Comments on: Does Your Safety Net Look Worn Out?

By: Marty

Marty — Tue, 29 Jan 2008 01:56:00 +0000

I am a SAHM of 2 with my husband finishing up his last semester of his Masters program. We move in 3 months. For right now we have 2K in a baby emergency fund and socked our 5k EITC tax refund check in a separate savings account (we are gearing up towards buying a house in 2-3 years). We also have 50K in student loans (down from 56K the previous year). I disagree with Dave Ramsey on more things than I agree with him but I started with the 1K emergency fund because it was a lot more acheivable than the 3-6 months expenses right off the bat (does anyone really know what COBRA will run them anyway?) I use ING online for these savings accounts and I also have their checking account so I can easily put funds into it. We save 10% of our income + tithe 10% and then sock an additional $100 away each month from what I am able to pull out. (We aren’t replacing most items in prep for our move). We live currently on 21K a year.

By: Amy

Amy — Thu, 24 Jan 2008 15:48:00 +0000

You guys are great! I am enjoying reading these and it is so great to see how each person tackles building an emergency fund. There is certainly no right or wrong way, it is just great to hear how everyone does it!!

By: Marva

Marva — Thu, 24 Jan 2008 13:34:00 +0000

Hi Amy! We have our vehicles and home paid for at age 31. We owe about $5000 in cc debt. We had our baby emergency fund in place and had to use it for one of the babies’s surgeries coming up. We love Dave Ramsey. I hope to get the $1000 back in place by the end of September. We save 5% of hubby’s check each week as well. We are a 1 income household. We had $18,000 in savings when the babies were born and cleaned it out in a matter of months for medical bills. So we definately want to start working on that again soon. I want to see 6 months worth of living expenses put away for hard times.

Every family is so different. I just think you have to do what is best for your own. Blessings on you and your endeavors!

By: Janessa

Janessa — Thu, 24 Jan 2008 13:32:00 +0000

We have a small emergency fund, about a months expenses. We have it in an Amtrust account because it gets a much higher interest rate then our bank savings accounts. If all goes well, we are about to eat through it when we refinance our home, now that interest rates have gone so low. So we'll have to build it back up again.

We actually go with the idea that paying off debt is like saving. Now we only have a car payment (that we are dumping hundreds on to, kinda fun!) that we have to pay off because we would just go upside down if we tried to resell it to get a bigger one.

And a house payment. I haven't worked since my daughter was born, so when we went to look for a house, we budgeted without my income. And then budgeted below what the bank insisted we could pay. That was a huge relief, not to have that pressure of me needing to have income. It was a little tight at first, although mainly just because we were spending money un-frugally.

Anytime we look really closely at our income vs. expenses, we realize how much God is providing. Even with our more frugal living (no cable, one car, husband rides bus to work, etc.), we should be in so much more debt then we are!

In the end, our goal is to be debt free as quickly as possible. When my husband got a new, steady job after buying the house, we put any increase in salary towards our car.

By: Miranda

Miranda — Thu, 24 Jan 2008 11:47:00 +0000

Amy,
So glad to see you posted this topic. In our house it seems we get our baby fund in place and start working on our debt only to be flooded by a down pour that uses up our baby fund and we have to start all over again! I’m looking forward to seeing what works for others… we need to try something new!

By: Guitar Widow

Guitar Widow — Thu, 24 Jan 2008 11:24:00 +0000

Amy – we know how hard it can be going through job loss. In my seven year career out of school, I have been laid off twice. One time, my husband and I were both out of work We worked for the same company – never again! It is our savings and living below our means that got us through those difficult times. The math never seemed to work out even with cutting our bills (no cable, no cell phones) and a $600 a month COBRA bill - God always provided.

Now we are working towards 6 months living expenses. I have this money in an online savings account, a money market account and bonds. I track our expenses and watch our budget. Every year it is my goal to try to reduce our bills as much as possible. By replacing our light bulbs with CPL, I learned I saved us 20% on our electric bills compared to the previous year! I also have a game plan of what can be cut immediately if we needed too – VOIP phone, and the YMCA membership are just two examples (still no cable – yea!)

I agree with you – get your emergency fund built up and then put money towards paying down your debt.

By: Rachel

Rachel — Thu, 24 Jan 2008 10:44:00 +0000

We, too, are working through the Dave Ramsey steps and are currently on working at getting to a point of having 6 months of expenses in an accessible savings account. We have one with a small balance through our bank and our larger one through ING. It will be great to get that cushion built into our lives. However, in reality, it is likely that our van will die before we can save for that as well and our emegency savings will have to be used for that. My husband has always contributed to his matched retirement account and we started the college funds long before we started the Dave Ramsey stuff, and we are not willing to stop contributing to those things so savings is going a little slower for us than if we had held off contributing to those accounts until we had a fully funded emergency fund. Oh well, do what you can and I agree with a previous commenter, go with a plan that will motivate you and your family. The only way you can really lose is if you don’t have a plan and implement the steps to get your family where you are now to where you want to be financially. Just keep chipping away!

By: Tracy

Tracy — Thu, 24 Jan 2008 09:33:00 +0000

Hi Amy-
We mostly stick to Dave Ramsey here although since we live in a church parsonage and don’t have a house payment we moved our student loans to the “pay off the house” step. Our loans have a tiny interest rate (2%) so we are paying off our consumer debt with our extra money. The amount we save and roll into debt is a significant amount each month so generally when an emergency comes up that’s pretty large we use that extra along with the savings account.

By: Stephanie

Stephanie — Thu, 24 Jan 2008 08:57:00 +0000

Well I really think it comes down to what you are comfortable with. NO formula is right if it makes you stress.

Personally we keep $1-2K in savings. Tim's income drops in the summer, and we do draw on it then. I feel comfortable with the small savings. I can't stand to see how much goes out in interest monthly, and want to be rid of that drain on our finances.

Tim's never been completely without work, but we have had extremely lean years when he was doing odd jobs while looking for a better job. At one point (with two kids)he was only earning about $100/week and we got $600/month rent from the other half of the duplex we lived in.

In those times we cut back to bare essentials. I prioritized the bills and paid the mortgage, utilities, and got groceries first, then anything left went to meet the minimum payments on other stuff. It was tight and sometimes stressful, but we got through it, and I learned a lot of frugal tips then!

If we were in that type of situation again we would handle it the same way. Though I think we live pretty basically now there certainly are places that could still be trimmed in an emergency. I am confident we could meet the bare essentials, and if other stuff didn't get paid, well it isn't ideal, but I'm willing to take that risk to try to get rid of the debt now! By lowering our debt now I feel we are in a better position to handle financial stresses.

By: Anonymous

Anonymous — Thu, 24 Jan 2008 07:59:00 +0000

We followed Dave’s advice somewhat. We did pay off all mortgage debt and are now working on our big emergency fund. However in our situation, my husband’s job is very stable, and by having paid off all non-mortgage debt we can live on his income alone if we have to. That was our goal because my own job as software engineer isn’t stable. Actually, part of my job instability is the fact that I am only willing to work part-time, so I only work while my kids are in school and the reality is that I have been with the same company for 9 1/2 years! The IT field is always uncertain, though. Where we strayed from Dave’s plan is that we always have contributed to our retirement accounts, and have a considerable amount there that we could tap into in a real emergency. I don’t think you should ever try to deny the emotional aspet of your finances. If it makes you feel more secure and more motivated to increase your savings before paying off debt, that is what you should do. It’s kind of like exercise: the best exercise is the one that you will DO.

Sheila