I appreciate DR's consistency on NOT borrowing money more than anything. I recently toyed with the idea wirh taking out a personal loan... and borrowing money has definitely been my problem in the past. I snapped out of it, knowing that choice is stupid and would take me backwards in my debt freedom journey! Thanks Dave!
Thought the same thing. After taxes and mortgage payment, cost of living/expenses, it will take them closer to 6 months if they are extremely diligent.
You should be able to save 30% of your gross if you really focus on it. That would be $2k a month so they should be able to pull it off in 4 or 5 months.
@@LG123ABC $6666.66 per month and that is before tax. $6666.66 - 25% (taxes) -Mortgages are at least $1000 and expenses $500. $3499 It is actually even lower if you add in property tax spread across 12 months and homeowners. Judging by John's and ransom's responses; I think we can see that it is not doable.
No the emergency fund may not fully cover an emergency. But if there is a brick flying at your face 20mph would you rather have no protection or perhaps a couple pillows?
Great plan Dave! It does take time to get on the contractor's schedule and for them to complete the work too. And, as someone who works in the construction industry, you are also correct, that the fees are not due at the start of the work. They may have an initial retainer, but there should be a schedule of payments due based on project milestones with the biggest sum due once the work is 100% completed, including the project walk through and checklist. I also liked what other people have committed about checking with their homeowners insurance. Hopefully, it'll cover some cost 🙏
Just imagine if you weren't even past baby step 1 and this happened! The emergency fund is definitely meant to help in an emergency. Even if it doesn't cover the entire cost of the emergency, it's still better than nothing!
We’re perpetually on baby step 2. But I told my husband end goal is a years worth of expenses saved, not 3-6 months. Though that’s better than nothing.
Sometimes it’s worth discussing this with a contractor as well. I’m sure many would agree to a payment plan - even splitting the cost over 3 monthly payments wouldn’t be unreasonable.
💯 percent my kind of preference when it comes to emergency fund which is at least should be 6-12. You can park it some liquid fund so that it doesn't sit and evaporate with inflation. Also it is accessible in 24 hours.
100%. 3-6 months is just not enough, and I would think that this pandemic would prove it. We have been in this crisis for a YEAR. Some folks have been out of work for almost a YEAR. 3 months would have lasted you until May, if that. I think 9-12 months is much better too.
@@josephcoatofmanycolors Perhaps if they worked on creating good content, rather than refreshing youtube for Dave vids to spam on, they would have more success.
@@JakeLesser I'm not sure. It's not easy to get where the algorith on your side. And I'm not even sure it is a bad thing to see new channels commenting. If the comment is not just: come here, I'm new on YT. I can be valueable and if it people like the content, they'll stay.
I hate them. They're jumping on the "Hey if this 22 year old can make a financial channel so can I?" followed by the comments "This is so great, Dave. I am doing the same with my financial youtube channel were i talk about stocks, retirement etc" lolz can you be anymore obvious
I wouldn't start a construction project without having all the money. Having done alot of remodeling I know you can run into other issues that require more money. Better to be safe than sorry.
@@Spladoinkal I rewatched the video since you said that, and he said they're(him and his wife) are on baby steps 4, 5, and 6. I'm assuming since his lady has income too, he probably thought 3 months was enough.
Not covered bro insurance covers a event not deterioration over years example if ur car paint job is faided from the sun over 10 years that’s not covered but if someone keys here car it will get painted
They are on Baby steps 4, 5, 6 according to him. Meaning they should have 3-6 months saved... They make 80K/yr..their Emergency fund should have been 20-40k... Not 10k. If they had actually saved only 3 months for emergency fund, they wouldn't have this problem.
I agree $10K sounds a little low, but wouldn't the target be more like $12 to 24K? I thought emergency fund was based on living expenses. Gross pay of $80K is probably around $60K net or $5000 take-home a month. This ends up being more like $4000 a month to actually spend due to them saving 15% for retirement as per Baby Step 4, and they could conceivably live on less than that.
Dave should really start suggestion 6 month emergency fund minimum. I have no debt and have 6 months. I can’t imagine having 3 months, especially with the year we just went through.
No, 3-6 is fine, the issue is the caller having inadequate insurance. You don't own stuff if your emergency fund cannot cover the worst possible scenario related to that. That's the same as saying I need $200k emergency fund because I just drove into a Lamborghini
This could be a sudden problem that insurance may cover. If their outside water pipe burst, for example. Better yet, if a neighbor (or county/city) recently did some work that caused the water to divert to the caller’s home the neighbor may be liable, etc. A friend of mine had a neighbor that poured a new concrete driveway and it sloped toward my friend’s house causing new water issues in his basement where there were none before, Neighbor had to pay for remediation and damages.
If he has homeowner's insurance he should check if any of the repairs are covered in his policy. I know mine has a condition for the roof and mold removal.
I always leave a HELOC which I only use for this kind of issue. But I dont use it unless it is an absolute emergency. I have never used,.becoz I buy only fairly new and reliable houses.
We just worked with a really great contractor who was willing to let us make payment as each part of the work was completed which allowed us to do everything cash only. It does take trust on both sides but it can be totally worth it
Caller didn’t seem interested in Dave’s answer. He was more interested in hearing himself on the show. The HELOC statement was just silly if you spend just a few days listening to DR and RC.
Maybe, but after that you need to start taking advantage of investment returns. Whether that's really long term like retirement or sorta long term like saving for college.
Dave advises saving 3-6 months, after you've paid off your (non-house-related) debts. Otherwise, aside from the longevity of the time needed to save 3-6 months of cash, it's also really just "dead money", while the debt you woudn't have settled continues to incur interest. Ultimately I feel the principle behind the "Step 1" emergency fun is sound so that it ensures focus on removing the debt, and this will help you can move to the more advanced "baby steps" as soon as you can. I do however think the amount itself should be increased in order to account for the inflation that's occurred since Dave first introduced it.
@@pmc9194 Not to mention he says $1,000 regardless if you’re a 25 year-old single person, or a couple who is 40 with four kids. He has a one size fits all and it doesn’t make sense
@@johnallen3497 it does make sense, the $1000 is designed not to be enough, it is not enough in order to motivate you through BS2 and 3 so that you get to the finally having enough
We're on baby step 4. Have to admit that I was never down with a 1k emergency fund. More like 1k-per-person in our family emergency fund, which in our case is 5. Thankfully, we're past that now.
@@saulgoodman2018 There is a possibility that the basement structure is due to soil movement. In that case, move insurance doesn't cover soil movement.
Hmm, I think I would add that it might be a smart decision for them to double their emergency fund. For 6 months their current emergency fund is only $1,600 a month for the both of them which probably isn't enough to live off of for 6 months (for most people). I would say $20,000 for the both of them is they healthy emergency fund to have and on top of that it would have covered the entire cost of the repair had they had it.
What part of emergency fund don't you understand. It can be for getting laid off, broken hvac, broken car, etc. Having some money saved up is better than none. Use your head
Not covered I had a wall leak that rotted out the whole front of the house before we noticed it insurance cited improper construction not covered they cover a single event not a house that is deteriorating over time
Taxes, Insurance, 401k eat up a ton in peoples paychecks. Highly doubt anyone making 80k is seeing 5k a month unless they have lots of kids and a spouse for deductions to their tax bill. Even then not sure
@@livingunashamed4869 let's say 4 months 2.5k is 10k. And it's 3-6 months months of expenses. Also depending how you do it you could cut some expenses. 2k a month is plenty for 2 people to survive. In most of the country Plus you don't know how stable there jobs are.
@coco marineblu lol you just live a more expensive life than many especially me. Also they have n emergency fund so they don't have debt. So with 6.5k a month 400 on food 1200 on housing 300 on transportation 400 on insurance 400 for the rest That's 2.7k Saving& investing 3.8
Ask the chosen contractor what you can do now to make his job easier and therefore cheaper. Chuck a dehumidifier down there, start prepping the area for the work to start etc. No need paying him to move your belongings out the way
I looked at several very cute houses with unfinished or partially finished basements when I was house hunting ...the more I looked the louder the cash register bell got in my head. I ended up buying a slab house..no basement and I’m glad.
Thank God for an emergency fund! EVERY SINGLE TIME I get my emergency fund going, THERE'S AN EMERGENCY!! smh 🤦♀️....guess that's what it's for but.....
There is no fixed emergency cost. The point is to have a reserve of funds that are for emergencies. The proper way to handle it, is to keep growing it. The rest comes down to what you can manage and where you see the cost vs. risk dynamic.
Work with the contractor and see if they can do it for $15k and pay half upfront. Follow Dave’s advice and go super tight on the budget and save up another $6-7k
I say do a $5k patch job that’ll allow you about 6 months to save for the remaining repairs and emergency fund. Once the job is finished, you should have some emergency money leftover as well
Curious as to how long the walls have been bad. Maybe able to use Carbon Fiber Strips to fix the wall...it's fairly easy to do and it can save the wall at more than half the cost of replacement...just means no Rebar is not present in the foundation wall currently...probably built before 1940.
Dave missed the point: sometimes a real emergemcy isn't covered and realistically can't be cash flowed. Example: Emergency Medical bill which isn't reachable and three times yearly income.
#1 No medical insurance? #2 Talk to the hospital billing department, you will be surprised how has and fast that bill will come down. #3 Years of income bill? File BANKRUPTCY, and then you will see the bill from the hospital magically drop to a manageable level.
Med bills don't need to be paid right away so if the emergency fund doesn't cover no big deal. No insurance and the hospital will knock half off. owe after insurance they will take a payment plan.
The point is medical bills for years is DEBT Opposite what Dave says, no debt. He never said no debt except medical bills. Pointing out there are times when debt is unavoidable.
@@stevenporter863What exactly is your point? The point of an emergency fund is to handle MOST situations NOT all situations. And the edge case example you gave can be handled without having 200k in cash on hand.
@@alexgrinage It's not possible. lol $6666.66 per month and that is before tax. $6666.66 - 25% (taxes) -Mortgages are at least $1000 and expenses $500. $3499 It is actually even lower if you add in property tax spread across 12 months and homeowners.
@@wewhoareabouttodiesaluteyo9303 you didn't even read my comment. I already addressed your point of about taxes mortgages are not at least 1k. 210k house at 4% is 1003
@@alexgrinage "Depends if the 80k is post tax witch I think it is. " You were in doubt. "mortgages are not at least 1k. 210k house at 4% is 1003" $1003 > $1k
Which is I think an emergency fund should be closer to $30k. That said, I had a similar (worse) situation. Bowing, mold, mushrooms growing through the floor, water pipes bursting, floor collapsing, the works! We decided to demolish the house and build a new one. Best decision ever for us. Costly yes, but I won't be worrying about such issues again in my lifetime.
@Marilyn mc Mushrooms growing IN the house can only occur if there's moisture and nutrition. For us, we eventually learned that the moisture was from a leaking water pipe (that eventually ruptured and caused even more damage) and the nutrition was from rotting wood beneath the floors. Ours was an old house (40+years) made with natural, untreated wood so essentially became a greenhouse for mold due to the house's natural design (Japanese long house) not being sufficient to compensate for climate change (hotter summers, longer rainy season, etc.). You should definitely have your home looked at by a pro. The conditions for mold and mushrooms don't occur overnight, so it could mean you have a long-standing problem, and potentially a sick house. Better safe than sorry!
Definitely don’t have enough. I disagree with Dave’s 3-6 months and would go for at least a years worth. I haven’t even moved out of my parents but I have my 3-6 mo. emergency fund and it doesn’t feel like enough and I don’t even have a place of my own
Add $100 monthly to emergency fund even if you have met your goal because of inflation. Have a separate savings account for home/car maintenance and add $200 to it monthly.
The issue wasn't the emergency fund it was because caller has inadequate insurance. Would you have a 200k emergency fund incase you drive into a lambo? No, you take out appropriate cover
Baby step 1 is an emergench fund. 10k is cute but thats not an emergency fund when you live on 80k. Your emergency fund should be at least 6 months. So 40k in this case.
Insurance does not cover some things. In fact, plan on getting insurance just to have them tell you that it will probably not cover you, when you need it.
Channel our forefathers. Grab a shovel and dig it out yourself. It will save money, but foundations can be fixed on your own with a little research. At the very least, do prep work to save some money.
I don’t understand Dave, you advise him to stop 401k to save the money but he can just continue and get that matched and just borrow it from the 401k and then pay it back quickly.
Dave get excellent advice. Use your entire emergency fund and supplement the rest. Even if he can picks up an extra job temporarily to help supplement faster.
Assuming his tax rate is 20 % after tax income would be approx 5300 a month. So living on 1300 a month when you don’t know his situation like kids or mortgage payment is realistic ? Ok....
Dear Dave, My son is having life-saving surgery next week. They are requiring payment up front. The surgery is $10,000, after insurance. I have $9000 in my emergency fund. I get paid the day after surgery. Can I please take out a $1000 loan and pay it back after my son’s life saving surgery? Dave: I never advise you to borrow money. Go deliver pizzas and make the $1000 by next week. What if I don’t make the $1000? Dave: Oh well!
Sometimes emergency funds don't cover the whole cost, but having something is better than having to start from scratch
You are absolutely correct.
This wasn't bad to begin with they make 6500 a month and only need 1700-3500 to live. That's 6k+ in 2 months.
I’m starting from scratch again cause this dumb pandemic
Shut up Alex stop scamming
@@DaddychiLL6 huh how am I scamming?
Notice in this real life scenario, the emergency fund gave this caller options that would not have existed if he was broke.
100% CORRECT
But, in this very real life scenario he is still 50% underfunded. Let that sink in..
That is better than being 100% underfunded
@@sami-9233 but he makes good income. let that sink in
@@sami-9233 10 k emergency fund is kinda low but I see what you are saying. This guy is not in a terrible position. He can cash flow it.
"I'm on the roof and I'm about to jump!"
Dave: ok what's your household income
🤣🤣🤣🤣🤣
😂😂
omg that's hilarious 🤣
Sell the roof.
@@Executor009 🤣🤣🤣 great comment
I appreciate DR's consistency on NOT borrowing money more than anything. I recently toyed with the idea wirh taking out a personal loan... and borrowing money has definitely been my problem in the past. I snapped out of it, knowing that choice is stupid and would take me backwards in my debt freedom journey! Thanks Dave!
Its a very common problem, emergency fund not enough to cover the emergency. Usually people have this issue with their medical bills.
It’s not a sure fire amount for emergencies! But it’s a step in the right direction!
Saving $4k a month with an $80k income is unrealistic.
Thought the same thing. After taxes and mortgage payment, cost of living/expenses, it will take them closer to 6 months if they are extremely diligent.
You should be able to save 30% of your gross if you really focus on it. That would be $2k a month so they should be able to pull it off in 4 or 5 months.
I make $80k and only manage to save $2200/mo on a strict budget
@@johnkeeler5 Same I make $85k and save around $2k a month.
@@LG123ABC $6666.66 per month and that is before tax. $6666.66 - 25% (taxes) -Mortgages are at least $1000 and expenses $500. $3499 It is actually even lower if you add in property tax spread across 12 months and homeowners.
Judging by John's and ransom's responses; I think we can see that it is not doable.
Always feel hopeful whenever watching your video. Thanks for your guidance, Sir Dave!
No the emergency fund may not fully cover an emergency. But if there is a brick flying at your face 20mph would you rather have no protection or perhaps a couple pillows?
I'd rather have an investment 'vehicle' that would move me out of the bricks path
I'd rather live in a decent neighborhood and hear about bricks on the news
@@darthrex6267😂😂😂😂
This is glorious. Of course annoying, worrying and upsetting etc but you could owe $20k plus and have no money at all! Well done
Great plan Dave! It does take time to get on the contractor's schedule and for them to complete the work too. And, as someone who works in the construction industry, you are also correct, that the fees are not due at the start of the work. They may have an initial retainer, but there should be a schedule of payments due based on project milestones with the biggest sum due once the work is 100% completed, including the project walk through and checklist.
I also liked what other people have committed about checking with their homeowners insurance. Hopefully, it'll cover some cost 🙏
Just imagine if you weren't even past baby step 1 and this happened! The emergency fund is definitely meant to help in an emergency. Even if it doesn't cover the entire cost of the emergency, it's still better than nothing!
True, but it's better to have it covered.
This is a challenge. This is why I always have a bit more in the emergency fund then Dave recommends just to feel safe.
Year and a half for that warm, fuzzy feeling *picture of a husky smiling with tongue out*
We’re perpetually on baby step 2. But I told my husband end goal is a years worth of expenses saved, not 3-6 months. Though that’s better than nothing.
Sometimes it’s worth discussing this with a contractor as well. I’m sure many would agree to a payment plan - even splitting the cost over 3 monthly payments wouldn’t be unreasonable.
Yep. Especially if you keep your promises, and pay when you have agreed to, that first time.
That's why i think 9 to 12 month emergency fund is likely better
💯 percent my kind of preference when it comes to emergency fund which is at least should be 6-12. You can park it some liquid fund so that it doesn't sit and evaporate with inflation. Also it is accessible in 24 hours.
100%. 3-6 months is just not enough, and I would think that this pandemic would prove it. We have been in this crisis for a YEAR. Some folks have been out of work for almost a YEAR. 3 months would have lasted you until May, if that. I think 9-12 months is much better too.
But the cost of the wall has nothing to do with what their regular expenses are
So save that much. Yes, Dave recommends 3-6 months. No one is stopping you from saving even more.
@@alexc5369this
I already know what Dave is gonna say, but I watch it anyways.
"We bought a house and then..."
I feel like I'm early. Where are all the comments from all the finance channels trying to get views?
Edit: nevermind, they’re here.
they usually comment within seconds the video is posted, am surprised I ain’t seen their comment yet 😂😂😂
@@josephcoatofmanycolors Perhaps if they worked on creating good content, rather than refreshing youtube for Dave vids to spam on, they would have more success.
Casey must be busy.
@@JakeLesser I'm not sure. It's not easy to get where the algorith on your side. And I'm not even sure it is a bad thing to see new channels commenting. If the comment is not just: come here, I'm new on YT. I can be valueable and if it people like the content, they'll stay.
I hate them. They're jumping on the "Hey if this 22 year old can make a financial channel so can I?" followed by the comments "This is so great, Dave. I am doing the same with my financial youtube channel were i talk about stocks, retirement etc" lolz can you be anymore obvious
That is good news. Something is better than nothing. Good call!!
Dave “ you will not talk over me, I will talk over you” Ramsey.
He is the one with the show
If you don’t want to hear his opinion, then don’t call his show.
Is his show and the guy called him.
Is the equity in my house income? 😂
NO!!
I wouldn't start a construction project without having all the money. Having done alot of remodeling I know you can run into other issues that require more money. Better to be safe than sorry.
10,000 seems a little low for his income. He probably just saved only for 3 months I guess.
He probably was in the process of saving up when this happened.
@@Spladoinkal I rewatched the video since you said that, and he said they're(him and his wife) are on baby steps 4, 5, and 6. I'm assuming since his lady has income too, he probably thought 3 months was enough.
@@gregcountryman8770 Oh wow nice catch! I missed that part.
@@gregcountryman8770If married, the fund is supposed to be 6 months. He definitely didn’t save enough.
Finally, been waiting for this one.....
We’re in this situation but we have a bigger shovel and a deeper hole - medical and taxes.
I would call his home insurance
Not covered bro insurance covers a event not deterioration over years example if ur car paint job is faided from the sun over 10 years that’s not covered but if someone keys here car it will get painted
@@TheMechanicj exactly, wear and tear is never covered. Only stuff like natural disasters or freak accidents.
Why would you do it? I think that's the guys problem
@@alexc5369 repair it at all?
They are on Baby steps 4, 5, 6 according to him. Meaning they should have 3-6 months saved... They make 80K/yr..their Emergency fund should have been 20-40k... Not 10k. If they had actually saved only 3 months for emergency fund, they wouldn't have this problem.
I agree $10K sounds a little low, but wouldn't the target be more like $12 to 24K? I thought emergency fund was based on living expenses. Gross pay of $80K is probably around $60K net or $5000 take-home a month. This ends up being more like $4000 a month to actually spend due to them saving 15% for retirement as per Baby Step 4, and they could conceivably live on less than that.
@@CyberSlugGumpIt’s supposed to be.
Dave should really start suggestion 6 month emergency fund minimum. I have no debt and have 6 months. I can’t imagine having 3 months, especially with the year we just went through.
No, 3-6 is fine, the issue is the caller having inadequate insurance. You don't own stuff if your emergency fund cannot cover the worst possible scenario related to that.
That's the same as saying I need $200k emergency fund because I just drove into a Lamborghini
He already created the baby steps. That would not be sticking it through with his idea that has been "oh so helpful" to so many people.
He now knows when he rebuilds the fund, aim for 25k instead of 10k.
Great question.
$10k seems low for a fully funded emergency fund
how can they save 4000 a month with 80k a year? 15 year fixed? Their mortgage must be a lot!
lol
This could be a sudden problem that insurance may cover. If their outside water pipe burst, for example. Better yet, if a neighbor (or county/city) recently did some work that caused the water to divert to the caller’s home the neighbor may be liable, etc. A friend of mine had a neighbor that poured a new concrete driveway and it sloped toward my friend’s house causing new water issues in his basement where there were none before, Neighbor had to pay for remediation and damages.
Now I’m wondering if my emergency fund is enough.
Its never enough especially if you have a house... there's alot more expenses than just a mortgage payment
If he has homeowner's insurance he should check if any of the repairs are covered in his policy. I know mine has a condition for the roof and mold removal.
This not an emergency fund issue. This is an insurance issue.
I was thinking the same. At least hold off construction until you have the cash on hand to fund the project.
This is an "over time" situation. Insurance won't cover it.
I always leave a HELOC which I only use for this kind of issue. But I dont use it unless it is an absolute emergency. I have never used,.becoz I buy only fairly new and reliable houses.
He was hoping Dave would say it's okay to borrow money in this situation
We just worked with a really great contractor who was willing to let us make payment as each part of the work was completed which allowed us to do everything cash only. It does take trust on both sides but it can be totally worth it
Caller didn’t seem interested in Dave’s answer. He was more interested in hearing himself on the show. The HELOC statement was just silly if you spend just a few days listening to DR and RC.
I would say save 3-6 months of emergency fund, then keep saving after that. That way you won't wipe out your emergency fund and have to start over.
Maybe, but after that you need to start taking advantage of investment returns. Whether that's really long term like retirement or sorta long term like saving for college.
Dave advises saving 3-6 months, after you've paid off your (non-house-related) debts. Otherwise, aside from the longevity of the time needed to save 3-6 months of cash, it's also really just "dead money", while the debt you woudn't have settled continues to incur interest. Ultimately I feel the principle behind the "Step 1" emergency fun is sound so that it ensures focus on removing the debt, and this will help you can move to the more advanced "baby steps" as soon as you can. I do however think the amount itself should be increased in order to account for the inflation that's occurred since Dave first introduced it.
@@pmc9194
Not to mention he says $1,000 regardless if you’re a 25 year-old single person, or a couple who is 40 with four kids. He has a one size fits all and it doesn’t make sense
Logic behind that doesn't make sense, so you have an emergency fund for your emergency fund?
@@johnallen3497 it does make sense, the $1000 is designed not to be enough, it is not enough in order to motivate you through BS2 and 3 so that you get to the finally having enough
We're on baby step 4. Have to admit that I was never down with a 1k emergency fund. More like 1k-per-person in our family emergency fund, which in our case is 5. Thankfully, we're past that now.
Does he not have house insurance??
@@saulgoodman2018 There is a possibility that the basement structure is due to soil movement. In that case, move insurance doesn't cover soil movement.
Love your show
I would also suggest that he rebuild his emergency fund somewhere in the middle. Refund it at $15k for the peace of mind.
Hmm, I think I would add that it might be a smart decision for them to double their emergency fund. For 6 months their current emergency fund is only $1,600 a month for the both of them which probably isn't enough to live off of for 6 months (for most people). I would say $20,000 for the both of them is they healthy emergency fund to have and on top of that it would have covered the entire cost of the repair had they had it.
The problem with Dave's 3-6 months of expenses is that it covers the expenses, and oftentimes not the actual emergency.
It's not supposed to. And that's just at the beginning you should later have a separate savings. On top of that I could stop 15% investing
@@alexgrinage Scammer.
What part of emergency fund don't you understand. It can be for getting laid off, broken hvac, broken car, etc. Having some money saved up is better than none. Use your head
@@todd2456 how am I a scammer ?
@@asymptomatic84 because in THIS case, the 3 months of expenses he saved didn't cover the EMERGENCY!! Use your head!
That sounds like something insurance would pay for...
I was thinking the same thing. I wonder if he checked with his homeowner's ins first.
Not covered I had a wall leak that rotted out the whole front of the house before we noticed it insurance cited improper construction not covered they cover a single event not a house that is deteriorating over time
Sounds like something insurance would not cover.
Not covered under a HO policy unfortunately.
People should have a 6 month emergency fund and 10K making 80K is too low should be at least 15 preferably 20K.
Um no. It's expenses so if they live a frugal life it's gonna be smaller. But also let's them save sooner and do extra investing
@@alexgrinage Lets say they make 5k a month and at worst they live off half 2.5k x 6 is 15k.
Taxes, Insurance, 401k eat up a ton in peoples paychecks. Highly doubt anyone making 80k is seeing 5k a month unless they have lots of kids and a spouse for deductions to their tax bill. Even then not sure
@@livingunashamed4869 let's say 4 months 2.5k is 10k. And it's 3-6 months months of expenses. Also depending how you do it you could cut some expenses.
2k a month is plenty for 2 people to survive. In most of the country
Plus you don't know how stable there jobs are.
@coco marineblu lol you just live a more expensive life than many especially me. Also they have n emergency fund so they don't have debt.
So with 6.5k a month
400 on food
1200 on housing
300 on transportation
400 on insurance
400 for the rest
That's 2.7k
Saving& investing 3.8
Ask the chosen contractor what you can do now to make his job easier and therefore cheaper. Chuck a dehumidifier down there, start prepping the area for the work to start etc. No need paying him to move your belongings out the way
Exactly, I would have the drywall / carpet anything that holds moisture all ripped out, and beach everywhere.
Basements are the worst especially if you live in areas with clay soil. They become money pits fast.
As a foundation repair guy in texas I will attest to this
I looked at several very cute houses with unfinished or partially finished basements when I was house hunting ...the more I looked the louder the cash register bell got in my head. I ended up buying a slab house..no basement and I’m glad.
That's why you need at least 6 months of expenses and another 6 grand.
Thank God for an emergency fund! EVERY SINGLE TIME I get my emergency fund going, THERE'S AN EMERGENCY!! smh 🤦♀️....guess that's what it's for but.....
I am all over the place with baby steps, I wish I knew all this when I was in my 20s, I would be in a good position but heck. Gotta try.
Going back to BS3 is still better than all the way back to BS 1 by cleaning out savings and going into debt, with the HEL(L)OC.
There is no fixed emergency cost. The point is to have a reserve of funds that are for emergencies. The proper way to handle it, is to keep growing it. The rest comes down to what you can manage and where you see the cost vs. risk dynamic.
Work with the contractor and see if they can do it for $15k and pay half upfront. Follow Dave’s advice and go super tight on the budget and save up another $6-7k
Yes. Probably could get atleast 1k off but also als half up front is a given
What happens if you have another emergency during this!
Today's why you want to get out of debt as fast as possible so you can really build up that fund.
I say do a $5k patch job that’ll allow you about 6 months to save for the remaining repairs and emergency fund. Once the job is finished, you should have some emergency money leftover as well
What do you do when this happens over and over again...for years and years?
37 year old and my emergency fund is $48K, I think it’s low. I want $600k. No debt.
How much do you have invested or in retirement account? What’s your net worth?
I kinda feel the same way. No debt is nice.
Hm. Sell your car.
Rice and beans, beans and rice. For 37 more years.
Quit bragging... emergency funds are for emergencies... when are you going to have a 600K emergency?
Sewer/Water pipes love to mess up the best laid plans too.
I waited and revisited the bids and found a better deal
$34k in equity is nothing
1 cigarette is nothing
It’s a lot of your trying to quit. 11 years smoke free
You're the best
Nice work 🎆✨🎇
Sell it as is
Mold can grow. Dave is insane with this one.
Curious as to how long the walls have been bad. Maybe able to use Carbon Fiber Strips to fix the wall...it's fairly easy to do and it can save the wall at more than half the cost of replacement...just means no Rebar is not present in the foundation wall currently...probably built before 1940.
If you have the contractor start before you have the money, isn’t that like a debt 🤔 what if you lose your job after he starts
what about insurance?
The title cracks me up
Dave missed the point: sometimes a real emergemcy isn't covered and realistically can't be cash flowed. Example: Emergency Medical bill which isn't reachable and three times yearly income.
#1 No medical insurance? #2 Talk to the hospital billing department, you will be surprised how has and fast that bill will come down. #3 Years of income bill? File BANKRUPTCY, and then you will see the bill from the hospital magically drop to a manageable level.
Med bills don't need to be paid right away so if the emergency fund doesn't cover no big deal. No insurance and the hospital will knock half off. owe after insurance they will take a payment plan.
You can spend years paying medical bills, that's not urgent
The point is medical bills for years is DEBT Opposite what Dave says, no debt. He never said no debt except medical bills. Pointing out there are times when debt is unavoidable.
@@stevenporter863What exactly is your point? The point of an emergency fund is to handle MOST situations NOT all situations. And the edge case example you gave can be handled without having 200k in cash on hand.
I’d love to hear Dave start messing with people and suggest “just buy a new car” as a solution to everyone’s questions.
😂😂😂
Isn’t this more of a budget line issue?
just think if you were in baby step two and this happened
Which is one of the reasons why Dave tells people not to buy a house until after Step 3.
80k income? After taxes it will take more than "a few months" to save $9000 after usual living expenses and mortgage payment.
Depends if the 80k is post tax witch I think it is. Dave told him to save 4k a month and he said he could with confidence.
@@alexgrinage It's not possible. lol
$6666.66 per month and that is before tax. $6666.66 - 25% (taxes) -Mortgages are at least $1000 and expenses $500. $3499 It is actually even lower if you add in property tax spread across 12 months and homeowners.
@@wewhoareabouttodiesaluteyo9303 you didn't even read my comment. I already addressed your point of about taxes
mortgages are not at least 1k. 210k house at 4% is 1003
@@alexgrinage "Depends if the 80k is post tax witch I think it is. "
You were in doubt.
"mortgages are not at least 1k. 210k house at 4% is 1003"
$1003 > $1k
They caller said he could do it. That is all that matters.
Which is I think an emergency fund should be closer to $30k. That said, I had a similar (worse) situation. Bowing, mold, mushrooms growing through the floor, water pipes bursting, floor collapsing, the works! We decided to demolish the house and build a new one. Best decision ever for us. Costly yes, but I won't be worrying about such issues again in my lifetime.
@Marilyn mc Mushrooms growing IN the house can only occur if there's moisture and nutrition. For us, we eventually learned that the moisture was from a leaking water pipe (that eventually ruptured and caused even more damage) and the nutrition was from rotting wood beneath the floors.
Ours was an old house (40+years) made with natural, untreated wood so essentially became a greenhouse for mold due to the house's natural design (Japanese long house) not being sufficient to compensate for climate change (hotter summers, longer rainy season, etc.).
You should definitely have your home looked at by a pro. The conditions for mold and mushrooms don't occur overnight, so it could mean you have a long-standing problem, and potentially a sick house. Better safe than sorry!
3-6 months of expenses saved for an emergency fund. Granted, I heard from people overseas that we don't have enough in our emergency funds.
Definitely don’t have enough. I disagree with Dave’s 3-6 months and would go for at least a years worth. I haven’t even moved out of my parents but I have my 3-6 mo. emergency fund and it doesn’t feel like enough and I don’t even have a place of my own
@@kasonedell7228 2020 made 3-6 months seem like a movie trailer. Yeah. I think it's important to be prepared.
How do we save for deferred maintenance?
If you have black mold in your home, you need that gone it’s very dangerous
It's really not that dangerous at all...
Add $100 monthly to emergency fund even if you have met your goal because of inflation. Have a separate savings account for home/car maintenance and add $200 to it monthly.
1 year emergency fund is probably the best bet. I rather have a full umbrella on a rainy day than a half one.
The issue wasn't the emergency fund it was because caller has inadequate insurance. Would you have a 200k emergency fund incase you drive into a lambo? No, you take out appropriate cover
And what if you are on baby steps 2 with $1000 and making $50k and it would take you 18-24 months to save that money???
probably not an emergency--just save to get your basement waterproofed
It's an emergency. Having black mold in your house, even in the basement, is very bad.
@@Joseph-xj4ex what does mold do?
Baby step 1 is an emergench fund. 10k is cute but thats not an emergency fund when you live on 80k. Your emergency fund should be at least 6 months. So 40k in this case.
Wait wait wait
Dave is "great!"
Not
"Better than I deserve!"
Something wrong...
What do you have insurance for?
Insurance does not cover some things. In fact, plan on getting insurance just to have them tell you that it will probably not cover you, when you need it.
Channel our forefathers. Grab a shovel and dig it out yourself. It will save money, but foundations can be fixed on your own with a little research. At the very least, do prep work to save some money.
They can also take a,loan from their 401K and pay themselves back
I don’t understand Dave, you advise him to stop 401k to save the money but he can just continue and get that matched and just borrow it from the 401k and then pay it back quickly.
15 year fixed? Are you crazy?
4000 a month after tax on an income of 80k not possible. Thumbs down on this advice. He needs more time to save up.
How many years can you live off of your savings if you stopped working today?
3 months, but I could hopefully make a good enough case to get unemployment that MAY allow me another 2 months
Could go for 2 years plus 6 months IF unemployment is counted
What if it were worse. Like a right now emergency and you only have the $1,000 emergency fund?
Buy PSEC stocks monthly dividend
BUY BNGO
Dave get excellent advice. Use your entire emergency fund and supplement the rest. Even if he can picks up an extra job temporarily to help supplement faster.
Save 4000 a month making 80k?
That's what I thought too, there's no way. Maybe $3,000 a month if they literally ate just rice and beans, but even then I'm not sure.
I was wondering the same thing. What would be leftover probably wouldn’t even cover just their mortgage.
Assuming his tax rate is 20 % after tax income would be approx 5300 a month. So living on 1300 a month when you don’t know his situation like kids or mortgage payment is realistic ? Ok....
This was my exact thought. Does Dave assume the figures that people give him are net earnings? 4k a month seems like quite the stretch.
Dear Dave,
My son is having life-saving surgery next week. They are requiring payment up front. The surgery is $10,000, after insurance. I have $9000 in my emergency fund. I get paid the day after surgery. Can I please take out a $1000 loan and pay it back after my son’s life saving surgery?
Dave: I never advise you to borrow money. Go deliver pizzas and make the $1000 by next week.
What if I don’t make the $1000?
Dave: Oh well!
I'm. Okay.