Why does Dave Ramsey still recommend a $1,000 emergency fund?

[karnageparanoos]

I took Dave Ramsey’s FPU in 2010 as a high school senior. Back then, he recommended a $1,000 emergency fund. Why does he still recommend a $1,000 emergency fund 16 years later? $1,000 is not what it used to be.

 

[ANT]

Most people don’t even have $1,000.
That’s why it’s the starter emergency fund. It gets the ball rolling.

 

[Breadzilla]

Two reasons.

The absence of an emergency fund is supposed to scare you and make you uncomfortable. It pushes you to get through BS2 as fast as possible.

Second, it teaches you to cash flow “emergencies.” If you make a decent living and do the steps correctly, you’ll quickly realize you can.

When we started Baby Step 2, cash flowing a $200 emergency would have been hard. Now, a little over halfway through it, our monthly margin alone would easily cash flow an emergency of even $5k.

Unfortunately, the Baby Steps aren’t magic for someone who doesn’t earn a lot and has a lot of debt. There’s no great way to avoid that math. That’s why they often focus on how someone can increase their income when they call with that situation.

 

[weslson650]

He has said in his videos, with heartfelt feeling, that $1,000 was never meant to be enough it was simply meant to be a small buffer to take the stress off while the debt got paid down, and hopefully to prevent people from going back into debt.

 

[foofamapocalypse]

$1000 is going to cover the majority of absolute emergencies. That's the point.

 

[Timbapandjuli]

$1,000 EF is what he suggests while trying to get out of debt... But once out of debt he suggests 3–6 months EF.

 

[virginiamcq2]

Look into The Money Guys financial order of operations (FOO)! It makes much more since!

 

[btcsoulfate24]

I 100% agree with you absolutely! I mean, 1000 is a good starting point, but man, it doesn’t go super far these days!