Continuing on my last post about not paying down debt...do you know what you would need for 3, 6, or 8 months with no income?
I went to my monthly spending plan and figured out a couple of different scenarios. In both emergency scenarios we cut out obvious things like savings, vacation, entertainment, etc.
I figured out two scenarios: desperate and really desperate. In Scenario A we keep our van and our life insurance policies, but Scenario B involves selling our van and canceling those policies.
Scenario A we would still need about 2/3 of our current income and Scenario B cuts what we spend now by half. Do you know how much money you actually need to live on a monthly basis? What about a bare bones/desperate measures budget? Multiply that by 8, is that what you have in the bank?
I like knowing the numbers and I can get excited about saving, but I still haven't come to terms with carrying credit card debt until we get our emergency fund back to where it should be. Argh, still wrestling with that one.
P.S. A couple of people have mentioned Dave Ramsey to me. (Thanks!) From what I know, which isn't a lot, his advice is along the lines of Mary Hunt's from Debt-Proof Your Marriage (which I read), but I am curious to see what his latest advice is on savings/debt in this economy and the best way to allocate all that extra money we have laying around (ha!). I'm on a hunt for a recent book by him and I'll let you know what I discover.
17 years ago
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2 comments:
I think we are doing the Dave Ramey study with our community group if you want to join us. We'd love to have you.
Above all, I don't know that there is a right/wrong answer here. You can probably find research to support either side. I do believe that this is something that you and your husband have to be at peace with and in agreement. God will lead you to the answer.
Hi Tina! I have read both of your recent posts about finances and wanted to let you know that this is a topic I've heard a lot about in the banking industry. From what I know about Suze Orman's advice, she plays on people's fears. I have heard better responses about Dave Ramsey's approach.
My advice would still be to paydown your credit card debt. You might also want to try to negotiate your interest rate down with your credit card company. In the end, I would do what you and Mike feel most comfortable with.
Sammie
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