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Ask Dave

Emergency Funding

Chris asks how long it should take to fully fund his emergency fund.

QUESTION: Chris on Twitter asks how long it should take to fully fund his emergency fund.

ANSWER: It usually takes six months to a year, and it usually takes 18 to 24 months for most people to get out of debt. That’s the average. That’s if they’re gazelle intense and they have no life like I was just talking about.

Baby Step 1 is you save $1,000, and you’re not paying any extra on your debts until you have that. Once you’ve got your $1,000 starter emergency fund, then you list your debts smallest to largest and attack them with a vengeance. I mean unbelievable intensity, unbelievable sacrifice. All you do is work and pay debt and get the mess cleaned up. If you go at it with that kind of an angle, most people are debt-free in 18 to 24 months, not counting the home. Sometimes it takes four and a half years. Sometimes it takes six months. Sometimes it takes 21 months. Those are the calls I’ve had today. But you attack, attack, attack, attack with a vengeance.

Once that’s gone, then you move on to Baby Step 3, which is that three to six months of expenses saved up, and that usually will take you about six months to a year. You’re talking two to three years—somewhere in that range—for most people to become debt-free and have their emergency fund in place.