Savings Before Debt?

Tony is a father of five and has one income. He has $30,000 in debt. He wants his fully funded emergency fund in place before starting his debt snowball. Is he wrong in thinking this is a good way to go?

QUESTION: Tony in Richmond, Virginia is a father of five and has one income. He has $30,000 in debt. He wants his fully funded emergency fund in place before starting his debt snowball. Is he wrong in thinking this is a good way to go?

ANSWER: Part of the fear of not having that savings is what drives you through your debt snowball. I didn’t like not having the savings, and my wife really didn’t like not having the savings. So we both used it as a whip to drive us through that debt snowball and get it knocked out. That’s why we limit it to only $1,000 in Baby Step 1 and knock everything out in Baby Step 2, which is all your debts except the home. Then finish the emergency fund of three to six months of expenses in Baby Step 3. That motivation is part of the program.