To start our Total Money Makeover and our journey to be debt free, we are first supposed to save $1,000 in an Emergency Fund. This needs to be easily accessible, but not too easy! We are not supposed to dip into it for anything other than a true emergency. Dave Ramsey likes to use the transmission going out as an example. We have replaced transmissions in both of our cars in the last 7 months, so hopefully we won't have to deal with that emergency again any time soon! Also, both were over $1,000, which leads me to my next point.
I remember either reading or hearing Dave say before that if you have a lot of expenses you could save $2,000. We have three kids with large daycare expenses. I feel more comfortable with us having $2,000 in the Emergency Fund, so that's what we are doing. When it gets down to it, and I'm only $1,000 away from a big pay-off, I'll probably go ahead and splurge then to pay something off quicker, but for now, I like that cushion.
I actually already had a little over $2,000 put away for us in a savings account at our local credit union. It's not tied to a checking account or anything like that, so not too easy to get. I have to go down and physically make a withdrawal to use that money.
I went to the credit union last week and withdrew the small amount of money we had in savings over $2,000 and will use that up to start off Baby Step #2 - The Debt Snowball!
Baby Step #1 - The starter Emergency Fund. DONE!!!
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