Dave Ramsey has been a huge influence on us. Alllowing us to become debt free and building an emergency fund and paying for our latest car in CASH!. We are currently working on steps 4, 5 and 6. Here is one of Dave questions and answers from our local newspaper.
Dear Dave,
At the moment, I’m single and earning only $20,000 a year. I expect that to increase to $30,000 next year. Do I really need $1,000 emergency fund in the bank, or can I get by with $500? I have about $38,000 in debt right now, including student loans.
I’m just wondering how to keep up with bills while I’m trying to save this money for my emergency fund.
Jane in Johnstown, PA
You’re at a point where you really should have an emergency fund of $1,000. It will be a little tough, but that will be your first big goal. Make sure you do a monthly written budget, which will help you control your money. That is how you can keep up with your bills while you work to achieve this $1,000 goal.
To make a monthly budget, you need to spend all of your money on paper before the month begins. For instance, if you know you’ll get two paychecks during the month that are $750 each, then you go ahead and plan out how you’ll spend that $750 before you ever get it. Take care of necessities first – food, shelter, clothing, transportation and utilities. After you’ve taken care of that, make sure you’re current on your debts. Once you’ve done that, put every spare dollar you can squeeze from your paycheck into your emergency fund. Keep all of your spending to necessities only.
Do all of this with a sense of urgency. Do it fast, in a couple of months. Remember the old saying about Murphy’s Law? If you keep hanging out there with no plan and no emergency fund, Murphy will hunt you down and move into your spare bedroom!
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