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No. of Recommendations: 8
An emergency fund actually sounded like a good idea to me a while back, but the more my eyes open up the less I see the sense in it right now, unless someone wants to pay me > 17% on that money. It seems like a Dave Ramsey psychological win thing that isn't really financially the best. I would think that most savvy people would say that it isn't the best idea just like getting a large tax refund isn't the best idea.

There are many layers to this onion. Let me describe another one from a different perspective to see if that helps seeing where I believe we're coming from.

Pause reality for a moment, and do a mental exercise. Ready? Skip ahead 5 years and look around. You're out of debt, your spending is under control, you have an emergency fund started, and the future is looking very bright. You look back and reflect the path that you've been on the last 5 years. After slaying a $50,000 dragon, the $1,000 emergency fund almost sounds piddly. That's the perspective that most people here are presently at, but don't think for a second we don't remember being in a situation very similar to yours.

My personal mountain was $53k, a combination of my CC debt and my new bride's student loan debt 13 years ago. The struggles you feel right now are real. Period. But, we are asking you to consider another possibility: when at the bottom and looking up, there is a possibility the view might be slightly distorted.

I believe most of us reflect up on that time that you are in now fondly because things were simple because there was only one focus: slay the debt monster. It's a goal that's very worthy, and actually fun once you've slayed it. We remember those days and are excited when somebody starts on that path. We're all behind you and rooting for you!

There's a lot of wisdom here, but there are also a lot of different personality types. You seem to know yourself well and what will work for you and what won't. My advice would be to take what's useful and throw away the rest (for now). That being said, I, too, am a proponent that a "spending plan" (not a budget) is a good idea. When there's too much month at the end of the money, you need to be purposeful and strategic where that money goes. Now more than ever!

I agree that it is overwhelming right now because it is a lot of work and it will fail the first month or two as you begin to realize your true expenses, but at the end of a very short period of time (3 months or so), you will have a very good handle on where the money is going. More importantly, you will be in control and decide which areas to decrease spending will have minimal impact on your life. Don't think of a spending plan as a restrictive tool that tells you "here's all you have, you're a loser for not having enough." Think of it in offensive terms: "here's what I have, where can I pack the most punch?!?!??!!?!" It's a game of whack-a-mole at first until the moles stop coming up and you're whacking them all at the same time.

My $0.02. Good luck!

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