Dear Dave,

In your plan, you talk about Baby Step 3 as saving enough to have three to six months of expenses in your emergency fund. My husband and I were wondering how you can determine whether you need to be on the low end or high end of that range?

-Amanda

Dear Amanda,

Lots of times in a marriage you’ll have a situation where one person wants to save more, while the other is excited to move on toward investing. Technically, neither is wrong, so the emergency fund really deals with someone’s own personal level of peace. Remember Murphy’s Law, and how it says that says if something can go wrong it will go wrong? Your emergency fund is Murphy Repellant. Some people just want to make sure he doesn’t knock on the door, while others want to make sure he stays in the next county!

There are always practical considerations you can use to determine the amount of your emergency fund. If you both have very stable jobs, you’ll probably be okay saving up three or four months of expenses. But if just one of you works outside the home, or if one is self-employed or on commission, leaning toward the six month side is probably a good idea. Plus, you can always compromise. Start out with three months, but add a little every once in a while until you reach a point where you’re both comfortable!

-Dave

Dear Dave,

You mentioned on your show that you once bought a truck below wholesale price. Do you have any tips for finding a good deal on a used car?

-Anonymous

Dear Anonymous,

When it comes to things like this, I just go on a big treasure hunt. I don’t really care where I buy something, because the best deals will sometimes pop up in the most unlikely places. The rule to remember when buying big ticket items is this: He who has the most patience and the most information wins. Continued...