Why Saving for Our Emergency Fund Took More Than a Year

When I left off in my “honest discussion” saga last week, it was the summer of 2008 and my family had just boarded a plane bound for Kansas City from Tel Aviv. In January of that year, we had gotten serious about figuring out the financial mess we found ourselves in, not the least of which was having $30K of debt.

In just seven months, we had managed to save $1,000 in a baby emergency fund and pay off all of our debt — i.e. Steps 1 and 2 of the Dave Ramsey Total Money Makeover. We achieved this rather break-neck pace by selling a lot of stuff (like our minivan and a houseful of furniture), cashing in a $5,000 savings account, increasing our income by about $2000 a month through freelance work, and living on a lot less than we were making in order to pay down debt. We had given up cable, eating out, vacations, new clothing, birthday presents, and more. But every cut-back was worth it when we made that final debt repayment!

The next step in our Total Money Makeover was to save three to six months of expenses in an emergency fund. But before we could do that, we had a few other issues to contend with. We were fortunate that we both worked from home in Israel, so our jobs were “portable”. That meant we had jobs in the U.S., so no transition time without income. And since we had moved to Kansas City to be near my folks, we had a place to crash with our two kids while we figured out where to live.

After searching for rental homes and finding them to be rather pricey, we decided instead to rent an apartment within the eruv. We needed to put aside first and last month’s rent, so that was our first savings goal. At the same time, we needed to scrounge up some furniture, since we had sold almost everything before we left Israel. Thanks to Craigslist, garage sales and cast-offs in my parents’ basements, we managed to outfit a two bedroom apartment for under $1,300.

We also made sure to get ahead of all of our annual bills, such as insurance. Rather than pay a monthly service fee, we paid six months at a time and enjoyed a reduced rate. Then we set up an online savings account to automatically save one-sixth of that payment each month to be ready for the next bill. {As an aside, we have used this system for almost everything — from insurance premiums to license renewals to our son’s day school tuition — and it has really helped us to avoid that “oh my gosh, we just got this bill but we don’t have any money, so we’ll just put it on the credit card” fiasco we’d faced in Israel.}

Creating this more organized financial system was definitely a good thing, but it also required a lot of cash — which meant that every penny we were saving was already spoken for. After two months of living in America, we had accomplished a lot, but we still hadn’t saved a cent toward our Emergency Fund.

Before we could make any progress, life threw us another curve ball — a wonderful one. I was pregnant with our third child. We had insurance, but it wouldn’t cover our midwife, so we knew we had about eight months to save $2,500. At the same time, we wanted to put aside another $1,000 to cover a brit or simchat bat (we didn’t find out the gender ahead of time), plus pay for all those incidentals that come up when you welcome a new member of your family.

Our goal was to put aside the first $750 a month of our ‘snowball’ toward the Baby & Birth Fund and then put everything else into our Emergency Fund. With limited income, our B&B Fund got the bulk of our margin. By the end of the year, we had put just $1500 into our Emergency Fund – barely half a month’s worth of expenses.

We kept plugging away, though, refusing to be deterred by our turtle-like progress. In March, we caught a major break — a sizable refund from Uncle Sam (yes, we file early). In general, a big refund isn’t a good thing — since it means you’ve been giving the government a tax-free loan all year. But given that we had moved in the middle of the year and had to set up a new business in America to handle our freelance work, I wasn’t surprised that our calculations were a bit off. We gleefully took the entire refund and finished off our B&B fund and gave a major boost to our EF.

From March through May, we finally got some good traction on our EF. We had saved up almost $11,000, thanks in large measure to that tax refund injection. We were about to celebrate a major financial milestone — three months of expenses in our EF — when “Murphy” came calling. A major financial stressor had reared its head thousands of miles away in another area of our life. Ultimately we would have to spend a big chunk of that fund we had worked so hard to save, but I’ll pick up with that part of our story next week.

To be continued.


You can read the rest of our story here:

Part 1: An Honest Discussion about Debt

Part 2: How We Owned Our Problem with Debt

Part 3: How Saving $1000 Changed My Life

Part 4: How We Paid off $30,000 of Debt in Just 6 Months

Part 5: The Rocky Road to an Emergency Fund

Part 6: Finishing Our Emergency Fund – We Did It!

Part 7: So, We’re Out of Debt and Have an Emergency Fund. Now What??!!


  1. This is so inspiring! Thanks!

Leave a Comment