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Debt-Free Living

4 Reasons You Need to Start Saving!

If you’ve heard it once, you’ve probably heard it a hundred times. You need to save. You need to save. You need to save.

We all know that saving is important, but so few of us really take the time to do it. What’s the deal?

Usually, we think life gets in the way. There’s so much to take care of now, who has time to worry about later? But that’s when we get into trouble. The 35-year-old who didn’t have time to save becomes the 70-year-old who is still working full time with 20 years of mortgage payments remaining.

The key is to make saving a priority right now, no matter how old you are.

Here are a few tips to help you get started.

1. The Baby Emergency Fund

Start by saving $1,000 for a “baby emergency fund.” Sell stuff. Work overtime. Do whatever you need to do to get that $1,000 as fast as you can. Put it in a basic money market account. This is your cushion. When you get a flat tire, when the little one needs to go to the ER, when the friendly officer pulls you over for going 55 in a 45, this savings account will keep you from using credit cards and going into debt.

After you save up that $1,000, it’s time to get out of debt using the debt snowball. Basically, it’s just a matter of paying all of your debts in the order of smallest to largest. You pay like crazy on the smallest one. When you’ve paid that off, use all of the money you were paying on it to put toward your second smallest debt. Follow that process until you’re out of debt. Then you can start saving in…

2. The Fully Funded Emergency Fund

At this point, you’re out of debt and you still have your $1,000 emergency fund. Now it’s time to throw all the money you were using to pay off debt into a bulkier emergency fund. I recommend saving three to six months of expenses. That way, you’re covered for the much bigger stuff—like maternity leave, getting laid off at work, and more serious medical bills.

3. Retirement and College

Next up, your retirement and your kids’ college funds. Sit down with a financial advisor you can trust, someone who has the heart of a teacher, and make sure you are saving enough to allow your kids to go to college and you to retire without debt. Related: When Do You Start Planning for College?

4. General Savings

Vacation, a car, Christmas, new furniture—these types of things aren’t emergencies. Christmas will always be on December 25. So no surprise there! Save up for this stuff ahead of time so you’re not tempted to plop down plastic. Related: 4 Ways to Vacation Without Debt

If you’re really trying to get out of debt and stop using credit cards, then saving is the place to start. You have to make it priority number one—saving up that first $1,000—before you do anything else.

Just the process of getting started saving money gives you momentum. Plus, it allows you to get your head above water and begin finding some financial peace in your life.

If you aren’t saving, don’t beat yourself up. Just get started today. You won’t regret it.


  • Save up the $1,000 baby emergency fund. Do we do this BEFORE paying off debt? (what if they are coming after you for money)?

    • jessica

      Yes the $1000 emergency is first, then the debt.

    • Nikki

      Always pay yourself 1st! According to Dave. Pay mortgage or rent, utilities, food, & car payment if you need it to maintain your job. If you have a vehicle payment that’s high sell it & get a good used less expensive vehicle until you can afford a nicer one. Then get the $1000 1st!!! That keeps you from using plastic in the event of those surprises life throws at you. If you use any of your emergency fund stop the debt snowball until you get your emergency fund back to $1000. Always keep it at $1000. Hope this helps. I also took the Dave Ramsey courses at one of our local churches. I highly recommend it! I had trouble completely understanding parts of the book but the courses made it crystal clear. Good luck!

    • Jessica and NIkki are correct. $1,000 emergency fund first then start paying off your debt. You have to make sure your 4 walls (food, utilities, shelter, reasonable transportation) are set but then drop, sell, stop everything else to save up that $1000 then get gazelle intense about getting yourself out of debt! It’s not easy but completely doable!

  • Patricia Matthews

    I had paid all my debt. I have my emergency fund and for three months of nIncome saved.. I bought a nicer car four months ago. Now, Just learned my employer is moving my division to another state and laying and everyone off. Should I go back to the dealer to try to get a lesser priced car or hold out while looking for another job.

  • Shannon

    I’m on baby step two though I just got laid off and have abt 3 months of emergency fund.. I am collecting unemployment so do I continue working on the baby step 2 or should I pay the minimum only while waiting to have another job ??

  • Sara

    Rachel – how would you recommend doing the envelope system when you get paid weekly?

    • Blessed Heart

      Splitting everything up by 4’s? Even for me getting paid twice a month plan what i am going to pay with each check. The only thing you really need to divy up in an envelope is food and gas. figure out what you are going to spend each month in those areas and divide by 4. (or however many weeks are in the month) then decide based on the bill/debt due dates and the dates of your checks what check will pay what bill. You will have to look over your budget monthly and adjust as needed since paycheck dates will change but everyone should be doing their budgets monthly anyhow so thats nothing special due to paycheck dates. Hope that helps!

    • grace

      i get paid daily (i work on tips). I take the allotted $ and add it to the envelope biweekly (for example my grocery budget is $300/mo. I add $150 on the 1st and $150 on the 15th. The in between checks head to the bank bills etc.

    • Kait

      My husband gets paid once a month and I get paid weekly. We found that it was easier to spend May’s money in June. So we actually wait a month to use the money. Not everyone is able to do that but it’s been helpful for us as we know in advance about short paychecks and such.

  • Blessed


  • Jean

    Question, my man and I are planning to get married layer this year. I’ve completed baby steps 1-3 but he still has a few thousand on a school loan. nWe’re cash flowing the weddin of course. :-)nQuestion- After we get married is it ok to not knock the combined down all the way to $1,000. But keep maybe $2,000 and through everything else at the loan? nThe plan will be to knock put the rest of the loan in about 6 months regardless.nnI’d just rather have a little more of a buffer, just incase, for peace of mind after getting married.

    • Jean

      Pardon the mistyped words.

      • Rebecca Tulloch

        I think keeping an extra $500 to $1,000 would be ok, but once you are married attack that debt together like a fiend! My husband and I got married and I had to buy a newer card a month before our wedding, we got duped into spending some stupid tax on the extended warrenty and had $13,000 in car loan when we were married….. We sacrificed pretty much everything but exactly a year after we bought it It was paid off! 🙂 Worth it!

    • ME

      I have the same question! Except my fiancu00e9 owes a bit more, we wouldn’t be able to pay his off completely for a year or two even if I throw most of my emergency fund at it…

    • Kait

      Jean, my husband and I are currently paying off our school loans as well. We just weren’t comfortable with only $1000 as we repeatedly had big repairs on our car in a matter of months. We kept it at $1500 but won’t go any higher than that for right now. It’s too easy to keep saying “What if, what if, what if”. Be prepared yet remember that you’ve still got a monthly income to help with expenses. With the budgeting system, you don’t always have to pull from the emergency fund.

  • Carrie

    If you pay your credit cards off every month (so no interest is being incurred), what is the harm in using them and obtaining the cash-back of benefits of those cards?

    • Shelly

      Most people with credit cards intend to pay them off every minute nth. No one ever gets a card a says let’s see how far in debt I can get! There are also studies that say if you use plastic you spend anywhere from 5 to 25 percent more than if you use cash. My husband doubted the cash-only thing too but now he loves it because we NEVER go over on our budget. When the cash is gone, it’s gone!