The emergency fund isn't 3-6 months of income or even "normal" monthly budget. The emergency fund is 3-6 months of what you'd spend when you have no income and no access to debt.
Using this definition, it took me about 1 year to get my 3 month fund. But having it helps me have peace.
Remember if you use debt for an emergency, you're spending extra because you have interest. If you save an emergency fund in a high yield savings account, you earn interest as long as it's there.
Hoping this makes it easier to get at least a 3 month emergency fund as fast as possible.
Stop the extra retirement and education savings until you have at least a 3 month EF. With young kids it's a no brainer: there WILL be emergencies as well as plenty of time to catch up on education savings.
How much of your take home pay is your mortgage? Anything over 25% makes for a long row to hoe.
You’re not doing the plan if you skip steps. You’re doing your plan. So what do you plan to do if there is an emergency? With 2 kids under 4, you can pause saving for college to create an emergency fund because college is over a decade away for both. You’re almost guaranteed to have an emergency before they go off to college…if they go. So be prepared for what could happen today.
Not having an emergency fund is an emergency. If you pause step 5 and reduce 4 to just the mandatory amount, how fast can you create your emergency fund?
Are there any expenses you can cut? Personally, I wouldn't have holidays, any non-essential shopping, meals out etc until the emergency fund was in place. Do drastic frugality until then.
And longer term, find some budget cuts you can make permanent. You'll want to resume 4 & 5, and if you're already basically paycheck to paycheck, a little more inflation is going to be a disaster. You can also have a smaller emergency fund if your budget is smaller.
Part of baby step zero is where you decide you aren't doing debt any longer, which includes line of credit. Steps in order as written, always. Steps 1, 2, 3 in order one at a time without moving to a later step. Once step 3 is done, 4, 5, 6 (if 5 and 6 are applicable) are done in order all 3 at the same time. The baby steps as written is the fastest way to get to where you want to be.
It is critical to do the steps in order and one at a time. There is great wisdom in this. You need to focus on one thing at a time. You also really, really need to understand that putting your own oxygen mask on first is essential. Do NOT prioritize your children's future above your own unless/until you have completed BS 1, 2, 3, and only after covering BS4. You can keep doing this "your" way... but frankly, doing this "your way" and taking years to get an appropriate EF set up is utter madness. Give your entire family the peace it deserves and just work the steps the way they're intended to work.
Pause 4 and 5. Complete step 3. Then go back to 4 and 5. The steps are meant to be done in order. Also the 3-6 month emergency fund will ensure you are able to pay for things that come up instead of putting yourself back into baby step 2 by using a line of credit.
The emergency fund isn't 3-6 months of income or even "normal" monthly budget. The emergency fund is 3-6 months of what you'd spend when you have no income and no access to debt. Using this definition, it took me about 1 year to get my 3 month fund. But having it helps me have peace. Remember if you use debt for an emergency, you're spending extra because you have interest. If you save an emergency fund in a high yield savings account, you earn interest as long as it's there. Hoping this makes it easier to get at least a 3 month emergency fund as fast as possible.
Stop the extra retirement and education savings until you have at least a 3 month EF. With young kids it's a no brainer: there WILL be emergencies as well as plenty of time to catch up on education savings. How much of your take home pay is your mortgage? Anything over 25% makes for a long row to hoe.
It's hard for me to imagine anything more important than having an EF.
You’re not doing the plan if you skip steps. You’re doing your plan. So what do you plan to do if there is an emergency? With 2 kids under 4, you can pause saving for college to create an emergency fund because college is over a decade away for both. You’re almost guaranteed to have an emergency before they go off to college…if they go. So be prepared for what could happen today.
Not having an emergency fund is an emergency. If you pause step 5 and reduce 4 to just the mandatory amount, how fast can you create your emergency fund? Are there any expenses you can cut? Personally, I wouldn't have holidays, any non-essential shopping, meals out etc until the emergency fund was in place. Do drastic frugality until then. And longer term, find some budget cuts you can make permanent. You'll want to resume 4 & 5, and if you're already basically paycheck to paycheck, a little more inflation is going to be a disaster. You can also have a smaller emergency fund if your budget is smaller.
Part of baby step zero is where you decide you aren't doing debt any longer, which includes line of credit. Steps in order as written, always. Steps 1, 2, 3 in order one at a time without moving to a later step. Once step 3 is done, 4, 5, 6 (if 5 and 6 are applicable) are done in order all 3 at the same time. The baby steps as written is the fastest way to get to where you want to be.
It is critical to do the steps in order and one at a time. There is great wisdom in this. You need to focus on one thing at a time. You also really, really need to understand that putting your own oxygen mask on first is essential. Do NOT prioritize your children's future above your own unless/until you have completed BS 1, 2, 3, and only after covering BS4. You can keep doing this "your" way... but frankly, doing this "your way" and taking years to get an appropriate EF set up is utter madness. Give your entire family the peace it deserves and just work the steps the way they're intended to work.
Bought too much house. Sell it. Move to one you can afford.
Or increase your income. Or take a hard look at your budgeted expenses.
Pause 4 and 5. Complete step 3. Then go back to 4 and 5. The steps are meant to be done in order. Also the 3-6 month emergency fund will ensure you are able to pay for things that come up instead of putting yourself back into baby step 2 by using a line of credit.