Dave Ramsey Responds To $1,000 Emergency Fund Not Being Enough In 2023
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$1000 is not enough, but it's more than $0, which is where many people are. It's a great starting point.
Agree. Eventually they should adjust that for inflation as the 1k doesnât have the same buying power as when they started preaching this. That being said, I know they like to keep their message simple
@@toddh2000 Yeah they have addressed this before - I don't think they will ever adjust it. Maybe if Rachel takes over she will change things, who knows.
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Does Dave have to tell you everything? Increase it if you want.
Lol yeah idk why people are so upset about that particular step. It's not that deep. If it works for you, fine. If not, do your own plan
Yeah, building up a 3 month emergency fund while paying minimum payments on debt. After building up that reserve I am paying the debt off. This feels better for me and works also perfectly fine...
â@stefandebruijn6559 that's what I did too.
So many people act like they need his permission or blessing before they do something different. Dave's plan obviously works for many people so there's no way he's going to start making exceptions or the whole thing breaks down. But again, why does it matter to so many people if Dave won't budge on his principles? Just go do your own variation.
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I really think the $1000 is more about a mindset shift. Its amazing how many people don't have $1000 saved. I didnt when I learned about Dave's system. But when I got that first $1000 saved, it changed my entire financial world.
Exactly, If only more people understood this
Yes! Dave has mentioned this too. Itâs really life-changing to just learn how to adopt a saver mindset instead of just bleeding money between paydays like I used to do.
Yes it's about creating a small goal to demonstrate that it can be done, its to motivate your self
Agreed.
Yeah its more of a safety net.
I saved up $1k in about 2 months, and the very next month my dog was diagnosed with a small tomour that is going to cost $1500 for the surgery. That $1k gave me more hope and peace of mind knowing I just needed $500 more compared to the bigger bill. It's not the best saving, but it's a nice piece of mind to have $1k just there.
If you would have adjusted Dave's advice for inflation you would have had enough đ
@@thedopplereffect00 Laughing at a dog with a tumor - I'd be ashamed.
@@Tank-vi2dv I was laughing at Dave's bad advice.
@@thedopplereffect00 No you weren't - you were being a troll. Stop it.
Yep
What the saddest part is, is that since 2003 Americans still don't even save a thousand dollars!!
Not just Americans. The rest of the planet as well
â@tictac3147 Yeah, but my concern is Americans.
America first
Probably have less now than 2003
Being able to save the $1,000 is a psychological win. The first win a person can accomplish. That gives a push to follow through with step 2.
The trouble is that when callers already have more than that, say $5000, they are told to use up $4000 of it to pay down their debt so they're left with only $1000. So it's not about $1000 being a psychological first step; it's a religious fixation on $1000 as a magic number.
@@megalodon1726 The key is to not get into debt in the first place so you don't have to give up that $4000. Problem is people are entitled nowadays thinking they deserve everything
@@artandarchitecture6399 The best defence is always prevention as for example losing weight is more difficult than gaining weight. You can't cure stupid
â@@megalodon1726 I hear what you are saying. However, paying off that $4000 in debt psychologically is a win too. So, although it is scary, getting that win and feeling momentum propels most people forward. When I was coaching, I would tell my clients that they didn't have to reduce their savings immediately. I would tell them to first make a budget and start paying down the debt. In the end, there were some who felt that momentum and felt good about taking that $4000 (or whatever it was for them) and putting it on debt and others didn't. Either way they were winning.
Right. To help with the HABIT of saving.
My wife and I paid $50k in debt in 18 months, and the $1k emergency found helped us to keep the budget when I had to go to the dentist because of a tooth ache. Thank God for this program â€
Obviously you are both healthy and able to work
How much was your income?
@@user-rl2jh3wn4tweâll be healthy and able to work lmao sounds like a skill issue
My wife and I had $2,800 left to paid the debt after monthly expenses. @@JstShadowH
I pity Americans. A tooth ache is totally covered by our health insurance. Wouldn't have to cough up a cent. When will you all learn to vote for someone who brings in healthcare for all citizens. Imagine what you could achieve with a population that is healthy and looked after.
I decided to make my emergency fund about 2000 to cover one mortgage payment. Just in case any problem ever happened with my paycheck that month. That made me feel safer
Same
We like to have 5...we have had huge emergencies...more than most Ie heard of.
Yep exactly! Itâs about looking at what could really throw you out personally, and working with that, until youâre able to get out of debt and start putting a proper 3-6month emergency
same
â@@jessicabixler1658 this is starting off
Most of the people who are in the debt program never saved $1000 and that's part of the problem. So 1000 is a good even ceremonial number. It gives you some confidence.
Yep, you get it. Sad that so many don't. They justify it to themselves because they want to feel "safe", so they never get motivated by the real FEAR that having only $1,000 brings. A little fear is healthy! It motivates you to cut deeper, sacrifice more, and work harder.
I imagine anyone can think of reasons why their BS 1 fund should be $2,000 or $5,000 or $10,000. What they don't understand is feeling "safe" saps your motivation. Small, quick wins are what gets you moving and keeps you on pace to achieve any large goal. These are the same folks who think it's smart to start training for a marathon by getting off the couch and running 10 miles. They hurt themselves and it takes forever to finish, so they give up around mile 4 because their body simply can't handle the strain, so they never achieve that first goal. They need to start out running 2 miles.... then 4... then 5... and so on, until their body slowly adapts to the new demands.
Psychology is critical here. And keep in mind... don't take advice from broke people. 90% of the folks saying "Well, you don't understand MY situation" are broke. Take advice from wealthy people who got out of debt.
FYI, if you keep having to spend the $1K every year due to an emergency, then its not an emergency. It's an annual expense that you need to budget for.
Also, stop buying Christmas gifts for people when you don't have $1K to your name. Trust me, they will be happier not having to give you $1K after you made them feel guilty by reminding them of all the gifts you gave them.
If you plug $1000 into an inflation calculator from 2003 to today, it would be $1600 so you could save that if you are seriously a numbers guy but I think the $1000 is a great morale booster for people when they save it up.
Good Point!
Thank you for calculating the inflation for me
Right, but how much "safer" is $1,600 than $1,000? Not much. As Ken sad, if you end up needing $600 above your emergency fund this month, you can literally earn that by going down to the local temp agency and get a job for 10 extra hours per week at $15/hour. Those kinds of jobs are everywhere. 40 hours/month * $15/hour = $600. Problem solved... and now your SUPER motivated and might keep that spare job to super charge your baby steps. The next 1.5 months, you build back the BS emergency fund, then start hammering out debts in BS 2.
The cold hard fact is most people will give up on a new plan/lifestyle after 3 months if they don't see results. BS 1 is the quick win people need to see to get and stay motivated. Even pushing that off by 1 month could be a disaster psychologically.
Baby step one is also supposed to be a quick win. The whole debt snowball system is based around small wins compounding into big wins. The $1000 emergency fund is a win that people can get in the first couple months of this process, which helps motivate you to continue on.
If $1000 isn't enough people risk blowing through it and getting back into bad habits.
$1000 isn't enough to "not be enough".
It's a 2-10% quicker win every year!
I would think simply wanting to get out of debt would be enough motivation on its own vs mental games to try to get you to be motivated.
@@Ryan_DeWitt you could say the same thing about many things - weight loss, fitness goals, building new habits. It's not easy enough to just be motivated.
But he also tells people with more than $1000 to drain their savings. That makes no sense
I also think that when people start doing this , they see how fast they can save up 1k, and helps see the bigger picture of being able to pay off debt faster than they thought!
i heard dave say it before the $1000 is not only a tiny safeguard but, it is to help you start learning to save which i think is the main point of the first thousand dollars. worked for me !
When my wife and I started FPU, my wife looked at me and said she will NOT be comfortable with only 1K in the bank as emergency fund. We talked about it and came up with 5K as the number. This gave my wife peace of mind and gave me a starting point for implementing the FPU plan. The big thing people forget is the PEACE part of FPU. You can change the baby steps and increase the amounts if needed for established peace ( let's say in your marriage) during the process. If both of you are not on board, you will never read the destination you set out for.
So she went from $0 to $5k? đ
â@@Reindeer_jay where did he say that?
A lot of people have debt but cash in the bank.
đ€š
What does FPU stand for?
Financial PeaceâŠ
University
We started FPU when we got married and started with a $2k fund because we were new to this whole adulthood business and wanted to be extra sure our young butts were covered.
My wife and I did Dave-ish, in one small way. We followed his baby steps, except for we had a $3,000 baby emergency fund. The reason we did that was we had more than that in cash when we got married, but had $70k in debt. We just felt more comfortable keeping $3k instead of $1k.
I'm not saying we are right. Dave knows more about finances than we do. But it made us more comfortable, and we paid all the debt off in 11 months. In some ways I feel guilty that we deviated, but we also kept our head down and pushed forward. So I don't feel *that* guilty. :)
Thanks, Dave.
You reduced risk with the $3k
I did the same, I think $3k is the perfect amount and then paid everything off
Dave is not the be all end all authority on finances. If you have a lot of debt, he has some good ideas to help you reduce the debt. But, there is a lot more wisdom out there that will take you a lot further. Consumer debt is bad, but using debt strategically is a very powerful tool for gaining financial freedom. Don't discount debt entirely. Get spending under control, then research using debt wisely to acquire growth and income producing assets.
I feel like the BEST thing that Dave does is he gives a good skeleton of steps. Most people need something to discuss in their head to START to make a plan. Especially if you are married, altering the steps so both people are on the same page is a good thing. Forcing a discussion that might never have happened is better than demanding a dollar amount.
â@@cherylallis2458Dave Ramsey once tried leveraging good debt to make money from property. The property market crashed, and he lost a ton of money and went bankrupt.
Good debt is very risky, and it's best to just invest your own money.
I started with Dave four ago...I am debt free..and owe a small amount on my home...what ever you do stick to his plan it works,đ€
I have 100k saved and still feel like I need more and strive to save everywhere I can and work as much. Donât ever let go and get comfortable. Stash that cash and forget about it.
If you have 100k saved you're better off than most people, maybe take some of that and aggressively invest...jus sayin đ€·đżââïž
Only Dave has to ability to make me emotional about finances. He's a life saver
The pandemic taught most people that $1000 is not enough. What's stopping people from increasing the amount? Sacrifice if you have to.
People tend to forget that Dave Ramsey always said a fully funded emergency fund is 10k; however, as many have commented you can always play with the amount to suit your needs. Dave wonât jump out of his book or talk show to strangle you if you save more than than he states in the baby stepsâŠ.he might if you save less but definitely not more.
RenegadeElite101 haha, yes you r right
I followed Dave's baby steps, and now I'm investing $1000.00 a month into an index fund. My point is to use the steps as an infrastructure and detail it as you go. It's more about the mindset.
It's a psychological, mindset thing. To feel success, get rolling, get motivated.
I really donât think wage growth is the problem with inflation. Iâm sure itâs a piece of the pie but letâs not forget corporate profits are at a all time High!!
I came here to say that, the major problem is increased profits
Ken is pro corp. He blames the working class for everything
@@HHHPedigrees People like that will only learn when their own children struggles. Karma will come knocking
I remember when I was working way up north in early 2010's they were paying fast food workers around 20$/hourly. The prices were exactly the same as in any major city.... price inflation isn't because workers are making more it's definitely because corporations are making more.
Thank you, I came here to say this as well. We know it's not because people are making more. One place to find out more about this is following Robert Reich's email digests, and having taken his Wealth & Poverty class, the data tells you corporations are making bank and shifting the blame.
The baby steps are getting me and others where I need to go which is fantastic and I'm thankful all the same.
When I paid out 107 grand in debt, I did it with 500 in the e-fund - Ye that was 10 years ago
One thing I would add to the discussion .. Car insurance deductible .. if my car insurance policy has 1000 deductible, then I need $1000 in the e-fund .. if I get into a wreck I need my car to get to work
Thanks team Ramsey for what u have done n my life
There's always gonna be someone that says no matter what you say that it's not enough if he said 2000 they still wouldn't say it wasn't enough
Inflation is fricken rough, but we just bought a new tire for $95. 1,000 is a great minor emergency fund.
$95!! What a deal. Tires for my Audi RS5 were $800 each...and because it is 450hp 4wd it burns out both fronts real fast. I now drive a Mazda CX5!
$1000 is more than enough for just a couple years of getting out of debt. Cash flow everything else. I was one of the ones complaining about this and then realized that I didnât even have any money đ So I shut my mouth and went to work. Budgeting is critical.
Itâs never enough! I done it all and lost it all many times over! Just do whatâs best for you and your family.
When we finally saved $3K in emergency funds, it felt good not seeing the balance go close to zero after paying all bills for the month. If anything happened, we could at least buy something to eat.đ
When we finally saved 3-6 months of emergency funds, the thought of a job loss became less frightening. If anything happened, we could at least have a few months to find a job instead of taking the first thing we could get.đź
Now we are working on investments. If we end up reaching FI, it's going to greatly impact how we show up at work... if we show up at work.đ
A good place to invest an emergency fund is into Treasury bonds. During a recession (when you're most likely to need the money), the Treasury lowers interest rates, so your existing Treasury bonds with the higher rate become worth more.
So, your bonds become more valuable when you need the money the most.
I decided on having a $4k savings while paying off debt. Because sometimes you just never know what will happen. I agree $1k was never enough. It's an idea to have some money saved in order to save more.
Dave wants people to get motivated. That's the point.
Wasnât supposed to be enough! What a great answer Uncle Dave⊠itâs definitely a jump start of an ER Fund đ
Something else worth considering: as you progress through baby step 2, you tend to very quickly free up cash flow in your budget. With just 2 or 3 things paid off, you free up money that can used to supplement the $1,000 starter emergency fund. If those 2 or 3 things you paid off already are giving you $200/mo more in your budget, that really means during any given month, you have a $1,200 emergency fund. Later on in the process, when you've paid off dang near everything, you might have more than $1,000 worth of free cash flow each month, effectively doubling the emergency fund. How do I know these things? BS 4,5,6, EDM. It works.
Thatâs only true if the emergency isnât a job lossâŠ
@@rsafree1139 - That's a fair point, but when you're cleaning up a big mess, you can't be timid about it. I could see having a baby emergency fund of $2,500, in this day and age, but most folks use that logic as an excuse to not really attack debt aggressively.
I thought you were putting that extra cash flow into the next debt??
@@macuse2008 - You do put all extra cash flow toward the next debt, but IF you have an emergency you can often cash flow it by not paying extra that one month.
Dave teaches to have sinking funds for expected expenses. I have a BS2 car, so I know once every now and again I need to spend $500 for some random repair. I have that in savings in addition to my $1K. Plan ahead.
I'm a firm believer in having the 3-6 month emergency fund before tackling debt because you could face some dire circumstances if you lost your job, especially if you care for dependents. Also, I disagree with the sentiment that inflation is a problem mainly because of wage pressure and paying workers more. There's little discussion of corporate responsibility in inflation, as corporations are currently netting record profits.
Inflation is a combination of multiple factors. It kicked off with people having 18 months of disposable income saved up looking to renovate their home. Trades men more than doubled their rates blaming material costs and they haven't dropped. Then logistics increased their rates due to shipping shortages and lack of labour, the war in Ukraine driving fuel prices through the roof and finally everyone else demanding an inflationary pay hike. So wage inflation did not cause the initial price hikes but it will prolong them. No easy solutions other than increasing interest rates to cool consumer demand.
But what's the difference if you have a credit card? Why can't that save you in a dire emergency? We all use credit card for everything anyways. And you can always do a cash advance.
@@joebudd6716 using a credit card when you've lost your job and the economy is tanking is not the same as using an emergency fund when the money is already in your bank account. What's the interest rate on credit cards these days if you don't clear them every month 30%pa probably more. If the economy is tanking there is a good chance you will end up in temp jobs in the short term on a fraction of what your previous job was,everyone things that because the job market has been booming the last 5 years you can just walk into a job tomorrow taking 10-20% more than the last one.
@@Weakeyedominant but even with all that said, if itâs an emergency, itâs an emergency. If itâs life or death, the credit card can still serve you short term.
@@hydepark1382 I do agree with you. But if itâs an emergency and the credit card is all you have between life and death, it still counts short term. Ideal, no. But if the only reason to have money saved is for a life or death emergency, I donât see how a credit card isnât a back up.
Itâs the psychological aspect with being able to save $1000 that hits the reward system in which could propel someone forward and get the momentum going
Definitely needed to see this Iâm so close to getting me $1000 emergency fund
Too funny. If you want more in savings, just put more in savings. I did, and slept better because of it. And you know what? The Ramsey police never came after me! đ
Lol. The Ramsey police are looking for you. They just haven't found you yet.
I wonder how these people make it through adulthood. If you want to have more, have more. Who's going to arrest you
đđđ Daveâs whole appeal is basically being a grandfather of sorts
I'm a cop
Bigger question is how could you manage to go years into your adult life with below $1,000 in savings?
@@MrJimmy3459 Majority of the population are one missed paycheck away from bankruptcy and trouble
Liked your comment! Made me laugh
You've probably heard of the recent survey that about 50% if not less of US adults don't have $500 dollars for an emergency. So yes, the $1000 is still a viable & relevant amount.
Actually it's 57% of americans cannot come up with $1k if something happened. Fewer than half of all americans can just pay $1k in an emergency. Baby step one is still valid at $1k.
I had a similar mindset before I started going intense. Once I started my side hustles I suddenly almost doubled my income. I've got several thousand extra a month to throw at a more expensive emergency if it happens. It's what I had to do when I had car problems. I didn't even touch my emergency fund. If you're following the plan then you're working all the time and making as much money as you can.
I agree with what Dave said. Anything is better than nothing and can be a big help. If you have a $2k emergency cost and you have $1k saved, now you have to come up with $1k and not $2k
$1000 is suppose to be a motivation. If you can save $1k you can get out of debt. Ever since I saved up my $1k I have been adding to it ever since and itâs working for me.
I love the conceptâŠwhen you submit to the principal and a large number of people are doing itâŠ.it really works!!! All in what YOU believe!!!
Thanks for publishing this segment!
We did an emergency fund of what we spend monthly to be responsibility and it had to cover three months.
All these people complaining that they don't feel comfortable with only $1k while ignoring the fact that you aren't supposed to feel comfortable with $1k. If you're walking through baby steps 1-3 in comfort, you're doing it wrong.
1000 dollars can cover many unexpected emergency expenses, especially when you are poor. Many just want the baby step to cover all emergencies, not most of them.
Exactly.. its to cover for the rare Emergencies that come up... Granted,... 1K won't cover a few back-to-back emergencies.. But how often does that really happen??? Thats why I started building a CD Ladder as part of my EF (12K spread out over 24 months)
Right! 1k will cover quite a bit really. The washer breaks down & it's gonna be $600 to repair it, the car needs muffler work, your window AC died & its 104° or your insurance covered all but $800 on that trip to the hospital.
That 1k can give you a lot of peace of mind but if it doesn't feel like enough, for your situation, then simply bump it up to 2k.
2k can cover a homeless emergency..1k depending where youâre at may or may not cover that.
Loved the explanation about the initial emergency fund. Thank you.
Ken's first "Baby Step" is on the neck of the little guy.
I'm grateful for Ramsey and FPU and have eliminated over $20,000 in debt in the past 8 months. However, I agree $1000 isn't enough and lately I started putting some extra money into my savings while still on Baby Step 2. So essentially I'm doing Steps 2 and 3 at the same time. You don't need permission to tweak the system a little bit. Saving that first $1000 is motivating and a great start to the program but there's nothing wrong with saving more in my opinion.
That's really impressive! Well done, keep it up!
Yeah.
If people dont think 1k is enough then they should do 2k, or 5k even.
I think holding onto more than that as an emergency fund might be overkill, but 5k will cover pretty much anything.
Its just getting that first 1k, 2k, 3k, etc, thats hard.
Keep up your good progress.
Yes, itâs 2023 and he wrote the baby steps in 2003. He says $1,000 for BABY STEPS because thatâs usually what is doable especially when people are just starting out. You adjust it as needed, and itâs kind of common sense. As you move through the baby steps and your money is âfreed up,â you are able to grow that emergency fund. People could very quickly become overwhelmed and discouraged with, âget your emergency funds up to $3-5,000â to begin with.
Tough.Need One Months Income. Get to work.
He doesnât say adjust it as needed. He says save $1000 and then use every single extra cent after that to pay down consumer debt. You canât add to your emergency fund if all of your money is going to pay off debt.
I love your teachings Dave. I got your total moneymakeover book, I can't wait to get started. đżđŠ
Ken blaming workers for inflation is hilariously out of touch
He's actually pretty correct about everything he said there's just a lot of other factors as well.
@@richarddowswell264 people only asked for more money because prices of everything else went up anyways
@@richarddowswell264 How is he correct? Companies are making record profits while sacking their workers. How is that fair or ethical?
â@@anthonyfaucy2761 This is exactly what I was about to say! Our salaries have not increased, but the products and services we push so hard for the employers certainly has! We're not seeing a dime of it! He's completely out of touch!
It is not the fault of the working poor that inflation is up across the board. If we can't operate a burger King without people being on foodstamps to work there, then we don't deserve burger Kings. We need to be better.
I'm guessing these are the kind of people who are told they should save $1k and then continue to spend everything like they normally do, but are surprised when the emergency $1k isn't enough.đ
Inflation is caused by one thing, and one thing only. It is NOT wages. It is PRINTING MONEY.
There are a few things that will cause inflation. Wars, less people being born, labor shortage where employers offer higher pay to attract and keep workers, famine, millions of chickens being killed because of bird flu, meat processing plants being blown up or sabotaged, I think we lost at least 2 of them recently and the cost of beef went up.
I work at a plastic company making 18 dollars an hour, on the low side. The people stacking pallets making 23 dollars an hour plus overtime. If you paying me this to make plastic, not counting the food that goes inside the plastic or the shipping and wondering why your 6 apple cups are 6 dollars at the store. You think it's from printing money and not about raising minimum wage to 15 and all the ppl who may wayy more then that simply stacking it on the pallet,.where do you think that money comes from?
@@mewtwomotherfuka the printer...
Great answer, thanks.
Thatâs true the little annoying things that break or need to be repaired are under $1000 but you can always save more
A good answer other than him saying it doesnât need to be adjusted with inflation. If prices double between 2003 and 2033, then it wonât even serve its basic function that it was intended even on a minimal level as he described soon. It needs to be upped to at least $2000
i kinda disagree with ken on his point. "just work more" isnt a real sustainable answer. people have limits and telling people to work 80 hours a week to afford bread is kinda silly. getting a 2nd or third job should only be something you do as a temporary solution to a problem. if youre working 40-50 hours a week and still cant afford to live, likely getting a different job is your best bet, not getting a 2nd job.
You pretty much just proved Ken's point.
Ken is clueless. Yeah, let's all just work 24 hours a day. Great solution!
Not really. A 40 hour "work week" is not really full time. I've worked 50-70 hours a week my whole life because I love what I do. I know a missionary in Mozambique (woman) who works 120 hours a week. We were created to work...
GREAT EXPLANATION DAVE !!!!
I believe whatever you have in your emergency fund is never enough. Always keep adding.
Such a great question!
I was wondering the same
đ€ Great question? đ
The guy is under a rock! Make your own amounts for each saving plan; not ask Dave what to do with every penny! Get your head out of from under the rock, and think for yourself.
@@Heidishereandthere He wasn't asking how much he should save, he was asking Dave if the baby steps should be updated
Also, if you're creating your own steps then you're not using the baby steps you're just making your own plan
The whole point of the baby steps is to give a roadmap to people who don't know how to create their own plan
1k is still good for lot of people. This amount will keep pushing yourself to limit and keep remind you that you are broke. If you have enough then you will never finish this steps.
I love papa Dave! The man has good Sense!
NOT everyoneâs wages are up. I can assure you everyone in my job category has not gotten a raise. Iâm sure we are not the only ones.
Dave's right-it's not about adjusting for inflation and covering for every scenario. It's about having a little money in the bank so when something unexpected comes up you don't have an excuse to go into debt or derail your plan. When two in three Americans can't comfortably cover a $400 expense, the idea of having cash on hand is a real mindset shift. Obviously once you've got everything else covered, you should build up your emergency fund to cover major emergencies. But for most people just having that cushion for the average unexpected expense so you don't fall off the wagon in a major plus.
Itâs about having a paradigm shift. Train yourself differently when budgeting and attacking debt.
I enjoy his take on things
Glad they're finally treating this question with respect. When people asked this question on the phone, they snapped.
What they donât mention in this clip, but is taught in the program, is after you have the emergency fund you should also budget savings each month toward home/vehicle maintenance or other life emergencies that will come up. The $1000 is motivation to get you started and then you add smaller amounts monthly to cover you over time.
$1000 is a good start! Most Americans don't even have $400 in their savings, so that number is nothing to sniff at!
That was a good question.
I succeeded in getting out of debt except my home. No car payment, no credit card debt, no student loans. Still broke. The last 4 months in a row, major expensive things with my home needed repair. Last month my front steps collapsed, now my roof is leaking. It just never ends.
I take Dave's advice to a point but adjust it to my personal situation. I use leverage when it benefits the situation. The concept of "not storing up everything" for when I'm too old to enjoy it, and "living for the day", it part of this grownup decision process. If you are cheap your whole life and have millions when your older, I don't see the benefit of passing on millions for others to enjoy.
I think Dave messed up. The first step should have been "Save at least a MONTH'S worth to cover next month's expenses." One would know what their expenses are (hopefully) and this would change based on inflation. THERE YA GO!
Great answer with the emergency fund question. These other two are out to lunch with their takes.
Great question . đ
PAY AT AN ALL-TIME HIGH!??????????? Seriously wages have been close to stagnant for the past 30 years while inflation and costs of everything went way up..
Yeah, I appreciate Dave but sometimes I feel he's too simplistic. People that have lower paying service industry jobs are getting raises -- some places -- but it's still not enough to keep up with cost of living. Especially areas where housing costs are crazy. I live in Florida and we have plenty of places where everything pretty much depends on service industry jobs, but the housing costs outpaced those salary's years ago. And side hustle jobs aren't as easily available sometimes, because everyone is having to do that. And the mantra of, "Get a better job!" doesn't work here, because our economy is reliant on these types of jobs.
I think he means the actual dollar amounts but heâs leaving out that it doesnât go nearly as far as it should.
Ken obviously doesnât know corporate profits are at an all time high. Classic wage blame game.
His response is a typical Econ 101 response. He shouldâve said Multi-billion dollar companies need to raise prices to ensure that they continue to profit hundreds of millions/ billions each year and keep the money in offshore accounts/ foreign countries to keep it sheltered from tax.
@@Delboydunno yes much more accurate. đ
Yup, and its incredibly annoying to see him sell that mess on stage like that. Profits come after expenses are covered. We know the game, just don't gaslight.
Exactly!!!
yes, let's blame the janitor making a buck more per hour!
Good job Dave !!
This was enough for us when out hot water tank went out. It bought a new hot water tank and paid for professionals to install. Thanks Dave.
Many has never seen $1K balance at the end of the month, so that is a good start. More of a habit forming than a true bail out.
Wages are also up because no one is going to work a job that can't pay rent which is becoming north of $1500 for a basic 1 bedroom.
A possible solution is determine the minimum wage based on the average rent in the area. Have the landlords and small businesses battle it out.
Love this
$1000 saved opens up the mindset that people can save, its an achievable goal that will get the ball rolling. However, everyone has different goals and levels of comfort, my minimum for a safety net is $4,000 and that allows me peace of mind that I can move forward afterwards paying things down.
I don't think this was a "gotcha!" question but Dave took it as an attack on the plan or a trap. I find this to be a very legitimate question.
He said good question
Clearly shows people can't think critically. Apply the fundamentals
Dave is the GOAT!
Itâs a good system, Dave has a good plan, it works!
Everyone should be looking to constantly improve their emergency fund situation as you never know what might pop up. Lots of ways to do this. I keep layers of emergency funds, so that money is at least working for me instead of all sitting in a savings account. 30% in cash, 30% in moderate growth/ low risk assets that can be quickly sold, and 40% in medium risk assets. I put a a set portion of my income into these three monthly and also keep an HSA account for health care related expenses.
You must not be a Christian because that is not a Kingdom mindset. Do you go through life thinking what bad things might happen to you daily???? I'm a 47 yr old female....never had an emergency fund. I also don't have health insurance. Nothing ever bad happens to me. I go through life surrounded by favor.
All of his other steps are inflation adjustable. For example, â3-6 months worth of expensesâ are one of his baby steps.
It would probably make more sense to have step one be half of a monthâs expenses (or income) saved, so itâs adjustable.
Other financial experts recommend adjustable amounts like one month of expenses or $1000 per household member. The one-size-fits-all $1000 is not widely accepted in the world of financial gurus.
Here in SoCal replacing your water heater (storage type-kind for kind) easy $1500 on the cheap side.
Good to know
Exactly whatâs wrong with people in 2023
Follow the system. Everyone has to be special, different. Thatâs why people donât succeed. They can sacrifice or follow simple instructions.
Dave just explained why $1k wasn't enough then now it's REALLY not enough.
It is failing to provide the little bit of cushion it used to.
Take responsibility and double that amount if you want.
He says $1000 is not intended to be enough, but he's also telling people who want to save more like $2000 or $5000 (or already have that much) that anything more than $1000 is too much. So $1000 is still deemed to be the correct magic number, and it makes no sense that it can be correct in 2003 and in 2023, and is also correct regardless of family size.
Dave always talks about conventional wisdom about managing debt and investing doesn't take into account risk. Well I think the $1k emergency fund doesn't take into account the risk today vs the risk in 2003 of having an emergency expense that can't be covered by that amount
One Months Income.
@@raiden031 you didnt watch the video....
I think $1000 is still valid. I've had to lean on my $1000 fund a number of times and it's a life saver. It took me a while to come up with it too. I had pretty much zero dollars leftover in my budget each month. If I recall, I probably had to wait until tax time to get me well on the way to $1000.
However, it is a snowball. Once you have it, those small emergencies no longer absolutely cripple you and you're able to build it back up much faster, as you chip away at debt.
Not sure what tires Dave uses (no doubt better than mine) but I'm able to get 4 new tires for under $1000 (which has actually happened to me; car wasn't going to pass inspection with the bald ones).
The 1k emergency is the one thing I never agreed with. Everytime I post on the baby steps page, that we kept a minimum of 3k instead of 1k.. my comment is deleted lol. We paid 50k debt in 13 months and now we have a healthy networth.
Great!