An emergency fund is a back up plan for unexpected life events. Trust me when I say that “something” will come up while on your debt journey and without this fund, we tend to go into debt to cover these surprises such as car and home repairs, unexpected medical expenses etc. This fund should be put in place before starting your debt free journey. Even if you have to make minimum payments toward debt and use the extra money to build your fund first.
Don’t be fooled! Things that you have forgotten like annual taxes, license payments, birthday party gifts are NOT emergencies and should be planned in your regular budget trackers.
How do you know what is a good amount to start with? Dave Ramsey recommends a fund of $1000 dollars but due to our family size of (6) we started with a fund of $3000. This is a decision you should make based on your family size and lifestyle.