Dear Dave: My husband and I are close to having our home paid off and being completely debt free. Can we dip into our emergency fund to pay off the house? – Enid

Dear Enid: I’m not sure I’d recommend doing this. I might think about it if your emergency fund is way too big, plus you have a very small amount left to pay on your home. But remember, your emergency fund should be three to six months of expenses — not income. On top of that, paying off your home a few months earlier isn’t exactly an emergency.


Believe me, I understand the feelings that go along with being so close to becoming completely debt free. It can be tempting to throw a bunch of money at your house, and get rid of the mortgage payments. Still, even as much as I hate debt, I wouldn’t put my emergency fund at risk to make it happen.

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When you do things like that, Enid, you’re just begging for Murphy to come visit. The moment you write a big check and weaken your emergency fund for something that isn’t an emergency, the transmission in your car will go out or you’ll have to replace the central air unit on your home. It’s not worth the risk! – Dave

Dear Dave: Should I catch up on my past due bills before saving up $1,000 for Baby Step 1? –Sharyn

Dear Sharyn: That’s exactly what you should do. Get current or make payment arrangements with everyone who’s willing to work with you first. In the process, make sure you’re keeping your own living necessities in mind — food, shelter, clothing, utilities and transportation.

After you’ve done that, and saved a beginner emergency fund of $1,000, start your debt snowball and pay off all your debts from smallest to largest, except for your home. That’s Baby Step 2. In Baby Step 3, you’ll save up and increase your emergency fund from $1,000 to a full three to six months of expenses. Once you reach this point, you can really start looking toward the future.

In Baby Step 4, start investing 15 percent of your income into Roth IRAs and other pre-tax retirement plans. College funding for the kids, if there are any, is next in Baby Step 5.

Baby Step 6 is a big one, because this is where you pay off your home early. But Baby Step 7 is the real deal. This is when you’re completely debt free, and you’re able to build wealth like crazy and give with outrageous generosity! – Dave

Dave Ramsey is a personal money-management expert, a bestselling author and host of the nationally syndicated radio program “The Dave Ramsey Show,” which is heard locally on KROC-AM. For more financial advice, visit