A few of my favorite blogs have written about emergency funds recently and far be it from me to let a bandwagon roll by without jumping on it. Step 1 of Dave Ramsey’s Total Money Makeover recommends saving up $1000 for emergencies before continuing to step 2 of paying off debt. Step 3 is when the more traditional 6 month emergency fund comes into play.
I’m not above disagreeing with Ramsey on some matters, but in this case, I absolutely agree.
In fact, in a case of great minds thinking alike, I first instituted Dave Ramsey‘s first Baby Step long before I ever read his book or even had heard of him. Back in 2009 when I first started to get my financial life in order, I proposed to my wife that we include in our checking account a buffer to ensure that we would always have enough to pay the bills that were due on any given day, and be able to cover any surprises or mathematical errors in our budget.
My wife agreed and we quickly built up our “buffer zone” in our checking account. My wife has come to take the idea very seriously and gets very upset if our balance drops below $1000 which will happen from time to time due to cash flow.
This buffer has been a godsend for us. When our central air conditioning unit went out just weeks after we bought our place and just as temperatures started to warm up, we were otherwise pinched for case, but had a fund to deal with such emergencies. When I was in an accident last year and totaled my car, the emergency fund stepped up to the bat and provided the cash to buy my Prizm for $500.
Do you have the beginner Emergency Fund that Dave Ramsey recommends? Did you get the idea from Ramsey or somewhere else?
- Dave Ramsey’s Total Money Makeover Baby Steps – Revised! (heallovebe.wordpress.com)
- Dave Ramsey (frugalmiss.com)
- DAVE RAMSEY: Good financial shape still requires emergency funds (gosanangelo.com)