Today, Jenn came by for a roast beef dinner and some time visiting. It was all wonderful and we did watch KU dismantle Texas Tech. As we talked, Jenn pointed out that the Talk Radio guy with the financial planning program talks about an emergency fund of $1,000. She said that this month that wasn't enough by half. It seems that her washer kicked the bucket first. This week that was followed by the water pump failing on her Jeep. It seems that the water pump can fail and it tends to eat things like the fan shroud and the fan clutch. Yep, $1,000 is about half of what a good emergency fund should be.
For me, it was a damn hot water heater failing and with parts it took about $600 to put it all back together. I do have a tendency to stock pile a little money up in the rental income account so this time I had enough. Throw in the Taxes last month and an insurance payment and $1,000 was about half enough. Dave Ramsey needs to rethink his guidance for the nest egg.
I don't know, I think $1,000 would typically cover it for us if we're on top of the bills and not spending a lot extra. There are those times when everything seems to happen at once and must be handled immediately, but usually $1,000 is about right. I think setting that initial emergency fund too high might be discouraging for people who are at the beginning stages of trying to get out of debt and manage their finances better, too. $1,000 can seem like a lot of money if you're already in debt. Maybe there should be levels. Once you get past that initial stage of eliminating debt and learning to manage your money and actually have an emergency fund, then you shoot for the next level of having double the emergency fund.ReplyDelete
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Good Thoughts Jenni. I think that having a fund that is too big might give people a false sense of security. Lets see if doubling the emergency fund as step four and then move on down the list. MUDReplyDelete
Just saying the new furnace min $1500 glad I put more in my emergency fund, love Dave but do disagree on that point.ReplyDelete
There is a lot to say about the costs of some of the essentials being covered in the amount of the emergency fund. It was a while back that Dave wrote his steps.ReplyDelete