My Liquid Savings Goal @ MoneyMusings.com

Saturday, February 03, 2007

My Liquid Savings Goal

Those of you familiar with Dave Ramsey probably already know about the third of his seven Baby Steps:

3. Create a full-fledged Emergency Fund containing 3 to 6 months' worth of expenses.

While I'm a strong proponent of most of what Ramsey has to say, I personally haven't followed his "Baby Steps" plan (not strictly, anyway) in my own life. At the moment, though, I'm devoting my energy to my equivalent of this "Emergency Fund" step.

Here's what I'm looking to accomplish:

1) $12,000 in a dedicated, stand-alone Emergency Fund at ING Direct.
2) $500 cushion in our Electric Orange checking account (from which we pay all bills).
3) $2,500 cushion in my wife's checking/savings account.

Once achieved, this will give our household balance sheet a "liquid savings" total of $15,000. It would cover roughly four months' worth of expenses for our household.

All of this, of course, is in addition to our Freedom account, in which we save for irregular (but expected!) expenses.

Labels: Dave Ramsey, Saving

— Posted by Michael @ 6:24 PM

9 Comments:

Hey that's a great plan if you ask me.

I like having a flexible emergency account as well. My person one is about $7000 that is in my money market with about 1200 in each of my 2 checking accounts and $2500-4000 in my 2 savings accounts (which are tied to my checking for overdraft protection) Mine is about $15000 as well and would last me a good 6 months of expenses.

Michael Sparks

, at 9:41 PM, February 03, 2007

Good luck to you. It's a very worthy goal.

Aimee

, at 12:21 PM, February 04, 2007

Great plan! I love Dave Ramsey and all that he has taught us.

Mona@TimeToBudget

, at 2:04 PM, February 05, 2007

Hello Michael,

Great Baby steps plan from "Dave Ramsey" Thank you for sharing.

P.S. Baby Steps link is not working

Financeguide101

, at 5:13 AM, February 06, 2007

Thanks for the heads-up! The link should be fixed now.

Michael

, at 9:17 AM, February 06, 2007

I'm a huge Dave Ramsey fan. I'm working on Baby Step 3 right now as well. My goal is get $15k in my HSBC online savings acccount. I'll also have a $2k cushion in our checking account.

I started in Baby Step 2 and paid off almost $11k in car debt. Now I'm looking forward to #4, retirement funding where I intend on maxing out our Roth IRAs...

Slim

, at 8:57 PM, February 13, 2007

I love the tone of your writing. The practical style appeals to me. I, too, aim to pay off my credit card debt and grow a liquid ER fund. (My goal is $10,000.) But how are you building your emergency fund? My constant dilemma is whether to concentrate on eliminating credit card debt before building any savings..but the next inevitable pitfall causes a landslide in on the cc debt.

gingers

, at 10:18 PM, February 18, 2007

Ginger,

I'm very fortunate in that I have a stable, above-average income, and perhaps more importantly, live in a rock-bottom cost-of-living state.

As you whittle away bill after bill, paying more and saving more becomes ever easier -- or it did for me.

The "savings vs. debt payoff" question is always sticky. I'm absolutely in favor of building a small e-fund (either $500 or $1k) before starting to attack the debts, much as is laid out in Dave Ramsey's Baby Steps.

Michael

, at 10:47 PM, February 18, 2007

Well I finally did it.

I've got $15,854 in my savings (s) accounts.

$7300 in my money market for (dire emergencies)
$5300 in my business savings that's tied to my business checking
$3100 in my personal savings tied to my personal checking.

I feel pretty safe at this point, but I do fee the impending economic problems could get worse than expected. I think I'll pad the money market some more in the future.

michael

, at 8:48 AM, January 17, 2008

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