Comments on: Debt Reduction – Emergency Fund Savings – The Balanced 75/25 Method http://www.debtfreeadventure.com/debt-reduction-emergency-fund-savings-the-balanced-7525-method/ Debt Credit & Personal Finance | Bible Help Sat, 31 Jul 2010 16:08:59 +0000 hourly 1 http://wordpress.org/?v=3.0.1 By: Debt Reduction and Savings Statement – March 2010http://www.debtfreeadventure.com/debt-reduction-emergency-fund-savings-the-balanced-7525-method/#comment-9021 Debt Reduction and Savings Statement – March 2010 Tue, 30 Mar 2010 13:20:04 +0000 http://www.debtfreeadventure.com/?p=1715#comment-9021 [...] Emergency fund savings goalWhile repaying Lending Club we were contributing $100/month to our Emergency Fund via our ING Direct automatic savings plan but will bump this amount up to $850 come April. This is [...] [...] Emergency fund savings goalWhile repaying Lending Club we were contributing $100/month to our Emergency Fund via our ING Direct automatic savings plan but will bump this amount up to $850 come April. This is [...]

]]> By: How To Make Money Blogginghttp://www.debtfreeadventure.com/debt-reduction-emergency-fund-savings-the-balanced-7525-method/#comment-8136 How To Make Money Blogging Tue, 02 Mar 2010 11:01:34 +0000 http://www.debtfreeadventure.com/?p=1715#comment-8136 [...] make mention of my “side hustle” here on DFA and how it earns money that enables us to repay debt much faster.  Recently several DFA readers have contacted me wanting to know exactly what my [...] [...] make mention of my “side hustle” here on DFA and how it earns money that enables us to repay debt much faster.  Recently several DFA readers have contacted me wanting to know exactly what my [...]

]]> By: Save Money - Reduce Debt - Increase Cash Flowhttp://www.debtfreeadventure.com/debt-reduction-emergency-fund-savings-the-balanced-7525-method/#comment-7845 Save Money - Reduce Debt - Increase Cash Flow Thu, 18 Feb 2010 22:29:55 +0000 http://www.debtfreeadventure.com/?p=1715#comment-7845 [...] savings.  This allows me to pay down my debt and save at the same time – I call it the 75/25 method.What do you think?Do you think that C.L. should use her $1,000 to start an emergency fund, pay down [...] [...] savings.  This allows me to pay down my debt and save at the same time – I call it the 75/25 method.What do you think?Do you think that C.L. should use her $1,000 to start an emergency fund, pay down [...]

]]> By: Kicking it to the Curb « ElysianConfusionhttp://www.debtfreeadventure.com/debt-reduction-emergency-fund-savings-the-balanced-7525-method/#comment-7544 Kicking it to the Curb « ElysianConfusion Fri, 12 Feb 2010 20:28:36 +0000 http://www.debtfreeadventure.com/?p=1715#comment-7544 [...] off YES! Just paid off the second credit card. There’s progress! I’m still working on Matt’s 75%/25% plan, I haven’t actually managed to incorporate that [...] [...] off YES! Just paid off the second credit card. There’s progress! I’m still working on Matt’s 75%/25% plan, I haven’t actually managed to incorporate that [...]

]]> By: » Determining Your Financial Priorities @ fivecentnickel.comhttp://www.debtfreeadventure.com/debt-reduction-emergency-fund-savings-the-balanced-7525-method/#comment-7202 » Determining Your Financial Priorities @ fivecentnickel.com Thu, 04 Feb 2010 11:02:54 +0000 http://www.debtfreeadventure.com/?p=1715#comment-7202 [...] ordered list, I should briefly touch on our giving strategy, and also outline our 75/25 method of debt reduction and savings contributions we adhere to throughout most every [...] [...] ordered list, I should briefly touch on our giving strategy, and also outline our 75/25 method of debt reduction and savings contributions we adhere to throughout most every [...]

]]> By: Debt Help - Debt Repayment Planhttp://www.debtfreeadventure.com/debt-reduction-emergency-fund-savings-the-balanced-7525-method/#comment-6133 Debt Help - Debt Repayment Plan Sat, 09 Jan 2010 12:02:15 +0000 http://www.debtfreeadventure.com/?p=1715#comment-6133 [...] an emergency fund. You don’t mention the existence of an emergency fund, but do mention a trading account.  I advise you to close the trading account choosing instead to [...] [...] an emergency fund. You don’t mention the existence of an emergency fund, but do mention a trading account.  I advise you to close the trading account choosing instead to [...]

]]> By: Financial Goal - Our Financial Plan for 2010http://www.debtfreeadventure.com/debt-reduction-emergency-fund-savings-the-balanced-7525-method/#comment-6072 Financial Goal - Our Financial Plan for 2010 Thu, 07 Jan 2010 20:09:52 +0000 http://www.debtfreeadventure.com/?p=1715#comment-6072 [...] Although our personal finance miracle did not come to light the way we had envisioned it, we are so blessed and are making excellent progress on debt repayment and savings. [...] [...] Although our personal finance miracle did not come to light the way we had envisioned it, we are so blessed and are making excellent progress on debt repayment and savings. [...]

]]> By: Debt Help | Buy New or Used Car?http://www.debtfreeadventure.com/debt-reduction-emergency-fund-savings-the-balanced-7525-method/#comment-5986 Debt Help | Buy New or Used Car? Tue, 05 Jan 2010 17:47:55 +0000 http://www.debtfreeadventure.com/?p=1715#comment-5986 [...] Establish and maintain an Emergency Fund. In your email you mention that you were going to use your $1,200 to pay off your 2nd credit card.  A better option is to always maintain AT LEAST $1,000 for emergencies just like this one.  As you (and many others have experienced)  sometimes $1,000 is not enough.  In that case, do what I do – the balanced 75/25 method of debt reduction and emergency fund savings. [...] [...] Establish and maintain an Emergency Fund. In your email you mention that you were going to use your $1,200 to pay off your 2nd credit card.  A better option is to always maintain AT LEAST $1,000 for emergencies just like this one.  As you (and many others have experienced)  sometimes $1,000 is not enough.  In that case, do what I do – the balanced 75/25 method of debt reduction and emergency fund savings. [...]

]]> By: Financial Goals for 2010 | fivecentnickel.comhttp://www.debtfreeadventure.com/debt-reduction-emergency-fund-savings-the-balanced-7525-method/#comment-5772 Financial Goals for 2010 | fivecentnickel.com Thu, 31 Dec 2009 11:01:45 +0000 http://www.debtfreeadventure.com/?p=1715#comment-5772 [...] A lot of people say to maintain a minimal emergency fund until you are out of debt, but I disagree. I think you should always pay yourself at least a small amount. That’s why I stick to a 75/25 savings plan. [...] [...] A lot of people say to maintain a minimal emergency fund until you are out of debt, but I disagree. I think you should always pay yourself at least a small amount. That’s why I stick to a 75/25 savings plan. [...]

]]> By: The Best of Black Coffee: 43 of the Worst Personal Finance Articles of 2009http://www.debtfreeadventure.com/debt-reduction-emergency-fund-savings-the-balanced-7525-method/#comment-5769 The Best of Black Coffee: 43 of the Worst Personal Finance Articles of 2009 Thu, 31 Dec 2009 02:42:22 +0000 http://www.debtfreeadventure.com/?p=1715#comment-5769 [...] contributions between his emergency fund savings and paying off his debt.  His plan is called the 75/25 method, which sounds eerily similar to my 78.3/21.7 method that I touted on this site a while back -  for [...] [...] contributions between his emergency fund savings and paying off his debt.  His plan is called the 75/25 method, which sounds eerily similar to my 78.3/21.7 method that I touted on this site a while back -  for [...]

]]> By: PF Bloggers Share Their Top Financial Resolutions for 2010 | Redeeming Richeshttp://www.debtfreeadventure.com/debt-reduction-emergency-fund-savings-the-balanced-7525-method/#comment-5739 PF Bloggers Share Their Top Financial Resolutions for 2010 | Redeeming Riches Wed, 30 Dec 2009 11:49:56 +0000 http://www.debtfreeadventure.com/?p=1715#comment-5739 [...] going to follow the 75/25 rule (by Matt Jabs). The 75/25 rule says that 75% of all available debt snowball funds will be put toward the debt [...] [...] going to follow the 75/25 rule (by Matt Jabs). The 75/25 rule says that 75% of all available debt snowball funds will be put toward the debt [...]

]]> By: Analyzing the 75/25 Method As A Debt Reduction Plan | Money Crashershttp://www.debtfreeadventure.com/debt-reduction-emergency-fund-savings-the-balanced-7525-method/#comment-5393 Analyzing the 75/25 Method As A Debt Reduction Plan | Money Crashers Thu, 17 Dec 2009 05:09:49 +0000 http://www.debtfreeadventure.com/?p=1715#comment-5393 [...] I was following the conversation, I noticed Matt Jabs from Debt Free Adventure talking about the 75/25 method. This method is a hybrid of several different debt reduction plans. Dave Ramsey teaches to build up [...] [...] I was following the conversation, I noticed Matt Jabs from Debt Free Adventure talking about the 75/25 method. This method is a hybrid of several different debt reduction plans. Dave Ramsey teaches to build up [...]

]]> By: Willpower! Going from Debt & Addiction to Automation & Success | Debt Free Adventure!http://www.debtfreeadventure.com/debt-reduction-emergency-fund-savings-the-balanced-7525-method/#comment-4701 Willpower! Going from Debt & Addiction to Automation & Success | Debt Free Adventure! Tue, 01 Dec 2009 07:36:09 +0000 http://www.debtfreeadventure.com/?p=1715#comment-4701 [...] for the future by saving for retirement rather than squandering earnings at the blackjack [...] [...] for the future by saving for retirement rather than squandering earnings at the blackjack [...]

]]> By: Gazelle Intensity in Debt Repayment | Debt Free Adventure!http://www.debtfreeadventure.com/debt-reduction-emergency-fund-savings-the-balanced-7525-method/#comment-3564 Gazelle Intensity in Debt Repayment | Debt Free Adventure! Fri, 30 Oct 2009 07:05:54 +0000 http://www.debtfreeadventure.com/?p=1715#comment-3564 [...] Debt Reduction – Emergency Fund Savings – The Balanced 75/25 Method [...] [...] Debt Reduction – Emergency Fund Savings – The Balanced 75/25 Method [...]

]]> By: Use Your Emergency Fund to Save on Insurance Premiumshttp://www.debtfreeadventure.com/debt-reduction-emergency-fund-savings-the-balanced-7525-method/#comment-3091 Use Your Emergency Fund to Save on Insurance Premiums Fri, 23 Oct 2009 00:58:50 +0000 http://www.debtfreeadventure.com/?p=1715#comment-3091 [...] summary, if you already have an emergency fund, you should check with your agent to see how a higher deductible could help you save on premiums. [...] [...] summary, if you already have an emergency fund, you should check with your agent to see how a higher deductible could help you save on premiums. [...]

]]> By: Matt Jabshttp://www.debtfreeadventure.com/debt-reduction-emergency-fund-savings-the-balanced-7525-method/#comment-2464 Matt Jabs Thu, 24 Sep 2009 13:35:31 +0000 http://www.debtfreeadventure.com/?p=1715#comment-2464 You obviously understand the exact reasons why I choose to save while I pay down debt. It may cost a little more, but "buying security" is worth it - <em>to a certain extent</em>, which you touch on per the $200 you will pay to have the added financial security of a decent savings to hedge against emergency.I love what you say regarding the extra $1,000 in savings you will have when this debt is paid off - I focus on that often - what a GREAT feeling it will be to finally be paying ourselves instead of others! You obviously understand the exact reasons why I choose to save while I pay down debt. It may cost a little more, but “buying security” is worth it – to a certain extent, which you touch on per the $200 you will pay to have the added financial security of a decent savings to hedge against emergency.

I love what you say regarding the extra $1,000 in savings you will have when this debt is paid off – I focus on that often – what a GREAT feeling it will be to finally be paying ourselves instead of others!

]]> By: Steve in W MAhttp://www.debtfreeadventure.com/debt-reduction-emergency-fund-savings-the-balanced-7525-method/#comment-2459 Steve in W MA Thu, 24 Sep 2009 04:25:09 +0000 http://www.debtfreeadventure.com/?p=1715#comment-2459 I use an approach very similar to the 75%/25% approach outlined here.A lot of it has to do with the fact that the interest on my outstanding debt of $7600 is only 5.9%, which will come out to around $300 total in the next 12 months when taking into consideration my rate of debt payoff over that period. If the interest rate were 12%, I would feel differently.Having experienced what it's like to have an emergency fund of $4000 or more, I really don't want to go back to the $1000 level for a number of reasons, basically because I feel freer and more secure at the same time knowing I have cash at hand available to take care of unforeseen circumstances or opportunities.So out of the $600 monthly dollars I have devoted to debt repayment I pay just over my minimum payment of 4% of the balance every month, or $350, to Discover Card. Then I take the last $150 and put it into a SmartyPig account called "Discover Escrow". It's money designated for that debt, but held in a cash account to supplement what I consider to be a relatively meager $1500 emergency fund in the event of a true emergency.And I take another 450 or so and put it towards various sinking funds in my monthly budget, such as car repair and my actual Emergency Fund.I could pay the debt off in exactly 7 months with the $1050 from my budget that is potentially available after mandatory expenses. But I don't want to live on the edge like that for 7 months, it's just not worth it. So I choose to spread out the debt payment for 18 months and build up my liquid cash reserves at the same time.Over the next 18 months, it will cost me (off the top of my head) an extra $200 in interest to do so (compared to paying off in 7 months). But having cash on hand is worth the $200 expense to me. I don't ever intent to go back to my previous financial set point of having $1000 or less available, whether or not I am paying off debt ( unless it's 20% interest rate debt--that would feel different because the cost would be much higher).By the time my last debt payment is made in 18 months, I will have about $7000 in my emergency fund, which is most of the way to the $10,000 I have set as a goal. And every month thereafter I will be able to increase my savings by $1000, which is going to feel fantastic. I use an approach very similar to the 75%/25% approach outlined here.

A lot of it has to do with the fact that the interest on my outstanding debt of $7600 is only 5.9%, which will come out to around $300 total in the next 12 months when taking into consideration my rate of debt payoff over that period. If the interest rate were 12%, I would feel differently.

Having experienced what it’s like to have an emergency fund of $4000 or more, I really don’t want to go back to the $1000 level for a number of reasons, basically because I feel freer and more secure at the same time knowing I have cash at hand available to take care of unforeseen circumstances or opportunities.

So out of the $600 monthly dollars I have devoted to debt repayment I pay just over my minimum payment of 4% of the balance every month, or $350, to Discover Card. Then I take the last $150 and put it into a SmartyPig account called “Discover Escrow”. It’s money designated for that debt, but held in a cash account to supplement what I consider to be a relatively meager $1500 emergency fund in the event of a true emergency.

And I take another 450 or so and put it towards various sinking funds in my monthly budget, such as car repair and my actual Emergency Fund.

I could pay the debt off in exactly 7 months with the $1050 from my budget that is potentially available after mandatory expenses. But I don’t want to live on the edge like that for 7 months, it’s just not worth it. So I choose to spread out the debt payment for 18 months and build up my liquid cash reserves at the same time.

Over the next 18 months, it will cost me (off the top of my head) an extra $200 in interest to do so (compared to paying off in 7 months). But having cash on hand is worth the $200 expense to me. I don’t ever intent to go back to my previous financial set point of having $1000 or less available, whether or not I am paying off debt ( unless it’s 20% interest rate debt–that would feel different because the cost would be much higher).

By the time my last debt payment is made in 18 months, I will have about $7000 in my emergency fund, which is most of the way to the $10,000 I have set as a goal. And every month thereafter I will be able to increase my savings by $1000, which is going to feel fantastic.

]]> By: Lending Club Edition - Monthly Debt Reduction & Savings Statement - July 2009 | Debt Free Adventure!http://www.debtfreeadventure.com/debt-reduction-emergency-fund-savings-the-balanced-7525-method/#comment-2443 Lending Club Edition - Monthly Debt Reduction & Savings Statement - July 2009 | Debt Free Adventure! Wed, 23 Sep 2009 13:36:26 +0000 http://www.debtfreeadventure.com/?p=1715#comment-2443 [...] believer in contributing to my savings EVERY month no matter what.  I am currently following my Balanced 75/25 Method of debt repayment/savings [...] [...] believer in contributing to my savings EVERY month no matter what.  I am currently following my Balanced 75/25 Method of debt repayment/savings [...]

]]> By: Should I Invest While Still In Debt? | Debt Free Adventure!http://www.debtfreeadventure.com/debt-reduction-emergency-fund-savings-the-balanced-7525-method/#comment-2389 Should I Invest While Still In Debt? | Debt Free Adventure! Fri, 18 Sep 2009 17:41:05 +0000 http://www.debtfreeadventure.com/?p=1715#comment-2389 [...] so save whatever amount works for you and your situation.  Before investing, I intend to build my Emergency Fund to $20,000 (which is equal to 6 – 9 months of current family [...] [...] so save whatever amount works for you and your situation.  Before investing, I intend to build my Emergency Fund to $20,000 (which is equal to 6 – 9 months of current family [...]

]]> By: The Debt Steamroller - I WILL FIGHT to reach my goals! | Debt Free Adventure!http://www.debtfreeadventure.com/debt-reduction-emergency-fund-savings-the-balanced-7525-method/#comment-2028 The Debt Steamroller - I WILL FIGHT to reach my goals! | Debt Free Adventure! Tue, 25 Aug 2009 17:01:13 +0000 http://www.debtfreeadventure.com/?p=1715#comment-2028 [...] (Jeep accident among other things) and will then be able to return all my available resources to debt repayment and emergency fund savings.  Although unplanned expenses are always unplanned… I am placing my hope in the fact that I [...] [...] (Jeep accident among other things) and will then be able to return all my available resources to debt repayment and emergency fund savings.  Although unplanned expenses are always unplanned… I am placing my hope in the fact that I [...]

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