Dave Says: Don’t Panic, You Have Plenty of Time

Dear Dave,

My husband and I have just $12,000 to pay off before we’re debt-free. We’ve paid off almost $70,000 in debt in the last two years, and we both just turned 50. We would like to buy a house soon, but we know we need an emergency fund. It would take us over a year to build up an emergency fund, so since we’re getting older, should we make adjustments to the Baby Steps?


Dear Debbie,

You’ve been making great progress, and you obviously have a good income to be able to pay off debt that quickly. But it shouldn’t take you two a year to build up an emergency fund, considering the rate at which you’ve been paying off debt.

Yes, you need a fully funded emergency fund of three to six months of expenses set aside before you start saving a down payment for a home. Maybe in your case, you could lean a little more toward the three-month side with your emergency fund. Then, after you’re all moved in, you could revisit the emergency fund and beef it up to six months.

Fifty isn’t old, Debbie. Just stay on course and stick with the plan. You two have plenty of time to get your finances in order and find a great home!