1,000$ emergency fund relevant anymore?

[Nutria]

I agree that $1000 is an inadequate emergency fund when paired with the advise to cut up all your credit cards. If a major appliance goes out or a car breaks down, the person is left in a very tough, no-options position.

This is why absolutes are so often Bad Advice. When we decided it was time to actually face up to our foolishness and climb out of CC debt, I put the cards "away", and we used debit cards instead. If we really needed one, though, it was available.

But people like pat answers. Even those of us who also like deeper, nuanced discourse.

[ThinkingCapital]

Obviously saving $1000 is better than saving nothing, but I certainly wouldn't consider it adequate for most people for an emergency fund. You're right that one emergency (big repair, appliance replacement, etc.) will wipe this fund out and probably leave you short of money.

[bjl584]

I suspect that deep down, when the microphone is off, Dave would acknowledge that $1,000 isn't really enough, even for a starter EF, but he probably just doesn't want to change that number since he's been preaching it for so long, it's in all of his books, it's ingrained in his teachings.

Also, if he started preaching that you need to save up say, $5000, it would turn off a lot of people. $1000 may not be enough, but at least it is an attainable goal for most people.

[tripods68]

I'm a big believer in establishing EF. Before we started FPU & DR principle we had over $40K in cash/brokerage account available to pay off about $23K in debt. We paid it off in just over 2 months.


What I learned from attending FPU, most of them had established some cash set aside (I suspect about 80% of them had over $1000). The reason most of them were there, they were looking for a 'clear direction'. The common theme was "they didn't have the process" to be debt free. They had to relearn something basic, re-program their thinking. Having a clear path towards debt free were "unclear". They needed a "Game Plan". Having that game plan resonate to most people and why its becomes effective if its executed properly.


$1000 EF is really just a "safety" net (Baby Step 1) when they are getting ready to start tackling their "DEBT" (Baby Step 2). While working baby step 2 they don't add anymore debt. He advised everyone to CUT ALL CREDIT CARDS to avoid even a 'small' temptation. If the car breaks down, hopefully $1000 would be enough to repair, but then it forces you to adjust your budget to stop the snowball If repair exceed $1000. After that, re-establish the $1000, then re-start baby step 2. This is the process what most people "need" and most appreciate it working DR principle.


At the end of the day, its about making the "right" choice. If people aren't committed in tackling their debt and makes all the excuses in the world, DR principle will not help you.

[Nutria]

What I learned from attending FPU, most of them had established some cash set aside (I suspect about 80% of them had over $1000). The reason most of them were there, they were looking for a 'clear direction'. The common theme was "they didn't have the process" to be debt free. They had to relearn something basic, re-program their thinking. Having a clear path towards debt free were "unclear". They needed a "Game Plan". Having that game plan what resonate to us the most why its effective.

What strikes me is that people need someone else to tell them really obvious stuff.

I didn't have the process to be debt free either, but I did have:

• the will to dig us out of a huge mountain of CC debt,
• the will to figure out how we were in so much debt despite earning so much,
• a spreadsheet, and
• a lack of that disgusting "fear of math".

[41Fin]

What strikes me is that people need someone else to tell them really obvious stuff.

“Common sense ain't common.” ― Will Rogers

[Nutria]

“Common sense ain't common.” ― Will Rogers

If you're smart enough to make $40,000/year then you're smart enough to look at bank and CC statements. Add up income and subtract expenses.

Just. Not. Rocket. Science.

[dawnwes]

What strikes me is that people need someone else to tell them really obvious stuff.

I didn't have the process to be debt free either, but I did have:

• the will to dig us out of a huge mountain of CC debt,
• the will to figure out how we were in so much debt despite earning so much,
• a spreadsheet, and
• a lack of that disgusting "fear of math".

See, I don't really look at it this way.

I need to lose weight. I know what constitutes a calorie, and I know how to exercise. But being in a group, with like minded people, who are all giving thoughts, ideas, suggestions, etc....really helps me to focus better.

Does that mean I will order the salad with grilled chicken and low cal dressing on the side and not eat the bread every time I go out? NOPE!!!!!!!!!!

But it may help me to be more mindful of thinking about it!

DH and I taught a financial class called Crown at our church for several years. Can I just tell you that teaching it over and over helps you stay on track?

[Nutria]

See, I don't really look at it this way.

I need to lose weight. I know what constitutes a calorie, and I know how to exercise. But being in a group, with like minded people, who are all giving thoughts, ideas, suggestions, etc....really helps me to focus better.

Does that mean I will order the salad with grilled chicken and low cal dressing on the side and not eat the bread every time I go out? NOPE!!!!!!!!!!

But it may help me to be more mindful of thinking about it!

DH and I taught a financial class called Crown at our church for several years. Can I just tell you that teaching it over and over helps you stay on track?

You've just delineated the difference between needing to be told what to do (lose weight by eating less and moving more), and wanting moral support to keep on the right track ("the high school reunion is two months away!!").

"Moral support" is not what my rant was about...

[41Fin]

If you're smart enough to make $40,000/year then you're smart enough to look at bank and CC statements. Add up income and subtract expenses.

Just. Not. Rocket. Science.

I agree with you but if that was the case the Total Money Makeover wouldn't have sold 4 million copies. History has proven that people need help with plenty of basic things. Millions of weight loss & personal finance books get sold every year and both tasks are simple.

[Nutria]

I agree with you but if that was the case the Total Money Makeover wouldn't have sold 4 million copies. History has proven that people need help with plenty of basic things. Millions of weight loss & personal finance books get sold every year and both tasks are simple.

It depresses the hell out of me every time I think of it. So I don't!!

[Gailete]

a lack of that disgusting "fear of math".

Funny! When I was in college with nary a math class, when I needed relax
I would go over my budget. Adding and subtracting relaxed me, and yes, I know that is weird. I had a tiny plant that I had been growing and I would even count the leaves if I had nothing else to add or subtract. I obviously had no fear of math. I've mentioned many times that I worked my way through college which takes a lot of planning and scheduling to keep up with schoolwork. My room mates sister once asked me for how I did it as she was having trouble keeping up even without trying to work her way through. She had trouble comprehending what I considered a simple system. Problem if I had written a book with all sorts of diagrams she could have gotten it. But getting through college (before they became beer and party time places, etc.) takes some thinking and a plan, just like budgeting.

As to DR's $1000 EF, that is a huge amount to a drowning man and those on small salaries. My autistic son is a huge follower of DR. He turns 33 this summer and has no credit card although he does have a debit card. He has an EF in place, is working on paying off his car and school loans, ASAP. This is his first car loan as he isn't a car guy and would end up with heaps that died on him. But for his first few 'adult' years, saving that first $1000 was a long hard process as he was making less than $20K a year. I think perhaps that is why DR keeps the amount down as there are so many with low salaries drowning in debt partly because they have has low incomes and don't know how nor want to live frugally. They want what everyone else has even if they can't afford it. This was really brought home to me one Christmas as I was going to spend ~ $200 for presents and I heard another couple talking about their financial woes and how they had only spent $800 on Christmas! I was shocked, but it is an advantage to growing up poor as you know that you can make it on less than normal and that you don't have to go into huge debt for things like holidays.

[sv2007]

My personal thought on this is 2-3k$ minimum.

Emergency fund amount depends highly on your particular situation and comfort/risk tolerance. For example, are you single? kids? easily damaged?

If $2-3k works foryou, then that's a good number for you.

[Nutria]

I think perhaps that is why DR keeps the amount down as there are so many with low salaries drowning in debt partly because they have has low incomes and don't know how nor want to live frugally. They want what everyone else has even if they can't afford it. This was really brought home to me one Christmas as I was going to spend ~ $200 for presents and I heard another couple talking about their financial woes and how they had only spent $800 on Christmas!

I blame advertising for stoking our inborn greed and envy.

I was shocked, but it is an advantage to growing up poor as you know that you can make it on less than normal and that you don't have to go into huge debt for things like holidays.

These people are poor but drowning in debt.

[tripods68]

I blame advertising for stoking our inborn greed and envy.

What happen to Personal Responsibility? Nobody point a gun in your head. Right, maybe it was the "Joneses" fault.

Marketers do what they do best; market their product--the Exploitation of the Masses"