I supposed I should have mentioned this earlier… we completed Dave’s baby step #1 which is to put $1,000 aside as our temporary “baby emergency fund” while we are snowballing our debt.  We are keeping it in our local credit union savings account - interest is not important at this point.  I want the money accessible but no so easily accessible that we can squander it.  It’s current location requires us to physically go into the bank to withdraw it.

What’s an emergency?  Dave defines an emergency as not being able to financially fund your “4-walls” because something truly unexpected happens.. ie: job loss, accident, fire, etc.

I’m not overly comfortable only having $1,000 but like Dave says, this is temporary and only while we are paying off our consumer debt.

Some readers have commented that using your credit cards is an option for an emergency fund. Frankly, that’s ridiculous. If your goal is to be debt free, why would you keep using the credit cards? Sure, the idea of paying them off in full every month is great, but obviously if you are trying to get out of debt, you haven’t been paying them off every month! Get real people! Get that emergency fund established so you never have to use your credit cards again.

Remember, it’s a mind set. You must make up your mind that debt is not an option. This means that using your credit cards is not an option. When you are recovering from carrying balances (aka, getting yourself out of debt) you have to stay out of temptation completely. Become a “card carrying member” of the cash is king world!