baby steps Archives - Our Bill Pickle

Three reasons $1K is not enough for an emergency fund

Saving an emergency fund was the first things we did when we started paying back our debt.

The concept made a lot of sense to me: an emergency fund creates a cushion in your budget that helps you avoid accumulating more debt when unexpected situations arise. Sign me up!

But when I set out to start saving, I quickly realized there are very different opinions about the right amount to have in your account while you’re paying off debt.

For many, $1K is the standard and I can understand why. Keeping your emergency fund small means more money is available to pay off debt. More money to debt means you pay off the debt faster. It makes sense.

But, as the title suggestions, I don’t think $1K is enough for an emergency fund.

Why the 7 baby steps don't work in 2018

In 2018, we reached an exciting milestone on our debt-free journey: we paid off all our non-student loan debt.

Over the span of a year, we paid off about $17K of debt. That total included two credit cards, a car loan and a line of credit.

The more progress we make on this journey, the more questions I get about the process we have been using to destroy this debt for good.

Most people assume we’re following the Dave Ramsey baby steps. I understand why — it’s a popular plan, one we are very familiar with, so it’s a logical assumption to make.

But it’s only sort of true.

Reality is, while I agree with most of the baby step philosophy, there are a few areas where Dave and I disagree.

Real talk: $1K isn’t enough for an emergency fund

Disagreeing with Dave: Our modified baby steps