The third baby step is to build up your emergency fund to 3-6 months of expenses. This is a general rule of thumb that I've seen recommended in some other places as well. Since Kadie (the nurse) and I have reasonably (ummm...mostly) secure jobs, we opted for the three month expenses emergency fund.
For us, that equates to about $12,000. In some ways, this step was the hardest. It took almost as long as Baby Step two, but without the gratification of seeing our debts evaporate. Plus, I must confess that we were not as diligent and focused as we were on Step Two. One gets lax when the wolf is no longer at the door.
It took us until September to save up the money. But now we've done it. We've put $2,000.00 in our local credit union (earning nothing) and the other $10,000.00 into a Capitol One Money Market account (earning 4.8% interest). We figured it would be nice to earn some interest off them for once.
We celebrated tonight at the same Japanese Steak House. Squealer enjoys the open flames. He's got some pyromania in him!
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