Switch Up The Baby Steps At 50?

Dawn and her husband have $12,000 left to pay off their debts. They're in their 50s and would like to buy a house but need an emergency fund. Should they make adjustments to the Baby Steps?

QUESTION: Dawn in Indianapolis and her husband have $12,000 left to go to pay off their debts. They’re in their 50s and would like to buy a house, but they need an emergency fund. Should they make any adjustments to the Baby Steps? Dave says no.

ANSWER: No. It shouldn’t take you a year to build an emergency fund at the rate you’ve been paying off debt. You need to have a fully funded emergency fund, but you could be more on the three months side and then begin to save for your down payment on your house. Then, when you get into the house, maybe you beef up the emergency fund a little bit after that and take it more toward the six months side. You’re not dying. You’re 50.

You’re making great progress. You’ve got to stop and say, “What we’re doing is new stuff for us, and it’s working.” I think you’re doing the right stuff, and I think we just keep doing the right stuff.