

    All in all, the last few months have increased awareness, communication, and a renewed vigor for life….i’m getting impatient, but the goal is now within grasp….82 months to go!!!!

  24. @Dan — good luck on your journey! Keep in mind that when you have only the mortgage left, there are some other important steps (retirement and kid’s college).

    We keep one credit card. I use it mainly to keep business travel separate from personal finance. We do not use it for day to day spending, the only time it comes out of the drawer is when I take a work trip, and we never carry a balance, ever.

    We also discovered along the way that we needed to save for a replacement car (probably 5-7 years from now) and my wife’s going back to school. This takes something away from our debt repayment schedule, but means we don’t incur any additional debt, so it’s all good!

    There has been a lot of discussion that Ramsey’s snowball isn’t effective (mathematically), and it seems you’ve adjusted to that. If you can deal with the longer psychological “payoff” of getting those things done, then paying based on interest rate does indeed make the most sense. For some people, though, I can see that they need a “win” quickly, or will be discouraged. It seems, though, that you are OK with a longer term payoff, which is cool.

    I wish you the best “weirdness”, because being “normal” sucks!

  25. Maybe Ramsey points this out somewhere else in the book, but it seems that there’s some conflict on the $1000 EF vs. a budget for predictable expenses, ie, what goes where.

    If I understand it correctly, the $1000 EF is in ADDITION to your regular budget. So rather than trying to estimate how much budget will be needed, it should be simpler to compile all expenses paid over the past year, then divide by 12 months–there’s your rough monthly budget, the expenses that are predicable and need to be planned for as part of regular spending. It’s not a perfect budget, but it’s the reality of your life, at least to this point.

    If you can project that you’ll need $3000/mo in recurring expenses like housing, auto, insurance, food, etc, but the 12 month analysis showed you actually spend $4000/mo, the difference of $1000/mo is either excess that needs to be trimmed, or it represents expenses that will need to be budgeted for, like repairs, holidays, etc., and part of savings apart from the emergency fund.

    Maybe personal finance has to be reduced to the simple “eat less/move more” principal of weight reduction (with all else mostly a matter of personal preference), so maybe “spend less/save more” and put all objectives and plans under that basic directive.

  26. 1 major negative event every 10 years? That sounds conservative (and optimistic). Either that or I have a high batting average! I’m almost afraid to count how many crazy things have happened to me and my immediate family in the past 6 years.

  27. @Dan:

    in response to your ‘pay-cash’ dilemma, i have found that by keeping track of your gas expenses for say, two/three months, that will give you a good estimate on what you spend. using that you can then budget for gas (pad it just in case). also there are different gas websites that can help you find the cheapest gas in your area. it works even better if the gas stations are in the general area of your daily/weekly route.

    i’ve just started listening to dave ramsey and i found that all that he talks about lines up with steps i’ve taken and research i’ve done. overall it’s a good program and the advice he gives is sound even though some of his comments can be dicey.

    re: cc’s. i haven’t had one since i paid mine off four years ago. it came in handy for gas and major expenses (car repairs) but when i couldn’t pay it off every month it went. now, the cc companies are trying to invoke a new rule. interest rates wont be fixed and they will be adjusted whenever the federal reserve decides to change interest rates. the consumer advocate group is trying to get that over turned. should be interesting.

    kristin

  28. For a lot of people I think $1000 doesn’t sound like a lot – especially if they’re dealing with imminent job loss or something along those lines. In those types of cases I think Ramsey might agree that’s it’s ok to stockpile cash while paying minimums. But in most cases and for most people $1000 should be more than enough. Say one month you have a car issue that costs $600 to pay for? You pay for it, and re-stock your emergency fund.

    We found that while we did have plenty of “mini-emergencies” while going through debt reduction, we never had one that was more than a few hundred dollars. Plus, add to that the fact that you’re going to be building a larger emergency fund down the road to cover almost any eventuality, and it makes complete sense.

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