He is right about the snowball, that's what I did. I few small wins helped me get going and motivated. I laid them out and laser focused on smallest, obsessed over it, everyday log onto website of debt holder and that number was in my mind. Took 10 years of poverty-like living but 3 weeks ago paid of 60 grand in debt! It can be done.
The $1,000 was NEVER meant to be a long term emergency fund…The problem was when people started Financial Peace University, something as simple as a flat tire would throw them off track…The $1,000 was meant to be a starter emergency fund til you can build up a fully funded emergency fund
I have heard Dave make this point myself. I have also heard him acting surprised that a new water heater was going to cost a caller over $1,000. He has had the starting EF as $1,000 for well over 10 years. With inflation why not bump that up to $1,500?
@@johna9994 Dave has also answered this, the $1000 is a basic commitment goal to get you going, because if you have zero saved, those emergency bills can kill your debt snowball motivation. $1000 will cover most emergency type bills that may pop up, for most people, and therefore help keep you from needing credit or adding a new bill to your debt list. it feels good to be able to handle a problem yourself without making your debt situation worse. the other reality that people forget, Dave wrote this for people that are completely broke and up to their eyeballs in debt, but have an income. the first step is really cutting expenses until you have a positive cash flow to go towards that $1000 in the bank, after that surplus money goes to debt. his program worked great for my wife and i, and we were not even that bad off, just way too much debt.
And that's what I like about Dave Ramsey. His advice may not be optimal but it's plenty good enough, it's easy to follow, and you get some early wins - and don't underestimate the value of those early wins. If you're skilled enough to work out your optimal strategy for getting out of debt you probably aren't going to be in debt to begin with ;)
I'm 54 and my wife and I are VERY worried about our future, gas and food prices rising daily. We have had our savings dwindle with the cost of living into the stratosphere, and we are finding it impossible to replace them. We can get by, but can't seem to get ahead. My condolences to anyone retiring in this crisis, 30 years nonstop just for a crooked system to take all you worked for.
I feel your pain mate, as a fellow retiree, I’d suggest you look into passive index fund investing and learn some more. For me, I had my share of ups and downs when I first started looking for a consistent passive income so I hired an expert advisor for aid, and following her advice, I poured $30k in value stocks and digital assets, Up to 200k so far and pretty sure I'm ready for whatever comes.
It’s funny how the only people complaining are the ones who have never actually tried to finish his plan. The ones who went through it are much better off.
I think the $1,000 emergency fund is more of a habit forming achievement than it is a safety net. $1,000 can pay for quite a few emergencies that may come up, and there are dozens more that it can’t. What I think Dave’s intention behind it is, is to start working that saving/investing muscle and to reach an achievement quickly to build momentum for the race that’s ahead of you. Realistically, a month saved is far better, but I don’t know how that would effect the rate of success or follow through. Maybe that emergency fund size should also be dependent on the situation, like the snowball vs. avalanche method. Just my thoughts.
Yea...I think the $1000 is for sanity...like if you get in an accident, you can pay the deductible and you're not thinking about hitting and running and possibly getting a felony on your record...or if you get very sick, you can pay for the initial co-pays of various doctors and not thinking I can figure this out on my own on WebMD, and then making a really bad self diagnosis that gets you screwed forever
Pretty much nails it and Dave has mention this before. Its about formatting your emotional spending habits/mindset about your finances. Dave has mention that $1000 wasnt enough in 2003, so dont expect it to be a real emergency fund. It used for small emergency as you pay off debt. If you have a emergency higher than $1000 then atleast you have a starting point. You can pay minimum on debt and handle the situation. That's the one thing I disagree with what Caleb mention how can you be far worse with just having $1000(should give an example honestly)? But at the end of the day it's a strategy and has work for some people. You don't have to follow every step and can modify to your needs. I personally did Dave format but used the avalanche method, saved $1500 and got it done.
Right, I basically understand it the way you do. It is a big step for someone to save $1000 when they have never saved anything in their life. Once you figure out how to make that happen, you can keep working at it to save for bigger and bigger emergencies (hopefully!) It's symbolic and aspirational for many, but just the start once it is attained.
I was trying to pay down debt but because of Caleb I learned about the resources I needed and I am officially debt free for the first time in a decade this month. Caleb’s voice lives in my brain every time I go to make a stupid purchase and it has actually saved me so much money with that mindset.
Study - 60% of Americans can't come up with 1000.00 dollars. Dave - Start with a 1000.00 dollars in your baby starter emergency fund Critics - that's dumb. ...... what?
Dumb in the sense of not possible for 60% of people, probably... Are we talking about an ongoing fund of $1k, or a fund that is supposed to grow by 1k PER MONTH? Big difference there. And considering that the median rent exceeds the median income in much of the country now, we clearly have a problem.
its pretty dumb that he specifically says to pay off ALL debt before increasing that emergency fund. imagine being a family of 6 and paying off debt for years all while having no more than $1000 in savings
@@thedopplereffect00How is he dishonest? That’s ridiculous. Being consistent in their teaching for 30 years instead of cultish either. If you have a better way, by all means, write a book, sell it, and watch people succeed the Doppler way.
The 1,000 is a starting emergency fund until you get out of debt. Part of the reasoning is to make you URGENT to pay off the debt, then build up to 3-6 months of living expenses afterwards.
Agree but what Caleb is saying is it should be a months worth of Expenses. $1000 (emergency) vs $2500 (Rent, food utilities). You can see why if an emergency happens, you can burn through the $100 and still be in the hole.
@@TheFruitneyKeep in mind people that go to Dave don’t have a penny saved. They never learned to save. Asking them to save even $1k is hard. A lady in my FPU class barely had $500 saved. And she struggled just to get the $1k. Not because she didn’t make any money. But because she had bad habits that needed to be corrected. So saving that first $1k is a huge win. And it’s a huge stretch. Now if you take that same group of people and ask them to save $2k, $3k, $4k +, they aren’t going to. The goal and the step is too big. Just achieving the first baby steps changes behavior. So when you’re on step 2, you have an intensity you didn’t before. And an urgency to save even more!
@@BlueDauntless Okay, but if it will take them a year to pay off debt, they have a year of being in a situation where if anything goes wrong their only lifeline will be credit which they obviously have a bad relationship with, and that will be utterly CRUSHING emotionally, because they will see all the progress they had been making disappear.
@@jordanledoux197 If you can't put money to the side where is the money to pay back debt supposed to come from? What happens e.g. if a bill is 200$ more than expected?
You start wherever you are. If all you have is $10 and can only add $25 a month do that. Anything beats having nothing. I’d rather have $1000 and have an $1500 emergency than have nothing saved. If you can save two or three months emergency before paying down debt, then you can pay down debt and tweak your emergency fund if need be. The objective is getting those debts down.
I don’t follow Dave Ramsey, but his system works for a lot of people and I’ve incorporated some of his principles into my own. No system is best for everyone.
$1k is more than enough for a starter emergency fund. $1k will buy a used transmission, will buy an HVAC repair, will buy a roof leak fix, will buy a new tire, etc.
Yes exactly. I did the Dave Ramsey baby steps.. I actually kept 3-4 grand in the emergency fund. But followed everything else like normal..but id agree. If you have a kid. Better make it 2K E fund.
So its been stated the $1000 is just to give a buffer against needing to go back to using CCs if something small comes up. It was shown people who had to fall back on CCs when they first start the program get super discouraged. Once they get to the step for an actual emergency fund, its supposed to be the equivalent of 5-6 months expenses
The problem lies in the timing. Dave's second step is to pay off all your debt before saving a 3-6 month emergency fund. It could take a person a few years to pay off their debts. Having such a small emergency fund would leave them vulnerable in the case of job loss, a medical emergency - even a small medical emergency, or plumbing disaster, among others. Granted, this is only my opinion, but I'd make step 1 the building of a one-month's expenses emergency fund, and I'd continue to feed it while tackling debt.
The comment around understanding what your relationship with money is, and where is going is a very insightful comment. This is so foundational to everything that they are all talking about. It's not just taking a passive interest in what you money is doing, you need to interrogate your fears around money; your insecurities.. all of it.
$1000 is the baby fund. Real emergency fund is 6 months. He recommends the $1000 for the raw beginners who are in massive debt. It’ll feed you if you lose your primary job, but not much more than that.
$1000 emergency fund is just a win, like tackling/attacking the small debt first. You need those wins, just so you can see the progress you're making. And if you're car has a $1200 issue, $200 doesnt look so bad.
Figuring out where to start when you have multiple debts is very overwhelming. I always paid over the minimum payment on credit cards and now only have one which I pay off monthly. When student loan interest went to 0% during covid and payments were deferred, you had better believe i went in and manually scheduled payments and my SL debt is gone. I also have not had cable TV in almost 4 decades. It kills me when I hear friends talk about being broke, but they have huge TVs and an expensive Cable/satellite/streaming service and go out drinking every weekend.
1 month in the bank isn't an emergency fund. That just breaks you out of the hand to mouth cycle so you can put bills on auto-pay. When you get TWO months in the bank, that's when you have money that you aren't counting on for the next month's expenses.
I'm a finance counselor at a university. I give people small things to do when they start. Like Caleb said in this video it makes more sense from the "emotional stand point" to start small.
As a CFP professional what this guys talks about in regards to giving advice on debt repayment methods is 100% bang on. You have to cater your recommendations to the phycology of the individual. To his point on emergency funds, he is right. I go a step further and recommend to people 3 months emergency fund for the fact in my country it takes about 3 months for unemployment insurance to kick in. This guy has a good head on his shoulder but needs to get out in the field working to obtain more experience. The amount of financial strategies you also get from fellow industry people is also invaluable. I guess Caleb gets some of that from other means but not as consistent as being in the field. Be a different thing if he was in the field for 10-20 years before jumping to RU-vid. Never tread the line of arrogance as experience and knowledge helps avoid that. Regardless of this non solicited advice, keep up the great work Caleb!
Dave acknowledges that of course $1000 is not enough for anything but it’s the human psychology behind it. Small victories trigger habit and motivation.
The other thing is: What to do without these 1000$? Payday loan? I think a big part of all that is to change the whole mindset to getting an overview, planning and pay now buy later.
Learning to budget and live within your means is a life skill most people don't have and need to learn to get control of their life. This is why so many people get degrees that they will never be able to pay back their student loans and they're not even sure where that can work and how much their earning potential actually is.
The size of your starter emergency fund is going to vary based on your situation. It should be an amount that would cover whatever an emergency would look like for you. Is it a transmission failure, an AC failure, a bad water heater? Whichever of those is the most likely and highest cost, that is what your emergency fund should be.
The reason Dave says start with $1,000 is because 3-6 months worth of savings is too daunting for some people and they would never even start. $1,000 is the buffer while they knock out their debt. Once the debt is gone the 3-6 months emergency fund is way more achievable.
I also love Dave. I listen to him almost every day. However my biggest issue with his baby step 1 is not necessarily the $1000 amount, but that he applies it to literally everyone regardless of their situation. $1000 bucks will work for most people, but Caleb is right on this one. If you're a family of 5 with a 15 year old car, or someone with a highly unstable income, you should be saving more than a 1000. The starter emergency fund should be based on your personal situation.
@@fglend73 I mean that saving $1000 is a good and reasonable first step for anyone improving their finances. Having an actual emergency fund is ideal, however if someone is struggling with financial discipline and needs guidelines, veering away from a laid out plan is likely to do more harm than good, especially early on when the discipline is being newly developed
@@aisherwasher6959 the point is that, while Dave has said many times that its a step and nothing more. he still refers it to an emergency fund and often doesnt take it any steps further when giving advice. he often tells people "follow the baby steps" and thats it. that baby step says specifically "save 1000 dollars and then pay off all debt" for someone with 5 kids they absolutely should not just have $1000 for months or even years as the pay off every dollar of debt they have. Dave doesnt often change his steps based on scenario and no one path works for every scenario
Why do people always look for the exceptions to the rule as a critique ? No advice works every single person in the world. How many people have 5 kids ?? $1000 is a starting point.
The $1000 starter emergency fund is to show you, that it is possible to save money. It is form a habit of saving money, which you will need to be financial stable. The 3 to 6 months emergency fund is your "true" emergency fund.
1000 dollars emergency fund is designed to keep you uncomfortable. The next step after paying off your debt not including your house is 3-6 month emergency fund. That is between 10-30 thousand dollars as an emergency fund. Then go into the next steps.
I think the part he's missing is that the $1,000 emergency fund should push you to get out of debt faster. If you have a whole month saved I think that's fine, but you'll be more comfortable and less motivated. The baby emergency fund is not designed to make you comfortable and to say "save up $3,859 before paying off debt" is such a momentum killer because they won't even actually get started paying off debt for months in most cases.
Dave who decorated his house in whiskey barrels, then sold it quickly because of all the lawsuits coming his way. If he had actually followed the Bible, he wouldn't be in this mess. He treats people horribly.
Dave tells you to keep $1k as an emergency fund until you’ve paid off all consumer debt besides your mortgage. This can take years. Additionally - the logic behind the $1k starter emergency fund was the same when Dave began his program 30 years ago but he has refused to adjust it for inflation. This makes no sense. $1k today has far less buying power than it did 30 years ago
Mathematically, you are correct, and Ramsey's approach is not optimized for maximizing gain or controlling risk; it's optimized to get people engaged in responsible financial planning and keep them engaged. $1,000 doesn't buy what it used to, but it puts a person into a mindset where they start thinking of short-term savings in the thousands of dollars scale. Other areas where Ramsey optimizes for psychology and human behavior over best return/risk management: -The debt snowball method. With the same savings rate, you're mathematically better off paying your debts off in order of which has the highest interest rate, not which is the smallest. Psychologically, people get more invested/engaged with the snowball method. -Paying off your house early. Unless your mortgage is much higher than average, you're generally better off investing that money. Paying off your mortgage early improves your financial peace of mind and flexibility. -Investing 15% of income as a goal after you have a fully-funded emergency fund. This is a pretty low bar designed to keep people on track, but it's better to save more than this if and when you can, especially in your younger years. -Abandoning the use of debt and credit entirely. Debt gets a lot of people in trouble, but it's a viable financial tool for acquiring assets and building wealth if and when it's used wisely. Dave's debt-averse approach is designed to maximize financial security, not financial gain.
@@willerwin3201 you’re right that he is more about psychology. So why does he call anyone who doesn’t follow this approach broke or stupid? Many, many people have fiscal control - they don’t follow his path and they excel. But he arrogantly pretends like they don’t exist. The $1k starter fund bothers me more than it should. But his logic 30 years ago picked this number as a reasonably attainable step one, never intended to be permanent. So at least adjust it for inflation so people don’t fall further behind. The logic from 30 years ago can remain exactly the same, but the number should absolutely be higher now
@@MeowmyandMe I couldn't say; I'm not a regular Ramsey viewer/listener, and I haven't seen or heard him call somebody broke or stupid. I've seen a few interviews he's given and clips where he's come across people who haven't followed his process to a T, and some people who challenged him on the merits of his psychology vs return on investment decisions behind his 7 step method, and he seemed reasonable about it. Can you give me any examples/links?
@@willerwin3201 I am sure I could hunt some down. But literally almost every single time he comes across a caller who says that his/her (pick one: mom, dad, financial advisor, friend, etc) disagrees with Dave’s stance on X, his almost immediate response is “why would you take advice from broke people?” It is literally an automatic assumption in his mind that if someone isn’t following Dave, he/she must be broke or stupid. I listen to clips on RU-vid a lot, and will look for examples for you tonight
@@MeowmyandMeThen why don't you just adjust it for inflation for yourself and stop whining about it, since you can't follow simple instruction? 😂 Stop _feeling_ and start _thinking_ for a second; unless you're a homeowner and/or a parent or a business owner/self-employed or something like that (and you should have well more than $1k saved up anyway in those particular cases), what emergencies--real emergencies--have you encountered that you needed $1k or more to fix that you didn't land in because of poor planning to begin with? That's where the credit card use comes in, BTW. And before you use a car, typically those don't suddenly crap out on you unless you were ignoring the warning signs (and sounds, and sensations) or you bought a POS that you didn't put enough money into. It's literally a floor so you don't have to spend on credit what you could take out of the emergency fund until you pay off your credit cards and car loan. By that time, you have a new perspective on your behavior with your money. You've reduced your expenses, you've increased your income, you built a budget to know what's coming out, what's going in, and what you owe and you've stuck to it, so you're not even worried about an emergency fund at this point, it becomes more of a safety cushion. After you've paid off your consumer debt, then you put 3-6 months expenses into it. I would just save half my gross annual income, but that's just me, and I'd calculate off of my gross annual income. That's where I've adjusted the Baby Steps. The percentages remain fixed, but the amounts would vary because as I increase my income and keep my expenses low and remain debt-free, I'd just calculate my fully-funded emergency fund of 50% of my gross pay and my investment at 15% of my gross pay. Follow them or don't, or adjust them as you want, but if it doesn't work for you--but it somehow did for all the people he's helped over 30 years, then we'll all know it's not a him problem.
He also recommends 8% withdrawal rate which is super dangerous and can lead you to going broke before you die, so doing this longer than Caleb's been alive isn't saying much
I’d be terrified if I only had $1k in my bank account. My rent is $1,300. I’d be homeless if I ever lost my job. It took me 7 months to get my current job.
I started focusing on my finances 2 months ago because I was tired of living paycheck to paycheck...better late than never. The first thing I did was save up a $1k emergency fund, which was easier than I thought it would be...who knew budgeting actually helps? I've since increased that to a 3-month emergency fund, which I'm still working on. I've paid off my credit card and am working on paying off the last $9k owed on my car. My house and student loans are already paid off. The struggle is real, but progress is progress.
I would disagree with that. I was never taught how to budget. Balance a checkbook, yes. Create and stick to a budget, not even a little. I had to learn.
I have said this before, I feel like it should be $1000 emergency fund AND one credit card with a zero balance. It took me time to stop using credit cards. I had actually become dependent on those cards to act almost like and income. It happened, though. I have no more consumer debt!!! Now I am making payments to my ex-husband regarding a vehicle we purchased just prior to getting divorced. Then….I pay off my house. If nothing disastrous happens, I should be out of debt completely by next year at this time.
As a mechanic better have 5000 if ur serious about never doing debt again 1000 dont cover shit plus new cars when out of warranty are crazy expensive to repair
A $1000 couldn't have gotten you a running car for the past 2-3 years (Yes I know there are deals but those take time to find etc) Largely thanks to the shit program that was cash for clunkers. I swear if some dumb politician tries that shit again with the push for EV's......@@chrishart8548 😠
@@chrishart8548 Dave is clueless when it comes to automotive repair costs and I recommend ignoring most of his specific advice. It's not 1985 anymore where you could pay a guy $500 to swap a $250 junkyard small block chevy into your impala. Nor can you buy anything safe that runs and stops on its own these days for less than $3000 - and it will still need thousands of dollars in repair to be reliable. Shop rates are $200/hr most places now. (For what it's worth, he constantly humble brags he has a Ford Raptor, a $70k+ toy truck which depreciates like crazy).
he never claimed it was specifically bad advice. just that the advice is not catered to anyone specifically and only a general case. and with any general case it does not always work
@@michaellong2439 like taking out 8% lol. Guy is a multimillionaire, he isn't the one taking out 8% on $500k retirement savings worrying whether he will run out of money before he dies...
I love Dave Ramsey but what he will never explain over the air on his show is that back in 1992 when he first originally wrote financial peace. The starter emergency fund was $1000 which was worth $2,188.53 in today’s is buying power due to inflation. And all he needs to do is say “hey guys inflation is a real thing and because I teach finances, Our thousand dollar emergency fund is going to be $2000 because everything has doubled. And the reason they don’t wanna change it is because he would have to rewrite 30 years worth of curriculum, videos, podcast, audio, radio, DVDs, you name it.
People misunderstand the $1000 STARTER emergency fund. If you set aside the $1k and pour all remaining disposable income (post-budget) into debt overpayments, then some $2k cost comes up, you use the $1k STARTER emergency fund and take the remaining $1k out of that month’s debt snowball budget. This whole plan, with millions of success stories is predicated on monthly cash flow and a cash based budget. So keeping a minimum float of $1k, plus that month’s cash budget, never leaves you with ONLY $1k for more than 28 days, assuming you spent your whole monthly budget in the first few days.
Everyone keeps saying the $1,000 is meant to be short term. The problem is this is all you have while you pay off all debt besides your mortgage which could take a decade. This might work if you’re 22 and owe $5k on a credit card but they give the same advice to 40 year olds with kids and $500k student loans who are going to spend years in this spot.
I disagree. If you are budgeting correctly, there should not be such thing as an emergency. It should all be budgeted for and once the “emergency” happens aka your car breaks down and needs $800 worth of maintenance then you have that money saved in the car maintenance fund and you don’t touch your emergency fund. Emergency is another word for unplanned for life situation.
Listen to the plan. The plan isn’t to stay in that spot for a decade. Two to three years. Massive debt will take more time. But what’s also happening in that time is behavior modification. Because people will get out of debt just to jump right back in. For example, this guy called in. Paid off all debt, including his mortgage and investment properties. Then lease a $50k dollar truck. He could pay it off in 6 months. Or he could have saved for it then paid cash. His behavior didn’t change. I’m more than willing to bet that guy dug himself in the hole again after that truck.
The $1,000 emergency fund not being enough is true, my husband and I (no kids, no pets) decided to always have AT LEAST $3,000 to $5,000 as our emergency fund (our rent alone is $2,000 we live in a 1bd/1b in South Florida). Two weeks ago our paid off 2008 Honda Civic SI needed the water pump and the timing chain replaced, amongst other things - that was $2,700 on the spot. Two years before that, I got into an accident with that same car and even though we had the recommended coverage by Ramsey’s program, we had to pay almost $4,000 (after the peanuts that our insurance gave us) so we could get the car fixed. Since it is an older car with over 100k miles, the insurance company deemed it total loss and they wanted to keep the car. So, no, $1,000 is not a one-size-fits-all, you gotta decide how much you’d really need as a minimum for your emergency fund.
$1000 takes care of lots of emergencies, but it’s not supposed to take care of everything. If it takes you any longer than a month to save a $1000 baby emergency fund, it’s going to take months and months and months to save up 3 months of expenses for a full emergency fund. That’s 3 extra months that your debt is increasing because you’re diverting money away from it for the emergency fund. Dave advice is good.
I'm no DR here! But my gosh! How many times does DR have to say "The $1,000 emergency fund is a starter fund! YOU CAN ADD TO THAT $1,000 EF!" But people STILL do not listen! We know and DR does too! That in this economy $1,000 EF will not totally take care of your emergencies. That is why you can add to it!🤦
I saved $2,000 and then used $500 of it to pay off my credit card and a few days later, I had a medical emergency and missed 2 weeks of work and the same day, someone drained my checking account because they got a hold of my debit card information. The bank restored my account and replaced my debit card and I had enough saved, it didn’t matter it was impossible for me to work and that made it a lot easier to recover not worrying about money. I had 40+ hours of PTO saved, but I recently had COVID and then I had it just about to 40 hours and I had a medical emergency that required 80 hours of PTO, so that would have been a week without pay. Now, I want to have enough saved where if I had another emergency in the next few months, I’m okay. Sometimes, multiple events happen close together. I need to save and then pay off more debt, but saving needs to come first or I’ll just end up with more debt because that’s what happened last time I got debt-free and the time before.
Dave has flat out said 1000 bucks has never been enough, its not supposed to be enough, its supposed to be just enough for a tire, or small repair while you get out of debt. Once you get the debt knocked out then it goes 3-6 months
Having a 1K cash is not a bad thing for the first step but you eventually need to have 3-6 months money saved away that you can get easily in an emergency. Dave preaches having emergency funds to cover 3-6 months, so I’m lost why saying his method doesn’t work when it has helped millions around the world with their debt issues
Did you not listen to what he said? Instead of just $1k which might have been great 10 years ago, you basically need more money now. Most true emergencies will wipe that $1k out quickly. Most car repairs are $1k+. AC repair over $1k. Fridge goes out $1k+. Washer, $1k. Etc etc
@@antwanthorogood4921 did you not read the first sentence of my comment? Yes saving 1K is really great especially in this economy however you will need to have 3-6 months of expenses saved up as well to be on the safe side of things.
One thing that Dave doesn't touch on a lot with the Emergency funds and getting out of debt is the time it takes because everyone's finance is different. But it is important to know that his program is not meant to take couple of years. His method takes time. A lot of ppl hear, 3-6 month emergency fund and say its impossible or doesn't seem feasible to save that much. The reality is that Dave expects you to get to this part within your timeframe which can be 2 years, 6 years, 8 years, etc based on your income. There are too many callers on his show calling and saying they are debt free in about 1-2 years from starting Dave's baby steps, but the reality is that most folks will take longer. So people do the math and realize it wont take them 1-2 years like his callers, but more like 5-8 years just to get out of debt and save a 3-6 month emergency fund. It seems discouraging but IT TAKES TIME to get your finance together.
Idk if thua guy read daves books lol 😅. I know he says he does but how you gonna save up for bigger emergencies when you cant save 1k? The saving 1k is more than a STARTER emergency fund. Yiure building habits and discipline to get there. Not to mention, step 3 is literally save 3-6 months of living expenses. He also teaches the avalanche method with debt. Debt is the biggest portion of where money goes. Its smart to pay it off.
It’s wild how someone can question his qualifications. I guarantee he only makes people’s lives better. And he doesn’t need a certification he’s literally just giving run of the mill dad advice to people who just never got it or he telling people how to get out of debt which is really just common sense people just don’t want to give up their lifestyles to pay it off and need to head someone say it
I followed Dave’s plan and that’s how I saved money for a house. I stopped the white envelope system bc of the pandemic I didn’t want to touch money but it works. I was always on budget
Every guest Caleb has had on had never changed, the first girl he had back. She came back significantly worst. There was guest that said they’ve been watching Caleb for months and made no real changes till there on his show. One guy that went on the show and was in huge debt, but was buying Caleb merch. I mean I’m a huge fan of Caleb but no way of thinking is 100% solid proof, Dave/ice coffee/ Caleb. Sometime is finding the happy medium that make sense
his take on the Ramsey E-fund makes sense. While I understand what Dave is teaching and for most of his listeners the $1k is the right thing to do, however saving a 1 month E fund is a good move.
I cant think of a single emergency thats helped by $1000. When I think emergency I think: Furnace goes out in winter ($5000), car transmission goes out ($2500), lose your job (whatever your monthly costs are). I follow Dave Ramsey but I have always had three months of expenses in an emergency fund and when I am out of debt will increase that to 6 months.
@@HatedJared Well then you are completely misunderstood about the reason for $1000 then. It's name is emergency fund but is not the only 1000 funds. He says after Baby Step 2 i.e paying off all the debts, the snowball way he says to save 6months of necessity as emergency.
@@daviddegea3373 So if someone has a family of 6 with 100k in credit card debt would you really suggest having only $1000 in savings for probably years until you get out of debt? his advice is general and with any general advice it does not work for every situation. A family like that has way more of a need to get a larger emergency fund prior to paying off all debt
furnace and transmission aren't really emergencies. Neither suddenly stop working - they die slowly and if you are doing regular maintenance you'll have a timeline of when they need replacing. Replacement cost/months to replacement = monthly sinking fund in budget. Regular maintenance is part of the monthly budget because they are expected expenses. The emergency fund is for unexpected expenses. You drive over a nail and need a new tire, or you're in an accident. For that big accident, set your deductible at $500 or $1,000. Also, don't pay $2,500 to replace a transmission - just buy a $2,500 car. If the car is worth enough to spend that much on a transmission, it's worth enough to do regular maintenance and not need a new transmission. Ultimately these are guidelines - personal finances are personal. My wife and I paid off $144K while having 4 kids and stuck with the $1,000 emergency fund. Anything over $1,000 we paused the baby steps (paid minimums) and used our cash flow to cover the emergency.
That “relationship and conscience of money” at the end was the report without reading the book, that dude thought he had there, it was bloated word salad. What do you for money? Haha 🤣
Caleb is right. Most emergencies are over 1000. I get the building the habit to save thing Dave is teaching but it just isn't enough to really make an impact
Then work hard and save more. I haven't went to a coffee shop in over 2 years. No eating out, no expensive bars. Stopped golfing. Saving more than ever thought possible
What common emergencies are over $1,000 that you can't insure against? Serious question because my wife and I have 4 kids and paid off $144K over some years and we only kept the $1,000 emergency fund, and set our insurance deductibles at that level. Most people don't even have $1,000 dollars, so it doesn't seem unreasonable to me.
@@laundrygoddess4 thanks for the reply. Yep, water heater is around $1,000 depending on size a labor - but that can be cash flowed. Remember, you have $1,000 plus your snowball, which you would pause. My kids had a bunch of dental stuff come up which we cashflowed. I also automatically have money going to an HSA as part of our budget which said dental work depleted. Furnaces generally take time to completely die. If someone has an old one, it's replacement should be in a sinking fund. I live in Minnesota and had one suddenly stop working - only took a few hundred to bring it back online. Root canal - do those come up suddenly? Like you can't plan to have it done in the future? I fortunately have never needed one. I feel like the dentist would warn of the upcoming need during a cleaning, or lingering pains warning of an issue, but I could be wrong. I did break a leg playing soccer, and although it was over $1,000 I called the hospital and put it on a payment plan until my HSA was replenished. Maybe I'm a risk taker, but I feel like the odds of having a $1,000+ emergency is very small. I'm also not dogmatic on the process - if your teeth hurt or your kid is injured, take care of it and get back on the snowball. I just never felt like we NEEDED more than $1,000 in the bank when we were already over $100K in the hole 🤷♂️ Ultimately the goal is to get out of debt as fast as possible in a way that works for you.
Depends on your situation. Between credit cards and selling investments (especially if we can go T+1 or shorter) I have not had a need for an emergency fund for decades. Will not start now.
(1) If you were disciplined, you won't be in debt. Does not make sense. (2) He does not understand emergency. The $1K is supposed to get you pump to pay off your debt and save more in the future. People are always looking for loopholes rather than follow what works.
Do agree that $1k is not enough. Surgeries and emergencies, Ive experienced, can cost more than $3K. Having enough in your Checking Account and in an Emergency Fund, in my opinion a Savings Account where you can instantly have access to that money, can save you from taking loans.
I don't think I've ever seen a Caleb success story. I think his audits are great for come to Jesus moments, but his follow-ups are always failures. He never addresses the actual issues. He does a budget that anyone can do with an app that none of his clients will stick to and he yells at everyone. It's definitely entertaining, but he doesn't offer any solutions. Starting with a two month emergency fund for someone that can't get through a month without taking out a payday loan is NEVER going to work.
Caleb's show is just entertainment. The people with spending issues need some type of counseling and analysis of their professional earning potential to get out of debt for good
I only watch his show to see how badly other people have screwed up so I have perspective on my own screw ups, but, unless I find a better way, the Baby Steps are it for me.
I feel em on travel anxiety haha I got a little girl and a fiance I love dearly so I use to think the worse when I would leave for work, but now I am getting better.
I get what he is trying to say but the truth is they were living check to check before right? Last time i checked $1000 is a way more than $0. The problem with the 1 month method us the length of time to accumulate it. If you make 3k a month and your left with $100 after all your bills. You start taking action 30 months from now. I think if you can save a months salary in 1-3 months, your not that bad off finacially and can fix the problem easily.
It works if you follow the steps. We had set backs e-fund back to zero multiple time put saved us from accruing more debt. At the $1000 and 3/6 month level. The behavior/discipline aspect is the hardest part especially with basically everything we want is at the click of a button.
While avalanche does technically save you more, the small victories help you stay on track. I discovered Caleb and prior to I was in and out of debt constantly. Going through periods where I was penny pinching because I didn't utilize CC responsibly to being out of debt. I never had a period where I was financially disciplined enough to just use credit as it should be. After Caleb's videos, I'm on track to actually maintaining a debt free lifestyle and at the very least one where the debt is easily manageable.
People will be contrarians no matter what the number is. Most of the people using Ramsey or Caleb have a decent amount of debt. It’s alot harder to save up a month’s worth of funds if you have a bunch of minimum monthly payments. If you’re in the beginning stages of either program, you’re very vulnerable. 1k is for the random medical bill or minor car repair. It doesn’t matter if your starter emergency fund is 1k or 3k if you’re central air unit takes a dump or your furnace blows out. You’re going to end up financing.
The buying power for 1k is way less when Dave made the steps compared to now. 2 to 3k is more reasonable because there is no longer a 1k emergency that exist anymore.
@@michaellong2439 The title says that Dave Ramsey's emergency fund doesn't work. It does. If you're talking about the $1000 it's not an emergency fund.
@@evr0.904 ok then what about the fact that his emergency fund is only supposed to exist after ALL debt is paid off, which could take years. imagine having a family of 6 and living for years with no more than $1000 in savings
I think what Caleb simply doesn’t understand is that most of the issues is with people spending, if you want to see progress knock out the little ones first that will give you a lot of confidence to tackle the big ones
