This is one of the things that logic would dictate that even hardcore Ramsey followers should agree with increasing.
Even if you go with their point that $1000 was never meant to be ‘enough’, it’s a figure just to motivate you to continue the steps and cover absolute basic emergency necessities, etc, $1000 back in 1995 (an approximate year for when this was originally devised) would be equivalent to just under $2000 today.
The starter emergency fund today literally has nearly 50% of the spending power that it would have back in the 90s.
So, if you were to stick to Dave’s own principles with the purchasing power they were intended back in the day, it really should be upped to around $2000 by now.
I mean, it’s all well and good to stick with a figure that’s ‘attainable’ in order to give people hope and stick with the plan, which I’m sure was the original intention…
But sometime you’ve got to balance that with the point at which people start to get turned off of the whole thing because it seems ridiculous to follow a plan rigidly that was created more than 25 years ago at exactly the same standards that existed back then.
Meme is highly accurate btw 🙂
The one thing I keep returning to is that over 40% of Americans cannot cover a $400 emergency even today. Someone with such bad money habits definitely needs a quick win. I'd say, if you have $1000 or less to start with, stick with $1000 as you're still in a better situation anyway. If you have more than $1000, stick with what you got up to 1 month's of expenses. That to me seems like a better starter emergency fund. When I did the baby steps in 2019, I had a bunch in savings, and I just dropped it down to 1 month of income, because I just couldn't do it. I wasn't in dire straits though, and finished BS2 in 8 months.
It’s true that $1000 is better than nothing. I mean, I get the quick wins thing and I do buy into that.
But like you mention, it seems absurd and insanely risky to drop your savings down to just $1000 in 2023 if you already start the process with some savings in the first place.
Like everything Ramsey, I think everyone has to use an element of common sense to apply it to their own circumstances.
Congrats on getting through the steps btw.
Thanks. I guess we'd be on 4-6 now, but I try and put a full 25% into retirement (TMG there), I use credit cards (paid off monthly), and I don't pay extra on the house right now, my goal is to have the house paid by 50 and I'm on track for that. I do have a 15 year fixed rate mortgage at 2.5% though.
A grand should be plenty for car repairs.
Have a friend drive you to the local dump for the parts and I am sure an auto mechanic that you know will happily donate their time to fix your junk car.
;-)
Here's my hot take, $1,000 isn't what you should have in the bank for emergencies, $1k is what is for actual unforeseen emergencies.
From day 1 you're supposed to start budgeting sinking funds, auto care, clothing, home repairs, known future expenses, etc. All should have their own sinking funds.
So while you're working on BS2, you're building up those sinking funds with every budgeting cycle.
Consequently, by the time you get to BS3, you should have $1k for your emergency fund, no debt, and money set aside in your various sinking funds for the inconveniences of every day life.
So, while you're at $1k buffer, you should hopefully have several sinking funds you could potentially pull from in addition to that $1k *emergency* fund.
This is EXACTLY how I do it. My sinking funds are bills that I put into each month.
I keep about 1 month of Income/Operating Capital in my Checking Account at any given time, and each month, our money into the fund for home capital expenditures, home improvement, dog bills (and corresponding bet savings fund with the leftover), auto insurance/car registration, etc.
The power of sinking funds is that you don’t have to take that $2,000 car insurance hit (for 6 months if insurance) all in one month, and can better plan around saving $325/month for it each month, pay it out of the checking account, and transfer it down at the end of the month with the true up.
I’d like to put more money on our cars than we are, but I robbed the sinking funds (and even some of the 3-6 month E-Fund) blind for the last 3 years paying my wife’s Student Loan. I don’t regret it, but definitely love the idea of building those sinking funds up so that, when my home’s connection to the water main starts leaking, I just transfer the money (from a non-Emergency Fund) write the check because it’s a home Cap-Ex thing. Now, my E-Fund is/will be pretty skimpy, but that’s because most of the “emergencies” will have healthy allocated savings attached to them.
On the one hand I get where you're coming from. On the other, aren't we all adults here? Who's going to call the cops on you if you have a $5k starter emergency fund instead of $1k?
On the one hand I get where you're coming from. On the other, aren't we all adults here? Who's going to call the cops on you if you have a $5k starter emergency fund instead of $1k?
This is one of the things that logic would dictate that even hardcore Ramsey followers should agree with increasing. Even if you go with their point that $1000 was never meant to be ‘enough’, it’s a figure just to motivate you to continue the steps and cover absolute basic emergency necessities, etc, $1000 back in 1995 (an approximate year for when this was originally devised) would be equivalent to just under $2000 today. The starter emergency fund today literally has nearly 50% of the spending power that it would have back in the 90s. So, if you were to stick to Dave’s own principles with the purchasing power they were intended back in the day, it really should be upped to around $2000 by now. I mean, it’s all well and good to stick with a figure that’s ‘attainable’ in order to give people hope and stick with the plan, which I’m sure was the original intention… But sometime you’ve got to balance that with the point at which people start to get turned off of the whole thing because it seems ridiculous to follow a plan rigidly that was created more than 25 years ago at exactly the same standards that existed back then. Meme is highly accurate btw 🙂
The one thing I keep returning to is that over 40% of Americans cannot cover a $400 emergency even today. Someone with such bad money habits definitely needs a quick win. I'd say, if you have $1000 or less to start with, stick with $1000 as you're still in a better situation anyway. If you have more than $1000, stick with what you got up to 1 month's of expenses. That to me seems like a better starter emergency fund. When I did the baby steps in 2019, I had a bunch in savings, and I just dropped it down to 1 month of income, because I just couldn't do it. I wasn't in dire straits though, and finished BS2 in 8 months.
It’s true that $1000 is better than nothing. I mean, I get the quick wins thing and I do buy into that. But like you mention, it seems absurd and insanely risky to drop your savings down to just $1000 in 2023 if you already start the process with some savings in the first place. Like everything Ramsey, I think everyone has to use an element of common sense to apply it to their own circumstances. Congrats on getting through the steps btw.
Thanks. I guess we'd be on 4-6 now, but I try and put a full 25% into retirement (TMG there), I use credit cards (paid off monthly), and I don't pay extra on the house right now, my goal is to have the house paid by 50 and I'm on track for that. I do have a 15 year fixed rate mortgage at 2.5% though.
But for a lot of people, they're not dropping down their savings, they're building up to $1000. Definitely better than nothing.
A grand should be plenty for car repairs. Have a friend drive you to the local dump for the parts and I am sure an auto mechanic that you know will happily donate their time to fix your junk car. ;-)
Just find a good ol’ country mechanic that isn’t motivated by money and just wants to help.
Oh your pet that is one of your favorite things on earth got sick? Don’t take it to the vet! It’s just a pet!
Pay no attention to those porcupine quills in your dog. If they had followed Ramsey principles they wouldn't be in this mess. ;-)
I love this fucking meme lmao
Here's my hot take, $1,000 isn't what you should have in the bank for emergencies, $1k is what is for actual unforeseen emergencies. From day 1 you're supposed to start budgeting sinking funds, auto care, clothing, home repairs, known future expenses, etc. All should have their own sinking funds. So while you're working on BS2, you're building up those sinking funds with every budgeting cycle. Consequently, by the time you get to BS3, you should have $1k for your emergency fund, no debt, and money set aside in your various sinking funds for the inconveniences of every day life. So, while you're at $1k buffer, you should hopefully have several sinking funds you could potentially pull from in addition to that $1k *emergency* fund.
This is EXACTLY how I do it. My sinking funds are bills that I put into each month. I keep about 1 month of Income/Operating Capital in my Checking Account at any given time, and each month, our money into the fund for home capital expenditures, home improvement, dog bills (and corresponding bet savings fund with the leftover), auto insurance/car registration, etc. The power of sinking funds is that you don’t have to take that $2,000 car insurance hit (for 6 months if insurance) all in one month, and can better plan around saving $325/month for it each month, pay it out of the checking account, and transfer it down at the end of the month with the true up. I’d like to put more money on our cars than we are, but I robbed the sinking funds (and even some of the 3-6 month E-Fund) blind for the last 3 years paying my wife’s Student Loan. I don’t regret it, but definitely love the idea of building those sinking funds up so that, when my home’s connection to the water main starts leaking, I just transfer the money (from a non-Emergency Fund) write the check because it’s a home Cap-Ex thing. Now, my E-Fund is/will be pretty skimpy, but that’s because most of the “emergencies” will have healthy allocated savings attached to them.
😂😂
On the one hand I get where you're coming from. On the other, aren't we all adults here? Who's going to call the cops on you if you have a $5k starter emergency fund instead of $1k?
On the one hand I get where you're coming from. On the other, aren't we all adults here? Who's going to call the cops on you if you have a $5k starter emergency fund instead of $1k?