Comments on: Dissecting Dave Ramsey’s Baby Steps: Baby Step 1

By: Anitra

Anitra — Thu, 05 Jun 2008 18:57:23 +0000

Kirsten,

You might be better off getting another account where there are no fees. I have online accounts with both Emigrant Direct (emigrantdirect.com) and E*Trade (etrade.com), and there is no miminum balance to maintain nor transfer requirements, and I earn a pretty decent (by decent I mean better than a regular bank savings) interest rate. You link the accounts to your regular bank checking account and can do online transfers in and out within 2 business days. I’ve had these accounts for over 3 years, and never any problems. I hope this helps.

By: Kirsten

Kirsten — Tue, 25 Mar 2008 05:35:05 +0000

In order to keep a saving account free of monthly service fees, I must transfer a minimum of $25 into the savings account every month. (no transfer fees) I have just completed my $1000 Emergency Fund. If I stop the transfers, the bank will charge $5 per month. Should I allow the transfers to continue and add to the Fund? …or transfer $25 out every month, to maintain the Fund at $1K?

By: Jacob

Jacob — Sat, 19 Jan 2008 04:46:55 +0000

Wow, Ive never seen so many people claim to follow ‘Dave’s Plan’ while earning minimum wage AND paying student loans. Are you srious? What type of degree did you get? I am on 6 months or so from completing BS #2, but probably wouldn’t have done so as quickly without first having my starter emergency fund. My wife and I have been on ‘The Plan’ for 6 months and nearly paid 13,000 (1/2) of my student loans. We were blessed to suffice with 1000. My wife is a full time mommy, we have a 10 month old son. I am looking forward to BS #5 ( and, of course 7). Those of you earning 14,000 and paying student loans, find a job in your field of education!! Engineering and Accounting are the most seeked by employers at thhis time (also the highest paying from 45-55k average, respective)

By: NCN

NCN — Wed, 09 Jan 2008 20:22:37 +0000

Michael..
When I dipped into my e-fund,
I would then stop sending extra payments and
focus on rebuilding the e-fund.
NCN

By: Michael

Michael — Wed, 09 Jan 2008 19:07:22 +0000

What happens if you have to spend, say, $200 out of the $1000 baby-emergency fund. Should you then immediately concentrate on replenishing this fund before resuming your debt snowball at full strength?

By: karla (threadbndr)

karla (threadbndr) — Tue, 29 May 2007 18:32:55 +0000

As I see it, Dave’s biggest push is to get us to change the way we look at money. Both the ‘baby efund’ and ‘debt snowball’ can be argued against in term of pure interest and compounding. BUT they are both techniques that change the fundament ways that people relate to their money.

Getting into a more healthy relationship with your money can’t be a bad thing. (and ye gods and little fishes, I think I just channeled Suze Orman!)

By: DR CONTRARIAN

DR CONTRARIAN — Sun, 27 May 2007 21:20:04 +0000

I believe the emergency fund to be purely emotional and psychological and not the best way.

Here’s why: Instead of sending $1,000 to a MMA/savings, why not send the $1,000 to a credit card? Instead of earning 4.5%-5.05% interest, you save 14%, 18%, etc. by paying down the card. If an emergency situation does not happen, then you just keep on keeping on. If it does, you use up to $1,000 on the credit card. Even if you use ALL of the $1,000 you will still be no worse off than if you had the money in a savings account and used it all, plus you would have saved paying interest on the card.

In Dave’s plan, if you use your emergency fund, you stop the snowball and rebuild the EF. That is time lost. In the above scenario, you just keep right on snowballing because your EF is the card. If you don’t have an EF situation, you’ve started sooner and finished faster than if you had taken time to build the EF. If you do have an EF situation, you are still ok.

The reason this would not work for everyone is: a) It won’t work if the credit card is closed (which Dave wants you to do at the start) b) It won’t work if everything is an emergency to you c) It won’t work if you get discouraged because you had to use it (though that could be the case with the EF too) and finally d) It won’t work if you use more than $1,000. (Of course, if you NEEDED (as in true emergency) more than $1,000 and you only had $1,000 in the EF, you’re in trouble anyway.)

Dave, and DR devotees, would slam this idea by saying “play with snakes” blah blah, but the fact is, you have the card account until you pay it off. Keep it open (to avoid the big hit on your credit score) until its paid, and, if you have an emergency, utilize a portion of a mentally set-aside $1,000.

Of course, this is a disaster for some people. My parents, for instance, whom I introduced to TMMO a couple of years ago DO NOT NEED a credit card of ANY kind for ANY purpose. Believe it!

Otherwise, it has served me well.

By: Moneymonk

Moneymonk — Thu, 24 May 2007 18:36:48 +0000

I went through all of DR baby steps. Except for paying off the house early b/c we plan to move soon

You do not have to go through the steps perfectly the way DR says it.

But the main concept is to avoid debt.

By: No Credit Needed Podcast » Blog Archive » No Credit Needed Podcast Episode 44 : Personal Finance Podcast About Debt Repayment, Debt Reduction, and Saving Money

Thu, 24 May 2007 04:08:02 +0000

[...] I’m writing a series of posts about Dave Ramsey’s Baby Steps. [...]

By: Daisy

Daisy — Wed, 23 May 2007 16:48:46 +0000

We have the emergency fund and are working on BS #2. The emergency fund we have is kept in our regular savings account, which unfortunately is connected to our checking account (sh, don’t tell Dave!). We actually dropped our emergency savings to get moving more on our debt. We actually needed it right away! We got into an ARM two years ago, and it was going to go variable in June. We started the refinance process in plenty of time to get it finished before the variable point, but our appraisal decreased, so we lost equity, which meant that we had to bring money to the closing. Thankfully, we have the emergency fund, and with adjustments to the budget, the shortfall won’t be for more than a week. But before changing our mindset, we would have just paid the money out of our regular income, and put whatever couldn’t be paid for on our credit cards.

I just hope BS #2 is shorter than I think it will be. With over 60gs in student loans, it seems thoroughly insurmountable.