let me clear something up here since i *JUST* went through this (needing the emergency fund)


there are two types of emergency funds - the first one is dave ramsey's $1000 and then the overall agreed upon emergency fund that covers a few months of living expenses if anything huge happens in your life.

i 10000% suggest and agree that you should stash away $1000 in your immediate emergency fund. this is for smaller emergencies that can make or break you over a month or two. then pay off your debt while squirrling a little bit away into your huge emergency fund - then when your debt is paid off, aggressively work on your big emer. fund.

i totally see the reasoning for the dave ramsey 1000 fund because we just went through this. everything was going along fine then when payday came (and the big payday where i pay the mortgage and lots of bills) and NO CHECK!!! i freaked and my hub called the company and they were having major payroll problems and that we would not be getting paid until two weeks later!!!!!!! that sent us into a tailspin and i didnt have enough to make the mortgage and my bills (we had just paid cash for a car a week before)

if it hadnt been for that $1000 we would be late on our mortgage, i would have had to borrow money from family (it was that serious) but i was still late on some bills. i think its critical to have that 1000 set up for those "oh ****" moments that come from left field.

I too am a Dave Ramsy follower. I have my $1K EF and the rest to debt. I am however seriously considering building that EF higher before I do pay off all the other debt. I would like to have at least a months worth of savings set aside as well as my $1k EF.

I view my EF as emergency repairs, etc. A month of expenses would be a nice safety net in addition. Although their ins't much od a chnce of losing my job right now I would hate to be in a poistion that i would lose it and might need to cover bills that exceed my EF until I could get another gig. Once you sent money off to a debt it's not like you can pull it back out and have as cash again.

However, I just have the $1K EF right now. i could make it $3K right now but also would be thrilled to see that extra $2K go to debt pay down. It's tough... thus the money is still in my checking account just sitting there, but will have to make that move in the next day or so.....

OK - first I must admit I haven't read Dave Ramesy's book yet, although I did just order it about 5 mintues ago (used, online) since my Library never has it in stock.

Once I read Dave Ramsey's book, maybe my opinion will change, but I have always thought it a little backwards to have say $1000 sitting in a savings account gaining 2% interest when you have credit card debt charging you anywhere from 2-20%.

Ok, if the debt is at 0% - great - start saving. If it's a 2% - why not, save. But if it's higher that 5%, I don't know. At that point it depends on HOW much debt you have (can it be paid off in a few months, or will it take a few years) and how secure your lifestyle is (job security, new vs. older cars, etc).

A couple of years ago my dh and I both had fairly good-paying, secure jobs and no kids. I finally talked my husband into using savings to pay toward debt. If, God forbid, something did happen we could always charge the card, but the likely-hood of it didn't seem very high. We instead depleated our savings, paid off most of our debt and within a month or 2 were debt free and saving once again! Worked out great for us! Like I said though, there are a lot of factors there to think about!

I keep my EF in an ING account, 4.50% interest. It's wasy to access if I need it but also difficult enought to access that I don't spend it for a want and not a need.

For me the security of having that EF is worth the few % points I lose by not paying it off to debt.

But once again, that's just me, it's a personal choice and how comfortable each person is with their debt.