Saturday, April 9, 2016

The Emergency Fund: Why I didn't listen to Dave Ramsey

Quite awhile ago, my husband started listening to Dave Ramsey. We got his book Financial Peace and read it. And set up ourselves a plan.

A pseudo-DR plan.

One of the biggest disagreements I had with DR and his baby steps was the Emergency Fund step. He advises you set up a $1,000 emergency fund, then stop there. After that you pay off all your debts and then work on a 3-6 month emergency fund.

This didn't sit right with me. Ever. Only $1,000? I did the math and that would not cover our bills for one month if just one of us were to stop working for whatever reason. Not one month. That would have meant using credit cards and accruing more debt, and we already had more than we could handle.

Now, I am a Wardle Woman. When we make up our minds about something, our minds are made up. I made up my mind that we would not have a $1000 emergency fund, then work on paying off all our debt. After calculating with our current salaries, it would take us 3 years to pay off all our debts. And only having $1000 in the bank, and not working on building our retirement for that long, made me EXTREMELY uncomfortable.

I felt very strongly about this. Very, VERY Strongly. No matter how I reasoned, and no matter how my husband reasoned, I could not sleep well at night knowing we had only $1000 to take care of us. I just couldn't do it.

In my experience, if I feel that uncomfortable about something, it means I need to do something to change it. You can call it whatever you want, "gut instinct", "intuition", but for me I usually feel that this is the Spirit prompting me to take certain action.

So, I told my husband I was still going to contribute to our emergency fund until it was $5,000. We could get by for about 3 months, longer if we were super careful, on that amount of money.

We reached a milestone of $2,000 in our emergency fund at the beginning of the year. I started to feel a lot less stressed and worried about our finances at this point. I felt like we were on the right track to keep us afloat for a month or two if something were to happen. At this point my disaster list consisted entirely of job loss. It would tide us over long enough to find a new job.

I kid you not, less than a week after reaching this milestone my car broke. Broke in a big way. Broke in a $2,000 repair bill way.

And I was so relieved that we had the cash on hand to pay for it. I was glad, that despite my husband's hesitations, I had put aside as much as I could after tithing (which always gets paid first) and paying bills (including extra credit card and student loan payments) into an emergency fund. I was glad I had IGNORED (sort of) DAVE RAMSEY.

At that point in our paying off debt journey, a $2,000 credit card charge would have put us right back where we started out at. Even if our emergency fund had been at $1,000 and we had to charge the other half, it would have been a major setback.

When it happened all I could keep saying and thinking was, "Isn't it great that Heavenly Father let me know that we needed more? That He kept this from happening until after we had what we needed to take care of it? Isn't it great!"

Since then, I have continued to ignore good ol' Dave Ramsey's advice about the emergency fund limit, and contributing to retirement (I recently read an article saying that most Millenials don't even have retirement and don't plan on having any. I do not want to be a 70 year old working the grocery bagging line).

Now, I'm not saying you shouldn't listen to DR. We listened to him. I think my husband still does, but I got tired of hearing him answer the same questions, the same way, over and over and over again. If you are listening to him, and following what he recommends, 90% of his radio show would not be happening.

Anyway. I appreciate what Dave Ramsey is doing for the people who listen to him. I appreciate that he has facilitated a very open financial relationship between myself and my husband. Because of him we BOTH know what are finances are like, where we are, and what needs to be done in order to get where we need to be.

But that doesn't mean we are following his advice verbatim. We are taking the concepts he advises, and adapting them as our situation dictates. And, honestly, as we are being led by the Spirit to adapt them.

When you do that, it allows Heavenly Father to see to your needs as you are able to take care of your own family. I am still working on that $5,000 goal, but for different reasons now. And if I feel like we need to save up more, you bet I am going to listen to that prompting because I know it's one way that Heavenly Father is keeping an eye out for our little family.

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