How to Bulletproof Your Emergency Fund
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- เผยแพร่เมื่อ 15 มิ.ย. 2024
- This is the third episode in my series covering the Ramsey Baby Steps, and I’m going to be real with you: Baby Step 3 is hard. As you save up three to six months of expenses for your emergency fund, there aren’t any quick wins or milestones. But it’s your last big sprint before you finally get to build wealth and give like no one else, so I’m here to keep you motivated!
In this episode of The Rachel Cruze Show, you’ll learn:
• 3 keys to having a bulletproof emergency fund
• How to find cold hard cash in your freezer
• A money tendency I used to be really immature about
Sponsors pay the producer of this show, The Lampo Group, LLC, advertising fees for mentioning their services or products during programming. Advertising fees are not based upon or otherwise tied to any product sale or business transacted between any consumer or sponsor. The following sponsors have paid for the programming you are viewing:
- Zander Insurance
Resources (everything mentioned in this episode):
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Baby Step 3 allowed hubby to look for a job without feeling desperate after being laid off 3 years into our marriage. It saved us from so much stress and anxiety.
That's awesome!
That's why it makes sense. It's really something.👏👏👏👏👏👏
I wish we would have known about this step. We were putting money into our 401k before saving 3-6 months worth. Now my husband has lost his job and we are so stressed.
I’m in the process of saving my 6 months emergency fund. I’m saving a full months income pre tax. As a single mom I’d feel more secure having six months of income saved rather than six months of expenses saved. And once that is saved up I plan on making a separate emergency fund for my car. To me car maintenance/car breaking down isn’t an emergency. It’s an inevitable part of car ownership. And for this one I’m saving 3 months income. This one is a secondary savings goal to my emergency fund and eventually retirement and sons college. I just really want to make sure my life is bulletproof in regards to money
Way to go!!!!!👏👏👏👏👏👏👏
That was my plan as well. Once I start baby step 3 I’m going to have 6 months of full income and at least 3 months in a spending account so if a car breaks down it will be covered without going into the emergency fund. Good Job 👍. I’m almost there.
That "peace of mind" can be so priceless! It changes how you perceive life, especially money!
Keep your emergency fund in a bank you don’t normally bank at. Right now I have $9,600! I have my emergency fund in a high yield money market account. If I borrow from it, I pay back what I borrowed and let the interest do the rest!
Thank you for the Baby Step 3 info. I make pinto and black beans in the crockpot and freeze them flat! 1 bag of beans can cost the same as a can. I get 5 servings of beans!! Black beans and rice are one of my favorite cheap side dishes 😀
Rice and beans are the best, if you really want to treat yourself add fresh avocado and tomatoes, it’s so good! My absolute favorite dish, and it’s plant based too!!
I decided to do that before I saw this and became a Saving Demon.
And I WAS a spendaholic.
Never turned down overtime and still don’t, and it was hard in the beginning, because it’s not a lot.
You hit 10k and the motivation REALLY kicks in.
I love going through life now with a, “Whatever” attitude toward the unknown.
“What if this happens?”
“Whatever. We got this.”
“What if that happens?”
“Whatever. We got this.”
The difference between a crisis and a hiccup is preparedness.
I used a page from an adult coloring book to track my BS3 savings. That visual really helped me. Now, I'm using one to track my mortgage payoff. :)
Sounds like a fun way to stay on track. How?
Bonnie Half-Elven creative!
Can you explain?
Couple things I do that helps tons that I haven't seen anywhere. One, I keep a pocket folder with my shopping list spiral notebook in it. Also use it for any coupons I will use. Then I have reference to what I purchased and any returns mispricing encountered etc. Second is my sheet protected stock list. This list includes everything that I know I will buy when I run low. When I prepare a shopping list I look at my stock list for anything that I am low on that isn't already on my shopping list. Combined with inventory taking, meal planning and resourceful procurement, I have remarkably low food expenses, lower than the USDA thrifty food budget that is the starting point for SNAP benefits.
Last summer we had no income coming in. Having to take it out of our emergency fund hurt cause we would be almost done with bs3 now....but that’s EXACTLY what it’s there for. Having the money to feed our four kids and pay our bills for the three months we needed it was a blessing. We are more “gazelle intense “ than ever about completely that step.
We had just finished paying off my student loans Dec 2019 and the car in Jan 2020. We moved in March for me to start a new job as a contract employee and my husband to go back to school. That all went out the window and had thankfully had 10k to fall back on for 5 months and yet another move. Very blessed we are both on the same page financially and learned about the baby steps. 😇
Baby step 3 and 3b has been my favorite step so far. I’ve never been much of a spender but when I saw my first 5k in my savings, I couldn’t stop looking at it and marveling. When I got 10k, I was so excited. When I got 25k in there, my stress dramatically dropped and I noticed little things that improved. My sleep quality, smaller appetite, my hair getting thicker again. Two years later, I now have 110k for my down payment and emergency fund, 5k in a HSA, 18k in a Roth IRA and 3k in my 401k. Now I’ll start to save for my 1st car in cash for the rest of the year for when I move out of my parents house since I’ll need it.
How old are you?
@@violettippet5246 just turned 28.
Our emergency fund is my FAVORITE part of our baby step journey. We have had so many occasions to use it: babies and job loss and medical and cars and everything but the kitchen sink!
This came at the perfect time for me. Step 3 is really hard. It seems to take forever and motivation is difficult.
You can do this, Sirena! - The RC Team
@sirenaspades
How was your time during the pandemic since you had an emergency fund?
I personally leaned towards 6 months and keeping my life style the same but I kept track of 3 months emergency fund and other benchmarks too to break down the big goal and keep me motivated.
Freezer tip - wire baskets are a better storage option, as it allows for better air circulation around your frozen goods.
And LABEL, LABEL, LABEL! Make sure all your items have a name and date on them or 3 months later you'll have no idea what you're looking at.
Love this!! Thank you! I've been following you, your dad and Chris Hogan for about 4 years. This stuff has changed my life. Appreciate it!!
You are such a great Teacher Rachel. Thank you to you and your team so much for this.
This was great. Especially the freezer tips at the end. WOW!
Thanks for watching, Tashia! - The RC Team
This video answered all my questions. I always thought the emergency fund can only be used if you lost your job.
Then you haven't listened to Dave. It's for any emergency. Car breaks down, fuel bills come in too high to pay for what you've budgeted, kid goes to E.R. and the bill is too high (though you can often negotiate that downward). Plz either read Total Money Makeover or listen to Dave's old recordings.
That's awesome! Glad to hear you were able to learn something new from this episode. Thanks for watching. 😊 - The RC Team
I am over 90% done with baby step 2 and I am actually really excited for step 3. I started step 2 a month before Covid hit, and because of Covid it took a little longer, but I expect to be debt free by my first paycheck in March. Just getting a little ahead of myself to figure out the best way to take care of step 3.
Great video, as always, Rachel! HUGS! 💕👍🏻
Thank you, Rachel
Baby step 3 is like everything counts, counts towards a future 😎
Thanks for sharing, great reminders and motivation for this black duck!
Thank you Rachel
Excellent. Thank you.
Great talk Rachel!
Guys am I the only who thinks that if Rachel was a disney character she would be Anna from frozen?? Idk why, but she really reminds me of her (positive, fun, enthusiastic, and a people person) I love it 🥰 ❤️ ok back to the video
Responsible Anna:Rachel Cruze
@@MindofaMadMan69 The Frozen 2 Queen version!
worksofeagerhands I still haven’t seen it 😩🤦🏽♀️
@@jada_m please fix that ASAP! LOL
Thank Rachel love the video👍
I'm active duty air force and my hubby just got picked up as a civilian for the army so both jobs are very very stable and predictable. After baby step 2 we'll probably just have 3 mos so we can cover issues but it will allow us to move to other goals faster
No one told me bs3 was the hardest. And if you dip in for emergencies, you're back on bs3 again. Dont get defeated, bs3 is there to use.
I’m finding it so hard to save on BS3! I always need it for something
@Red_1976 this is why you need the same intensity in bs3 as in bs1 and bs2. You shouldn't take your foot off the gas until you have bs3 completed
Frivolous debt is an addiction; getting in over your head into debt to your own detriment is addictive behavior. The consumer mentality is like an addict trying to fill a void so they can experience a sense of self importance which is just a distraction from an unresolved underlying issue.
I bought dis pan type tubs at the Dollar Tree for $1.25 and put veggies in one or two- meats in 1-2 etc. you can find things quicker that way.
Love you Rach! Woohoo!
Speaking to my heart right now, lol.
Thanks 🙏
Enjoyed this episode.
Wanted to get the CHEAT SHEET that you mentioned, could not find it in the description.
This is awesome. Thanks for sharing this valuable knowledge. How I can connect?
Does America have offset mortgages? Our mortgage (in the UK) is a type called offset. Which means the mortgage has a savings account associated with it and the amount you have in the offset savings is subtracted from the remaining mortgage balance when the interest is calculated. Not sure how common this is in the UK but it worked out nicely for us. We saved an entire months payment worth of interest last year.
I twicked the baby steps a little bit, we are a single income family, therefore BS1 I have decided my starter Emer Fund is one month of expenses. Soon to achieve this in order to start debt snowballing BS2!
Inea - eBusiness Accountant dont “twick“ the babysteps. You need at least $1000 for an emergency fund. What if you have car repairs etc?
@@Lisatwade shes saying they decided to make an emergency fund of greater than $1000 before moving on to baby step 2 ... because they are a single income family... reading comprehension
@@Lisatwade Lisa, a full month of expenses (which I agree is more practical than just $1,000) is a good way to go for a single-income family. I was an Accountant before I retired and I used to tell people to consider one month the first step, also.
Inea - I've felt for a long time that $1,000 isn't enough, and I applaud you. I like your idea of 1 full month, or (my benchmark) $3,000. It can take a while to do that, but the good news is, it gets you into the habits you'll need to do automatically when you're paying off debt. Good on you!
Sherry Ellesson Dave says that he wants it to scare people a bit so they’ll become gazelle intense on paying off debts. If we relax and think we have enough reserve in the bank we may not be motivated to cut back and attack our debts to move to the next baby step. Trust the process. He knows what he’s doing. Anything else is “Dave-ish” not “Dave”
Saving that $1000 was difficult. I kept using it for “stuff.”
But you did it!!! So great!
Great video, but Where is the cheat sheet that I can download to calculate my emergency fund?
Here you go, Isabel! - The RC Team bit.ly/38XmutN
I don’t see the link for the emergency fund work sheet, am I missing it or has it been removed? Thanks
I would love to see more videos with Susan.
Hello, Where is the link for the Cheat sheet? as mentioned in the video at 8:42
Have mine in a bank online. Money Market accounts aren't worth it unless you have over 50k due to graduated interest tiers.
I got no debt, and already saved up for my 1st baby step. Do I need to save up for step 3 before buying a car, or should i finance a car, then pay it off, then go into step 3?
Been on BS4 with buffer on BS3 (6 most) but I am not getting the "peace of mind". I am single. Also, having trouble finding Financial Advisor and trusting them to handle my finances. Any advice?
You don't need a financial advisor. We all have access to an enormous amount of resources to educate ourselves on finances.
Nobody is going to take better care of your money than yourself
Go to the Dave Ramsey website and find a trusted advisor with the heart of a teacher.
Having a financial advisor is not a bad thing, but you're going to want to make sure that you're keeping up with what's happening with your money and not just letting them handle it all on their own. You have to play a part in it. Other than that, having a financial adviser can be a great thing.
I also struggle with the peace of mind. But I think that’s an overall low-grade anxiety I have regarding money and life in general since my husband passed away. Perhaps yours stems from a background worry too? It could be worth speaking to a counsellor about. Security is important for our mental health. I’m hoping mine will go once I return to work.
Hi! Where is the link to download the cheat sheet Rachel mentions (8:40) ?
I hear there is legislation that combines your Emergency Savings with your 401K and allows withdrawals without special Taxes or Penalties or anything!
Be interesting how it rolls out!
Where is the document to calculate how much of an emergency fund you need? The video said there would be a link in the show notes, but I don’t see it. Thanks!
Here you go, Michelle! bit.ly/2vLlJW8 - The RC Team
My wife and I both have well-paying jobs, and my wife also has a $2,000/month pension check from her previous employer. How do we factor her pension into our emergency fund calculations?
I couldn't find the cheat mentioned @ 8:50 in the video. 🥺
The link for how to calculate emergency fund?
I recommend saving enough money to self insure vs giving any company your hard earned dollars.
Um... where exactly is the "bulletproof" part?
The title really should be "Maintain Your Focus in BS3"
Where is the link for the Emergency Fund cheat sheet? THX
Here it is! 😊 bit.ly/38LZJZH - The RC Team
So, does the $1,000 merge into Baby Step 3 when all debt is paid or does Baby Step 1 and Baby Step 3 remain separate accounts?
Good question! I would like to know this also. I’m in the middle of baby step 3 and I have been saving it separately from the $1000, but don’t really have a reason why.
They are merged. On baby step 3, take the $1,000 and increase it to 3-6 months. Hope that helps
Where do you guys keep your 6 months emergency fund?
Question for people commenting:
Hubby and I just adopted a dog 🐶 ❤️ and we want to put a fence up. It’s about 7,000 because we have a big yard. We don’t have debt and have emergency fund in excess of 30,000.. (we only need 25,000 for the 6 months of emergency, everything else is sinking fund)
should we take the money out and put fence up?
www.daveramsey.com/blog/pricey-petsare-they-making-us-broke
I would because my pets are like family. Money is a tool to enable you to live your priorities.
There may be a public safety issue in keeping animal contained in an urban environment. Not safe if animal gets loose and comes to harm and also not safe if animal could be dangerous to strangers. Can probably be justified as emergency but really needs to be considered before acquiring pet.
As long as you put that $7,000 back in your account immediately. Tbh the fence should have been put up previously if you were already planning on adopting a doggo, but alas, time to use the fund!
How long would it take you to save the 7k? Could you take the pup out on a leash until then?
Doesn't sound like an emergency to me.
How exactly much is the emergency fund for most people? I know it depends but some general idea like the median would be nice. Is that 20k, less more?
3-6 months of expenses. There's no general idea, it's just 3-6 months of expenses and it's completely different for everybody
@@droid2D2C3P0 I get that, but curious how much other people are saving for EF.
My 6 months emergency fund is $11,600 but I want to get married and start a family. Should I save more than that?
I’m debt free and have $2300 saved so far.
No, if $11,600 is 6 mos expenses for where you're at then you need to start doing other things such as investing and paying off your house. Once you're married then reevaluate where you're at but for now, $11k is enough
Martin Rus once you’re engaged, you and your fiancé should agree to a certain monthly savings and have it automatically saved into a money market account or online savings account to earn 1.70 percent or so. Then you can use those funds for the wedding or down payment.
Your expenses will be different with a spouse and family, but if you're a dual income household and you guys get on the same page before having a kid then it should be easier to get to whatever your new emergency fund goal is. Honestly, instead of worrying about a new number for an emergency fund, I'd be more focused on getting on the same page with your fiancee about finances and saving separately for the wedding. I personally wouldn't wait to have 6 months of an emergency fund in the bank before getting married. But staying debt free through the wedding and honestly with some level of savings.
Maybe go for a 3 month emergency fund right now instead of 6? Or go a little more nontraditional with your wedding or honeymoon for now. I know some people get very affordable wedding rings now and plan to upgrade later. The same thing could be true for a honeymoon where maybe it's very affordable but an anniversary gets a bigger budget. Whatever happens, if you guys get on the same page and are dedicated to succeeding financially you can accomplish great things together!
@Ordinary Sessel Depends on who you marry. My wedding day was a pretty great day because I was with people I cared for. We're newlyweds still (less than a year) but we spent less than $1,000 on our wedding and honeymoon. We had people bring food instead of worrying about what wedding gifts to get, I used a dress I already had, my ring was less than $100, and we went to an amusement park and historic town for our honeymoon. Believe it or not, I was the one who pushed for that because I wanted us to be debt free and work on paying off my (at the time future) husband's car. He didn't think there was anything wrong with car payments. Now he's talking about saving a huge portion of our income automatically and we're looking at going on a nice trip this Summer. It's really all about education and knowing goals are tangible. Most people don't think they can be wealthy because of decisions like that until they see it working for themselves or someone else. But then it's a lot easier to build momentum.
Ordinary Sessel, plenty of users out there of both genders and plenty of wonderful people too. I highly recommend you seek therapy to help you work through whatever is causing your mistrust.
I can’t find the cheat sheet on how to calculate your emergency fund??? She said it’s in the show notes but I don’t see it. Anyone know where to find it?
Check it out here, Martina! - The RC Team bit.ly/37MQG9y
Great thank you RC 😀
I wish this woman has a soothing voice.. like her dad.
Hint: Save more than $1000 😂
Hint: Save more then a 100$ 😂
I have a question. What if you’re a college student and your 3-6 months of expenses are less than $1000?
@@averynmitchell save more than $1,000. Emergencies are not limited to a college student’s low cost of living. Limiting one’s savings to their living expenses is to deny the possibility of accidents, and other emergencies that are NOT losing one’s job. Save more than $1,000!
@@alona724 Great insight, thank you for your input.
@@averynmitchell Dave Ramsey says if you can't afford BABY STEP 1 ($1000$), JUST DO 500$.... Either way, by default. I think everyonr should have at least a $2500$-$3000$ E Fund. Just my opinion.
My go bank no iuder istad
We're in a third world country and thinking part of bullet proofing our savings might mean putting it in assets? It keeps becoming worth less over time when measured against the dollar. Problem with assets are they are not always liquid....
My husband and I are 67 should we continue or cancell his term life insurance that he had at work ..he is now retired..and it keeps going up
I plan to stop paying for insurance once it expires. By the time it expires, I would have millions.
Ms Rachel thank you so much for always sharing your knowledge. My emergency funds account is depleted and I'm super mad about that. So this video came in at the right time.
Also, please, please do not cross your legs. It puts lots of pressure on your knees and I'm not certain but it might contribute to developing spider veins on that area.
You should save 1 year of your monthly income and 3-6 months of your monthly expenses
Let me get this straight - 1year of your income & 6 months of expenses? That would take years!
Savings = You get to keep your money
Good jobs workers no my ritng fraids
My litle ingilesh
Me before 2020: shm I don’t understand how people get in credit car debts.
Me 2020: got into 5k credit card debts😫
Methinks this lady probably brings up her husbands student loans all the time even after they’ve paid it off.
Terri Nakaji just goes to show that money could be a cause of marital issues even if you’re debt-free. If you don’t see eye to eye and aren’t willing to forgive or accept or respect or move forward past the financial issues, the marriage will still suffer.
Interesting observation. Did she resent him being the breadwinner? His education probably enabled him to do that. This is just a snapshot of their life and can be misleading...wanted to say that to be fair
Maybe when she does that he could point out the 80-100 lbs she's gained since marrying.She doesn't give me a good vibe at all!
Buy a $1,000 safe to guard your $1,000.
Your air conditioning breaking down isn't an emergency! You can survive for a few months feeling hot! It's not the end of the world! People used to live without air conditioning! lol
My ti piles bank lomy israle my name tmnawo berhane
Nothing new here. Go to the source ie her dad, Dave Ramsey. This is just the same thing he has already said a million times.
not true really. I appreciate that she can go through various details on how to implement Dave's advice more exhaustively
I would like to point out that unless your kids are raised from the start on cauliflower "potatoes" they absolutely will notice, don't lie to them and tell them it is potatoes when it isn't
Maybe, good advice three years ago, however, not now. banks aren't safe anymore, and there is no interest rate worth risking your savings over. Bernie Madoff showed us what greed can do when investing. Pay attention
imagine shilling for the death lottery on a finance podcast 💀
Rachel gives good advice, but she talks like a teenager.