Comments on: Analyzing the 75/25 Method As A Debt Reduction Plan

By: Shock

Shock — Mon, 25 Jan 2010 21:14:33 +0000

What I like to do is once a debt is paid off, I then either take the amount I was paying on the that debt and move it to paying off another debt or increasing my savings by that debt payment amount. Percentages are too rigid for me. I pay off the smallest debt and then take that amount and apply my method.

By: Elizabeth I

Elizabeth I — Fri, 15 Jan 2010 06:41:49 +0000

Has anyone had a true emergency that cost less than $1000? I cannot recall a time when a big car repair bill, dental bill, or large medical bill was LESS than $1,000K.

People need to realize that your “emergency fund” is really a financial stabilizer. It allows you to get to a place where you can START to pay down your debt and not be reduced to square one (going back into debt) on account of an unexpected financial emergency.

Thus, once people have $5000 in a savings account, then any money going toward debt is going to be consistent and have a major impact.

By: Gina

Gina — Sun, 10 Jan 2010 14:34:20 +0000

Although I am a big Dave Ramsey fan, I too feel that $1000 for an emergency fund is much to small. I think that the amount for an emergency fund is variable from person to person given their stage in life. For me, peace of mind knowing that I truly have enough in my emergency fund is worthy of a few months more in debt.

By: Peter

Peter — Tue, 05 Jan 2010 16:42:45 +0000

To a degree I agree that in some cases $1000 for an emergency fund just isn’t enough. My wife and I had a medical emergency when we were getting out of debt -and on the dave ramsey plan. We had ignored his $1000 advice, and had a $2000 emergency fund. Our hospital bills came out to about $1800 – so having a larger one worked for us.

On the other hand you have to be careful of saving too much when you’re in debt because it can short circuit your debt reduction. So while i’m all for a slightly larger emergency fund, I’m not for continuing savings indefinitely while in debt. Just my 2 cents. :)

By: Craig

Craig — Thu, 17 Dec 2009 16:57:13 +0000

Balance is always good, all depends on your system. I balance out but don’t usually have a specific percentage, just try to spread the wealth between saving for investments and vacation.

By: Matt Jabs

Matt Jabs — Thu, 17 Dec 2009 13:47:22 +0000

“You can’t go wrong getting out of debt.” – Dave Ramsey

And boy ain’t that the truth! :-)

That said, we have to do what works for us. Especially with the massive downturn in our economy, which you mention, it is very important to diversify our focus. Saving is always a good idea. Sure, you may be out of debt a little faster if you commit 100% to repayment… but what if something happens along the way? Will you have to use a credit card again? If you continue to save at least a portion of what you take it, you can feel more secure about the unknown – and that is worth a lot to me!