As we go forward with our financial journey with Dave Ramsey’s Baby Steps, I have realized a trend. Baby Step 2, getting out of debt, is widely discussed but the other steps are severely lacking in content. There is little on the web about the other steps compared to numero dos. However, in order to keep debt from happening again, Baby Step 3 is very crucial and should be met with just as much intensity.
Unfortunately, too often people get out of debt just to go right back into it. Life happens. Unexpected things happen. And if you don’t accept that now and prepare for it, then a setback is just around the corner.
Here is an idea of what life is like with a fully established emergency fund…
- Car breaks down and it’s going to take $1,000 to repair it- You have the money.
- Kid gets sick and you haven’t met your insurance deductible yet- You have the money.
- Family member passed away and you need to purchase a plane ticket for the funeral- You have the money.
Welcome to your new insurance plan! You have the money to swallow the expense. The emergency itself is hard enough. Paying for it shouldn’t have to be. We choose to keep 6 months. You may be happy with only 3 or 4. The point is, there is much freedom and security in a fully funded rainy day fund that a credit card just can not give you. A credit card leaves you more panicked, an emergency fund leaves you relieved. There is just no comparison.
Proverbs 21:5: The plans of the diligent lead surely to plenty, But those of everyone who is hasty, surely to poverty.
So diligently save your money for those emergencies and poverty will be forever fleeing.