As you read The Total Money Makeover, (which if you plan to read this blog on a regular basis is a requirement to know what I am talking about) Dave talks about the baby steps to getting out of debt and building wealth. There are seven steps in this process. Step one is starting an emergency fund by putting aside $1,000 as quick as you can. Step two is dumping debt utilizing a debt snowball. The average person should be able to complete step two within 18 months. Be patient as you read with me, I will be on step two for about another four years or more. That means you can be on step seven before I reach step three, if you will start today.

Accomplishing step one seemed easy enough, place $1000 into an emergency fund to be spent only on emergencies.  I had that step completed within one week, basically the next time I got paid. Then comes the other question, what is an emergency?  Basically an emergency is anything I can’t plan for that affects the four walls (housing, food, transportation and clothing). Clothing really isn’t an emergency in most circumstances because I know that clothes wear out. Christmas is in December, Amy’s birthday is in April, insurance is due every six months; these are all not emergencies. They all have to be budgeted for and not paid out of the emergency fund.

As many times in my life as I had found myself with money in my account, I had never found myself with an emergency fund. When my car broke down, I thought it was time to buy a new one. If it was something minor, I might fix it, but that was the exception. Without an emergency fund, I was literally an accident waiting for a place to happen. As Dave likes to say, having an emergency fund is Murphy repellent. I had taken the most simple step, the one that seemingly all of us should have already taken, but for some reason always neglect to take, or rob for non-emergencies. I had an emergency fund, and I have gotten Murphy out of my ruck sack forever.

Next was to contact everyone I owed money. We will talk about that tomorrow.