quote:
Dave Ramsey is simply out of touch with reality if he truly believes $1,000 is a good starter emergency fund. If anything, $5,000 is a good beginning to an emergency fund in today's reality. $1,000 may have been good enough to start with in 1995 or 2000 but not in 2015.

This was brought up on Dave's show a couple of times, his response was that if someone is already thousands of dollars in debt the probability that they can accumulate $5,000-$10,000 for an emergency fund as step one is small. Just like paying of the smallest debt first regardless of interest rate doesn't make mathematical sense it gives the person a sense they have accomplished something toward their goal, the $1000 emergency fund is used as a starting point because it is more likely to be achievable, and at the same time provide a little relief for small emergencies. When you have only debt $1000.00 can make a difference. In his plan if you are forced to use the emergency fund the debt payment should be stopped until the emergency fund is back to $1000.00 so that somewhat take care of the case of having multiple emergencies that exceed $1000.00.

This post was edited on 6/27/15 at 1:57 pm

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Posted by Ace Midnight

Between sanity and madness

Member since Dec 2006

89552 posts

Posted on 6/27/15 at 1:55 pm to King of New Orleans

quote:
I'm trying to pay a little more than the minimum payment amounts each month.

Does not compute with:

quote:
Dave Ramsey's techniques

The debt snowball is very, very specific.

You set aside $1000 in an emergency fund

You then arrange your remaining debt balances from smallest to largest (excluding mortgage). You drop all but the smallest balance to the minimum payment and you THROW money at the smallest balance until it is gone.

Then you go to the next biggest balance, taking all the money you were paying on the first one and pay it until it is done.

It works every time - works like a charm and will go faster than you expect.

This post was edited on 6/27/15 at 1:57 pm

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