Cameron wants to move to Los Angeles to work in television and film. He's trying to determine what kind of emergency fund he should shoot for above his expenses. Dave shoots some holes in Cameron's plan.
QUESTION: Cameron in Illinois wants to move to Los Angeles to work in television and film. He’s not married and has no kids, and he’s trying to determine what kind of emergency fund he should shoot for above his expenses. Dave shoots some holes in Cameron’s plan.
ANSWER: So you’re going to move to California with a car payment and $2,500 in your pocket? Dude, I think you’re up for a problem. I want you to go live your dream, but I don’t want it turning into a nightmare. No, I wouldn’t take a car payment with me to California. I think I’m going to make other transportation arrangements.
Yes, I think you need more savings than that unless you have a job lined up that will feed you and will pay all of your living expenses. You need to be able to completely live on your income that you know you have before you make this move, because $2,500 will be gone in 20 minutes in L.A. You can’t get around the corner for that. It won’t be gone if you make enough to live on. You go out there, look at an apartment, figure out what your living arrangements are, figure out what your household budget is going to look like there, and you have a job lined up for enough to cover that. When you do, then you make that move—and no car payments. You don’t move someplace broke with car payments and expect that to turn out well. It’s just not going to.