I'm getting a little nervous about only having $1000 in my emergency fund. I know the reason that Dave Ramsey recommends that amount is because most emergencies will be under $1000. But with the car repairs (if the insurance hadn't covered them) being over $500 just for struts, that's a little too close for comfort for me.
I also think he recommends the $1000 so that it will spur you on to getting baby step #2 (pay off debts) done faster. I just feel like we're not really making much headway there because there always seems to be something else coming up.
I would really like to save another $1000 just to have a higher comfort level, but then it would be putting off getting the mortgage paid off even longer.
February 21st, 2008 at 01:06 pm 1203599202
February 21st, 2008 at 01:25 pm 1203600349
i have $12,500 (used to be $15,000 but had to spend some) and i have $9,500 in debt. why don't i use it to pay off the 3.99% amex? because i feel secure having it there in the case of unemployment or something along those lines! keep whatever you feel you need to be secure. I think "secure" it a relative term, applicable to each individual.
February 21st, 2008 at 01:39 pm 1203601198
February 21st, 2008 at 05:21 pm 1203614506
I will tell you something that I didn't realize when we started down the debt freeing road. I've actually learned this here on this forum. If someone has an open line of credit, that can be an emergency fund. Some reason that it is better to pay down debt that has a higher percentage that isn't deductible rather than having an account paying a small percentage that is taxable. Thinking realistically, there are items that you probably would want cash for.
You have never mentioned how high your interest rates are on what you currently owe. That would help alot and it seems like most of your debts are high ones right now and you wouldn't see any paid off for a while and maybe that's why you feel the way you do. Anyway, as others have said, you have to sleep tight at night and if this is something that would give you a peace of mind - it's your decision.
February 21st, 2008 at 06:48 pm 1203619720
February 21st, 2008 at 07:27 pm 1203622066
February 21st, 2008 at 10:23 pm 1203632620
February 22nd, 2008 at 01:38 am 1203644322
February 22nd, 2008 at 01:40 am 1203644430
February 22nd, 2008 at 06:33 pm 1203705230
February 22nd, 2008 at 06:39 pm 1203705583
The payments are highest on the biggest mortgage. The little one has our taxes escrowed into it and they're twice the amount of the actual payment. So even when it's paid off I'll need to continue to put the amount for taxes away to pay them when they come due. The interest rate on the small mortgage is 3% higher than the larger loan.
February 22nd, 2008 at 07:15 pm 1203707744
February 22nd, 2008 at 07:20 pm 1203708053
February 22nd, 2008 at 09:48 pm 1203716928
February 22nd, 2008 at 10:27 pm 1203719220
We did the split thing when we decided to start prepaying stuff and didn't have an emergency fund. I think it was David Bach's book 'Automatic Millionaire' that encouraged this - even though it doesn't make the best 'financial' sense, his idea is that you must do what let's you rest. And if that is paying some on the debt and putting some in the e.fund, then so be it. At some point in time you get to the crossover point where you've got a decent little amount in the efund and can then hit the debts hard.