January 20, 2026 • 19 mins
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In this episode of the Debt Free Dad podcast, Brad Nelson discusses the importance of having a small emergency fund and how it can significantly change the way you handle money, reduce stress, and help you feel more prepared. Brad explains why an emergency fund is a crucial step towards financial stability and debt-free living. He also shares tips on how to start building an emergency fund, even if you're living paycheck to paycheck. Tune in to learn how creating a small buffer can provide peace of mind and lead to better money management.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Brad (00:00):
Most people don't panic when an emergency happens.
They panic because they don'thave anything set aside for it.
Now, in today's episode, we'regoing to be talking about how a
small emergency fund can changethe way you handle money, reduce
stress, and help you stopreacting to life and start
feeling prepared instead.
Announcer (00:22):
You're listening to the Debt Free Dad podcast with
Brad Nelson.
Brad and his co-hostsexperience the anxiety of living
paycheck to paycheck beforelearning the fundamentals of
financial success.
They are now on a mission toempower regular people to pay
off their debt for good andenjoy happier, less stressful
lives.
Keep listening forinspirational interviews, tips,
(00:44):
tricks, and practical advice togain financial freedom.
Speaker 1 (00:49):
Hey guys, welcome to today's show.
My name is Brad Nelson.
I'm the founder of Debt FreeDad.
I paid off about $45,000 ofdebt.
I've been debt-free now formore than 12 years.
I've also been fortunate tohelp thousands of other people
save and pay off tens ofmillions of dollars with the
work that we do here at DebtFree Debt.
Now, guys, after listening tothis episode, if you're ready to
take things to the next level,might be why you're listening to
(01:10):
this podcast to begin with, butmaybe you're someone who wants
to break free from livingpaycheck to paycheck.
You want to reduce stress,build your savings, finally pay
off your debt for good.
But you're probably like a lotof people out there, you're just
not sure where to get started.
We've created some incrediblefree resources for you here at
Dev FreeDad, and I'll be sharingsome details about how you get
some of those later on intoday's episode.
(01:31):
Before we get on today's show,we've been doing a lot of solo
episodes.
I know if you've been a regularlistener for some time in the
new year here in 2026, we've hada lot of people traveling.
Chris's ice cream shop isclosed this time of year.
So he's been traveling.
He's actually traveling abroad.
Katie is also doing sometraveling.
And then sadly, Amber andmyself, we were sick for a
(01:53):
couple of weeks.
So we haven't had the wholegroup together in some time.
So if you're wondering, hey,where is everybody?
We will be getting back onto aregular schedule as soon as
everyone is healthy, returningfrom vacation and their travels.
So you guys just get me today.
And as we get started in thisepisode, I want to ask you
something.
When something unexpectedhappens in your life, maybe it's
(02:16):
a car repair, could be amedical bill, a home issue,
something needs to be repairedin your home.
It's an emergency.
What's our first reaction?
Is it panic?
Is it stress?
Do you freak out, right?
Because of the financialimplications of whatever that
unexpected expense is.
(02:36):
You get that sinking feeling inyour stomach where you
immediately start doing themental math, right?
And worrying about how you'regoing to cover that unexpected
expense.
For most people, it's not theexpense itself that causes all
of the stress.
It's the fact that there'snothing there to handle it.
(02:58):
You've got nothing to fall backon.
And I used to live that way,you guys, many, many years ago.
And I can still remember whatthose feelings felt like.
And when there's nothing there,every problem feels bigger than
it really is.
So today, I want to circle backand talk about one of the most
basic things of getting yourpersonal finances under control.
(03:18):
And I want to talk about thesmall emergency fund.
Not a big one, not a perfectone, but a small one.
And I want to talk about how itcan completely change how you
experience your money and howthat little emergency fund can
make such a big difference inyour overall financial health
and honestly in your ongoingprogress here in wanting to get
out of debt.
And why this step often mattersmore than paying off debt at
(03:42):
first, is the big thing I wantto talk about because most
people will make the mistake andthey say, I want to get out of
debt, and they don't focus onsaving, they focus on getting
out of debt.
We're going to talk about whythat can be a big mistake,
especially when you're firstgetting started.
Now, here's something that mostpeople don't realize, and I
didn't at first either.
Emergencies aren't stressfulbecause they're expensive.
(04:02):
They're stressful because theyexpose how fragile things feel,
how fragile our financial lifeis.
And when you don't have asavings, every unexpected
expense, it feels like a threat,right?
It's a threat to maybe yourrent or your mortgage.
You know, you freak out.
Are we gonna be able to pay themortgage?
(04:22):
Are we gonna get behind?
It's a threat to are we gonnahave enough money to put food on
the table and get groceries?
It's a threat to are we gonnahave enough money to put gas in
the car?
It's a threat, maybe if you'reon your financial journey, it's
a threat to your progress.
Because, man, if you didn'thave any money saved and you've
been paying off debt, guesswhat?
You have no other choice but toswipe credit cards again.
It's a threat to that progressthat you've been making, it's a
(04:43):
threat to your stress levels,right?
That's why emergencies don'tjust cost money.
This is why most people in theUnited States agree that money
is one of the number one thingsthat stresses them out the most.
Because it costs you yourpeace, it costs you your sleep,
it costs you, man, that theemotional energy, right?
(05:06):
And when you live in that statelong enough, you stop feeling
proactive with money and youstart feeling reactive.
You're not planning anymore,you're just waiting for that
next thing to land on yourdoorstep.
You're just surviving, and thisis important.
(05:27):
Most people don't live withoutan emergency fund because
they're just irresponsible.
If you ask most people, hey,you want to have an emergency
fund?
Well, yeah, most people intheir right mind would say, yes,
that sounds like a really goodthing I should have.
We live without one becauselife has just been expensive, it
gets overwhelming, it'snonstop, right?
And it'll beat you to yourknees if you're not careful,
(05:49):
right?
That's what life is sometimes.
And we've been putting outfires for years, and sometimes
we just kind of get into thishabit and this circling mindset
of I'm just never gonna getahead, I'm just never gonna be
able to save money.
So when someone says, like meon this podcast, I'm gonna sound
like a little bit of ahypocrite right here, but when I
say just save more money, italmost to you might feel
(06:10):
insulting right now because it'snot like you don't want to save
money.
The problem isn't effort.
Yeah, maybe in some cases, butfor a lot of people, it's not
always just effort, it's justmargin, right?
So I want to talk about what asmall emergency fund actually
does and why we feel like thisis one of the most important
things that you can do,especially when getting started.
(06:31):
Obviously, looking at yourhabits and your behaviors and
your choices is huge, having amonthly budget.
But man, top three building asmall emergency fund.
Because a small emergency fund,it doesn't solve everything.
Heck, even a big emergency funddoesn't always solve
everything, but it does threereally powerful things.
First, we talked about this inthe beginning of the show today,
(06:52):
it slows the panic.
When something happens, you'renot like freaking out and
immediately scrambling theemergency sirens aren't going
off in your head, right?
You're not frantically checkingyour bank account balances and
figuring out what we're gonnamove around or what we're gonna
skip or what we're gonna getbehind on to cover this.
You're not trying to decidewhich bills can wait, right?
(07:14):
It gives you the opportunity topause, it gives you the
opportunity just to breathe,right?
And that alone changes yourentire experience.
It breaks the big credit cardand debt cycle.
(07:35):
You're never gonna get out ofdebt if you're always depending
on it to save you.
Instead of automaticallyreaching for debt or that credit
card, you reach for moneybecause it's there.
It's like a kind of like a minifinancial hug you've given
yourself and you've planned for,right?
That one shift prevents months,sometimes years of added
(07:56):
financial stress just byplanning ahead.
Lastly, it changes how youthink.
You go from hoping nothing goeswrong, fingers crossed, right?
It's like that whole joke yousee sometimes.
Oh, I hear a noise in my car.
I just turned the radio up alittle louder so I don't hear
it, right?
You want to avoid it becauseyou know that noise probably is
gonna cost you some money.
It's gonna cause you to go intodebt because you don't have an
(08:17):
emergency fund, right?
So instead of again hopingnothing goes wrong, you know
that you can handle it.
That mental shift is massive,right?
This is where a lot of peoplepush back, though.
They say things like, what'sthe point of saving $500?
Or what's the point of having$1,000 or $2,000 or $3,000 saved
in this small emergency fund?
That's not going to cover areally big emergency, Brad.
(08:40):
I'll start saving once my dadis gone.
And on the surface, honestly, Iget it.
That sounds logical, and Ihonestly felt the same way when
I first got started.
But here's the thing it itignores how real life actually
works.
Most emergencies, and again,I've experienced all sorts of
emergencies, as I'm sure you arelistening to this show, but we
(09:02):
know most emergencies aren'tcatastrophic.
Most, again, not all, but mostare small to medium-size
emergencies.
We're talking about things likeflat tires, car repairs, maybe
medical co-pays, prescriptions,out of work for a little bit
because you're sick, lost somehours, appliance repairs, you
(09:24):
know, kids' school expenses, uh,man, utility bills that spike,
especially right now as I'mrecording this.
It is darn cold here inWisconsin, man.
We're gonna get a bigger energybill next month because uh,
man, our heat's been runningnonstop.
You see, a $500 to $1,000buffer handles a huge percentage
of what people actually dealwith.
More importantly, it stops thatemotional spiral and it
(09:48):
prevents a lot of that initialfinancial stress that you feel
when these unexpected expenseshit your doorstep.
Because when you can handle thefirst hit, you don't panic
about the second one.
And here's something reallyimportant the piece doesn't come
from the amount.
Yeah, sure.
The more you have, the better,right?
(10:09):
I suggest at least trying tobuild it up to 3,000, but start
at 500, start up to a thousand.
But it doesn't come from theamount.
That piece comes from thepreparation, it comes from
knowing the back of your mind,if something happens, we've got
money put away to handle this.
It comes from knowing that youmade a decision for yourself
ahead of time instead of justreacting in the moment.
(10:32):
Even a small emergency fund cancreate that kind of peace and
that kind of space in your life.
And for a lot of my members, myroots members, the thousands of
people I've helped over theyears, I see it time and time
again.
They say, I just never realizedwhen I started roots or I
started listening to the podcastthat in just 30, 60, or 90
(10:52):
days, I could feel so much lessstress.
And a lot of that, you guys,comes from building in emergency
fund savings, having a budget,knowing what's going on with
your expenses.
It creates that space.
It creates a lot of that peacethat you're looking for.
All right.
And that space that we'retalking about is space between
the problem and your reaction.
And that space is literallyeverything.
(11:13):
And you can't even put a pricetag on it.
It feels so good.
Because when you have thatspace, that's where better
decisions are actually made.
In fact, on this podcast,several years ago, we did an
episode on how financial stressaffects your life.
They proved in a study thatpeople who are under constant
financial stress are more proneto making worse financial
(11:35):
decisions for their financiallife because of that stress.
So when you're not givingyourself that space, you're
actually setting yourself up formore financial stress moving
forward because your head's notclear.
You're not giving yourself thatspace to make better decisions.
And that's where people stopmaking desperation moves, is
when they have that space.
That's where progress stopsgetting undone.
And let me say this clearly: without an emergency fund, every (11:58):
undefined
step forward is fragile, right?
It's like walking kind of onedgehills almost, like it's like
you're just waiting or you'rewalking on ice, right?
And you're just waiting for theice to crack and fall through.
One unexpected expense withoutan emergency fund can erase
months of effort in getting outof debt.
(12:19):
And that's why people feel likethey're doing everything right
and still not getting ahead.
And also, guys, when you aren'tsaving and you're prioritizing
paying off debt without asavings, you're not breaking the
habit of using debt.
You got to break that habit.
Debt is not a rescue, you are arescue.
Your emergency fund is therescue, and that's what you got
(12:40):
to prioritize.
But even with a small emergencyfund, that's what allows you to
stay in the game.
You don't undo the progress,you don't feel like quitting
when things uh happen, right?
And again, I want to keep inmind too, full transparency.
It's never fun to use youremergency fund, especially for
car repairs.
It's painful, right?
But it feels really great thatyou didn't have to swipe a
(13:02):
credit card and go further intodebt.
You don't feel like the systemis broken, right?
So you build confidence insteadof frustration, essentially.
And confidence is fuel.
And confidence only comes bytaking action, getting that win
of having that emergency fund,having something happen.
You have money there.
It's a feel-good moment becauseyou realize I don't no longer
(13:25):
have to depend on debt.
I can build an emergency fundfor those.
So a small emergency fundactually helps you get out of
debt faster because debt payoffwithout saving, it's unstable.
Every emergency without anemergency fund is going to add
on more debt.
Balances go back up, yourmotivation drops.
Again, you have that feelingthat no matter what you do isn't
working, and eventually peoplejust give up.
(13:46):
Not because they're lazy, notbecause what they were doing
wasn't working, it's because itfeels pointless.
There's a psychological side tothis.
But when you have a smallbuffer, like an emergency fund,
right?
Progress sticks.
And it's never going to beperfect, but it allows you to be
more consistent.
And consistency is what'salways going to allow you to
(14:09):
win.
Now let's talk about how tostart without overthinking this.
All right.
This does not need to be supercomplicated.
Your only goal is just tocreate breathing room.
That's it.
All right.
So for some people, thatbreathing room is $500 to start
with.
And again, start incrementally.
Start with a $500 goal, thenwork up to $1,000, then work up
to $2,000, then work up to$3,000.
(14:30):
I think $3,000 is a really goodnumber for a starter emergency
fund for most people.
The number, again, matters farless than actually creating the
habit of putting that money awayand prioritizing your emergency
fund.
This isn't about buildingwealth.
I don't want you to stick thisinto an investment account or a
CD or anything like that.
(14:50):
Put it into a boring savingsaccount.
This is about stabilizing yourlife.
If you have an emergency fund,I want you to be able to quickly
access that money and use thatto save yourself rather than
dead.
Right.
And no, this doesn't require araise.
You don't have to go outnecessarily.
Maybe in some cases, you don'thave to go out and get a second
job.
Maybe you work some extrahours, though.
That could be good.
(15:11):
It also could come from smallcuts, short-term sacrifices
going through your budget anddeciding, hey, what can we live
without for a little bit so wecan prioritize building the
savings first?
And then when that savings isbuilt, go back to putting that
other thing back in your budget.
It's not gone forever, it'sjust gone for right now, so we
can get some stabilization.
It comes from deciding thatpiece is worth prioritizing.
(15:34):
And here's something I want youto hear saving even a small
emergency fund, you guys, is awin.
And for a lot of our members,man, it's the most amount of
money that they've ever had in asavings account.
It was for me when I first gotstarted.
I used to carry anywherebetween $1,500 to $2,000 in my
emergency fund when I wasgetting out of debt.
And you guys, I was a terriblesaver.
(15:56):
I hardly had any money insavings, if any at all.
So for me, seeing that money inthere is huge, is
life-changing.
And even that small amount, andI know that sounds crazy, but
you'll feel it as well becauseit's proof to yourself that
you're starting to take controlof your finances.
It's proof that things arechanging for you, even if they
don't feel really dramatic yet.
(16:19):
And that matters way more thanyou think.
So again, guys, an emergencyfund isn't about the money.
It's about the peace of mind.
It's about the less stress.
It's about, again, having thatlittle financial hug in your
back pocket when you need it.
It's about waking up knowingthat when life happens, and it
will, trust me, you're notimmediately going to be in
crisis mode.
(16:39):
All right.
And especially, man, guys, ifyou're in a relationship, man,
having a backup emergency fundis going to save so much stress
on your relationship, so manymoney fights, so many arguments.
Man, just make it a priority.
And if you've been stuck and ifyou've been overwhelmed and
constantly reacting financially,this is going to be your first
move.
Not because, again, it doesn'tfix everything, but because it
(17:02):
changes how you begin to see andfeel about your money.
And that's where the realchange begins to happen.
Now, again, guys, if you wanthelp from us here at the
DefreeDad team, you want tobuild this step-by-step plan
with real support andaccountability.
That's exactly what we focus oninside Roots.
Now, Roots isn't open all thetime, but I would highly
(17:24):
recommend that you go toDefreedad.com, jump on our wait
list so the next time it opens,that you can consider joining us
in there.
If you're looking for a greatcommunity to help support you,
ask questions.
Again, help let us hold yourhand throughout this entire
process.
All of that is available to youin Roots.
And if you don't join, I wouldjust suggest here as you're
listening to this podcast, keeplistening.
Go back and listen to ourprevious episodes as well.
(17:46):
But start small, start today.
One decision, one step, onehabit, and that's how you begin
to change your entire financiallife and eventually reach
financial freedom.
All right, guys, if you'reready to break free from living
paycheck to paycheck, you wantto reduce financial stress, you
want to build savings andfinally pay off your debt for
good, but maybe you're not surewhere to start.
Don't worry.
(18:06):
We've got you covered here atDeaf Free Debt.
Simplify My Money is sent toyou each and every Sunday to
your email.
It is your step-by-step roadmapin conjunction and partnership
with this podcast to help youhave better financial control.
You're going to learn some easyfollow strategies to manage
your money effectively.
It's also going to help youmake stress-free money
decisions.
These are going to help yousimplify your financial life
(18:28):
with proven tips that actuallywork.
And you're going to gain thetools and confidence to tackle
your financial goals head on.
You can sign up for Simplify MyMoney by clicking the link at
the top of the show notes.
Thanks for joining us ontoday's show, and we will see
you guys on the next episode.
Announcer (18:47):
Thanks for listening to the Debt Free Dad podcast.
Connect with us on Facebook,TikTok, YouTube, and Instagram.
Just search Debt Free Dad.
If you found value in today'sepisode, please leave us a
rating and review.
We so appreciate it.
For resources, show notes, andlinks mentioned in today's show,
visit debtfreedad.com.
(19:08):
Catch you next week.
Most people don't panic when an emergency happens.
They panic because they don'thave anything set aside for it.
Now, in today's episode, we'regoing to be talking about how a
small emergency fund can changethe way you handle money, reduce
stress, and help you stopreacting to life and start
feeling prepared instead.
Announcer (00:22):
You're listening to the Debt Free Dad podcast with
Brad Nelson.
Brad and his co-hostsexperience the anxiety of living
paycheck to paycheck beforelearning the fundamentals of
financial success.
They are now on a mission toempower regular people to pay
off their debt for good andenjoy happier, less stressful
lives.
Keep listening forinspirational interviews, tips,
(00:44):
tricks, and practical advice togain financial freedom.
Speaker 1 (00:49):
Hey guys, welcome to today's show.
My name is Brad Nelson.
I'm the founder of Debt FreeDad.
I paid off about $45,000 ofdebt.
I've been debt-free now formore than 12 years.
I've also been fortunate tohelp thousands of other people
save and pay off tens ofmillions of dollars with the
work that we do here at DebtFree Debt.
Now, guys, after listening tothis episode, if you're ready to
take things to the next level,might be why you're listening to
(01:10):
this podcast to begin with, butmaybe you're someone who wants
to break free from livingpaycheck to paycheck.
You want to reduce stress,build your savings, finally pay
off your debt for good.
But you're probably like a lotof people out there, you're just
not sure where to get started.
We've created some incrediblefree resources for you here at
Dev FreeDad, and I'll be sharingsome details about how you get
some of those later on intoday's episode.
(01:31):
Before we get on today's show,we've been doing a lot of solo
episodes.
I know if you've been a regularlistener for some time in the
new year here in 2026, we've hada lot of people traveling.
Chris's ice cream shop isclosed this time of year.
So he's been traveling.
He's actually traveling abroad.
Katie is also doing sometraveling.
And then sadly, Amber andmyself, we were sick for a
(01:53):
couple of weeks.
So we haven't had the wholegroup together in some time.
So if you're wondering, hey,where is everybody?
We will be getting back onto aregular schedule as soon as
everyone is healthy, returningfrom vacation and their travels.
So you guys just get me today.
And as we get started in thisepisode, I want to ask you
something.
When something unexpectedhappens in your life, maybe it's
(02:16):
a car repair, could be amedical bill, a home issue,
something needs to be repairedin your home.
It's an emergency.
What's our first reaction?
Is it panic?
Is it stress?
Do you freak out, right?
Because of the financialimplications of whatever that
unexpected expense is.
(02:36):
You get that sinking feeling inyour stomach where you
immediately start doing themental math, right?
And worrying about how you'regoing to cover that unexpected
expense.
For most people, it's not theexpense itself that causes all
of the stress.
It's the fact that there'snothing there to handle it.
(02:58):
You've got nothing to fall backon.
And I used to live that way,you guys, many, many years ago.
And I can still remember whatthose feelings felt like.
And when there's nothing there,every problem feels bigger than
it really is.
So today, I want to circle backand talk about one of the most
basic things of getting yourpersonal finances under control.
(03:18):
And I want to talk about thesmall emergency fund.
Not a big one, not a perfectone, but a small one.
And I want to talk about how itcan completely change how you
experience your money and howthat little emergency fund can
make such a big difference inyour overall financial health
and honestly in your ongoingprogress here in wanting to get
out of debt.
And why this step often mattersmore than paying off debt at
(03:42):
first, is the big thing I wantto talk about because most
people will make the mistake andthey say, I want to get out of
debt, and they don't focus onsaving, they focus on getting
out of debt.
We're going to talk about whythat can be a big mistake,
especially when you're firstgetting started.
Now, here's something that mostpeople don't realize, and I
didn't at first either.
Emergencies aren't stressfulbecause they're expensive.
(04:02):
They're stressful because theyexpose how fragile things feel,
how fragile our financial lifeis.
And when you don't have asavings, every unexpected
expense, it feels like a threat,right?
It's a threat to maybe yourrent or your mortgage.
You know, you freak out.
Are we gonna be able to pay themortgage?
(04:22):
Are we gonna get behind?
It's a threat to are we gonnahave enough money to put food on
the table and get groceries?
It's a threat to are we gonnahave enough money to put gas in
the car?
It's a threat, maybe if you'reon your financial journey, it's
a threat to your progress.
Because, man, if you didn'thave any money saved and you've
been paying off debt, guesswhat?
You have no other choice but toswipe credit cards again.
It's a threat to that progressthat you've been making, it's a
(04:43):
threat to your stress levels,right?
That's why emergencies don'tjust cost money.
This is why most people in theUnited States agree that money
is one of the number one thingsthat stresses them out the most.
Because it costs you yourpeace, it costs you your sleep,
it costs you, man, that theemotional energy, right?
(05:06):
And when you live in that statelong enough, you stop feeling
proactive with money and youstart feeling reactive.
You're not planning anymore,you're just waiting for that
next thing to land on yourdoorstep.
You're just surviving, and thisis important.
(05:27):
Most people don't live withoutan emergency fund because
they're just irresponsible.
If you ask most people, hey,you want to have an emergency
fund?
Well, yeah, most people intheir right mind would say, yes,
that sounds like a really goodthing I should have.
We live without one becauselife has just been expensive, it
gets overwhelming, it'snonstop, right?
And it'll beat you to yourknees if you're not careful,
(05:49):
right?
That's what life is sometimes.
And we've been putting outfires for years, and sometimes
we just kind of get into thishabit and this circling mindset
of I'm just never gonna getahead, I'm just never gonna be
able to save money.
So when someone says, like meon this podcast, I'm gonna sound
like a little bit of ahypocrite right here, but when I
say just save more money, italmost to you might feel
(06:10):
insulting right now because it'snot like you don't want to save
money.
The problem isn't effort.
Yeah, maybe in some cases, butfor a lot of people, it's not
always just effort, it's justmargin, right?
So I want to talk about what asmall emergency fund actually
does and why we feel like thisis one of the most important
things that you can do,especially when getting started.
(06:31):
Obviously, looking at yourhabits and your behaviors and
your choices is huge, having amonthly budget.
But man, top three building asmall emergency fund.
Because a small emergency fund,it doesn't solve everything.
Heck, even a big emergency funddoesn't always solve
everything, but it does threereally powerful things.
First, we talked about this inthe beginning of the show today,
(06:52):
it slows the panic.
When something happens, you'renot like freaking out and
immediately scrambling theemergency sirens aren't going
off in your head, right?
You're not frantically checkingyour bank account balances and
figuring out what we're gonnamove around or what we're gonna
skip or what we're gonna getbehind on to cover this.
You're not trying to decidewhich bills can wait, right?
(07:14):
It gives you the opportunity topause, it gives you the
opportunity just to breathe,right?
And that alone changes yourentire experience.
It breaks the big credit cardand debt cycle.
(07:35):
You're never gonna get out ofdebt if you're always depending
on it to save you.
Instead of automaticallyreaching for debt or that credit
card, you reach for moneybecause it's there.
It's like a kind of like a minifinancial hug you've given
yourself and you've planned for,right?
That one shift prevents months,sometimes years of added
(07:56):
financial stress just byplanning ahead.
Lastly, it changes how youthink.
You go from hoping nothing goeswrong, fingers crossed, right?
It's like that whole joke yousee sometimes.
Oh, I hear a noise in my car.
I just turned the radio up alittle louder so I don't hear
it, right?
You want to avoid it becauseyou know that noise probably is
gonna cost you some money.
It's gonna cause you to go intodebt because you don't have an
(08:17):
emergency fund, right?
So instead of again hopingnothing goes wrong, you know
that you can handle it.
That mental shift is massive,right?
This is where a lot of peoplepush back, though.
They say things like, what'sthe point of saving $500?
Or what's the point of having$1,000 or $2,000 or $3,000 saved
in this small emergency fund?
That's not going to cover areally big emergency, Brad.
(08:40):
I'll start saving once my dadis gone.
And on the surface, honestly, Iget it.
That sounds logical, and Ihonestly felt the same way when
I first got started.
But here's the thing it itignores how real life actually
works.
Most emergencies, and again,I've experienced all sorts of
emergencies, as I'm sure you arelistening to this show, but we
(09:02):
know most emergencies aren'tcatastrophic.
Most, again, not all, but mostare small to medium-size
emergencies.
We're talking about things likeflat tires, car repairs, maybe
medical co-pays, prescriptions,out of work for a little bit
because you're sick, lost somehours, appliance repairs, you
(09:24):
know, kids' school expenses, uh,man, utility bills that spike,
especially right now as I'mrecording this.
It is darn cold here inWisconsin, man.
We're gonna get a bigger energybill next month because uh,
man, our heat's been runningnonstop.
You see, a $500 to $1,000buffer handles a huge percentage
of what people actually dealwith.
More importantly, it stops thatemotional spiral and it
(09:48):
prevents a lot of that initialfinancial stress that you feel
when these unexpected expenseshit your doorstep.
Because when you can handle thefirst hit, you don't panic
about the second one.
And here's something reallyimportant the piece doesn't come
from the amount.
Yeah, sure.
The more you have, the better,right?
(10:09):
I suggest at least trying tobuild it up to 3,000, but start
at 500, start up to a thousand.
But it doesn't come from theamount.
That piece comes from thepreparation, it comes from
knowing the back of your mind,if something happens, we've got
money put away to handle this.
It comes from knowing that youmade a decision for yourself
ahead of time instead of justreacting in the moment.
(10:32):
Even a small emergency fund cancreate that kind of peace and
that kind of space in your life.
And for a lot of my members, myroots members, the thousands of
people I've helped over theyears, I see it time and time
again.
They say, I just never realizedwhen I started roots or I
started listening to the podcastthat in just 30, 60, or 90
(10:52):
days, I could feel so much lessstress.
And a lot of that, you guys,comes from building in emergency
fund savings, having a budget,knowing what's going on with
your expenses.
It creates that space.
It creates a lot of that peacethat you're looking for.
All right.
And that space that we'retalking about is space between
the problem and your reaction.
And that space is literallyeverything.
(11:13):
And you can't even put a pricetag on it.
It feels so good.
Because when you have thatspace, that's where better
decisions are actually made.
In fact, on this podcast,several years ago, we did an
episode on how financial stressaffects your life.
They proved in a study thatpeople who are under constant
financial stress are more proneto making worse financial
(11:35):
decisions for their financiallife because of that stress.
So when you're not givingyourself that space, you're
actually setting yourself up formore financial stress moving
forward because your head's notclear.
You're not giving yourself thatspace to make better decisions.
And that's where people stopmaking desperation moves, is
when they have that space.
That's where progress stopsgetting undone.
And let me say this clearly: without an emergency fund, every (11:58):
undefined
step forward is fragile, right?
It's like walking kind of onedgehills almost, like it's like
you're just waiting or you'rewalking on ice, right?
And you're just waiting for theice to crack and fall through.
One unexpected expense withoutan emergency fund can erase
months of effort in getting outof debt.
(12:19):
And that's why people feel likethey're doing everything right
and still not getting ahead.
And also, guys, when you aren'tsaving and you're prioritizing
paying off debt without asavings, you're not breaking the
habit of using debt.
You got to break that habit.
Debt is not a rescue, you are arescue.
Your emergency fund is therescue, and that's what you got
(12:40):
to prioritize.
But even with a small emergencyfund, that's what allows you to
stay in the game.
You don't undo the progress,you don't feel like quitting
when things uh happen, right?
And again, I want to keep inmind too, full transparency.
It's never fun to use youremergency fund, especially for
car repairs.
It's painful, right?
But it feels really great thatyou didn't have to swipe a
(13:02):
credit card and go further intodebt.
You don't feel like the systemis broken, right?
So you build confidence insteadof frustration, essentially.
And confidence is fuel.
And confidence only comes bytaking action, getting that win
of having that emergency fund,having something happen.
You have money there.
It's a feel-good moment becauseyou realize I don't no longer
(13:25):
have to depend on debt.
I can build an emergency fundfor those.
So a small emergency fundactually helps you get out of
debt faster because debt payoffwithout saving, it's unstable.
Every emergency without anemergency fund is going to add
on more debt.
Balances go back up, yourmotivation drops.
Again, you have that feelingthat no matter what you do isn't
working, and eventually peoplejust give up.
(13:46):
Not because they're lazy, notbecause what they were doing
wasn't working, it's because itfeels pointless.
There's a psychological side tothis.
But when you have a smallbuffer, like an emergency fund,
right?
Progress sticks.
And it's never going to beperfect, but it allows you to be
more consistent.
And consistency is what'salways going to allow you to
(14:09):
win.
Now let's talk about how tostart without overthinking this.
All right.
This does not need to be supercomplicated.
Your only goal is just tocreate breathing room.
That's it.
All right.
So for some people, thatbreathing room is $500 to start
with.
And again, start incrementally.
Start with a $500 goal, thenwork up to $1,000, then work up
to $2,000, then work up to$3,000.
(14:30):
I think $3,000 is a really goodnumber for a starter emergency
fund for most people.
The number, again, matters farless than actually creating the
habit of putting that money awayand prioritizing your emergency
fund.
This isn't about buildingwealth.
I don't want you to stick thisinto an investment account or a
CD or anything like that.
(14:50):
Put it into a boring savingsaccount.
This is about stabilizing yourlife.
If you have an emergency fund,I want you to be able to quickly
access that money and use thatto save yourself rather than
dead.
Right.
And no, this doesn't require araise.
You don't have to go outnecessarily.
Maybe in some cases, you don'thave to go out and get a second
job.
Maybe you work some extrahours, though.
That could be good.
(15:11):
It also could come from smallcuts, short-term sacrifices
going through your budget anddeciding, hey, what can we live
without for a little bit so wecan prioritize building the
savings first?
And then when that savings isbuilt, go back to putting that
other thing back in your budget.
It's not gone forever, it'sjust gone for right now, so we
can get some stabilization.
It comes from deciding thatpiece is worth prioritizing.
(15:34):
And here's something I want youto hear saving even a small
emergency fund, you guys, is awin.
And for a lot of our members,man, it's the most amount of
money that they've ever had in asavings account.
It was for me when I first gotstarted.
I used to carry anywherebetween $1,500 to $2,000 in my
emergency fund when I wasgetting out of debt.
And you guys, I was a terriblesaver.
(15:56):
I hardly had any money insavings, if any at all.
So for me, seeing that money inthere is huge, is
life-changing.
And even that small amount, andI know that sounds crazy, but
you'll feel it as well becauseit's proof to yourself that
you're starting to take controlof your finances.
It's proof that things arechanging for you, even if they
don't feel really dramatic yet.
(16:19):
And that matters way more thanyou think.
So again, guys, an emergencyfund isn't about the money.
It's about the peace of mind.
It's about the less stress.
It's about, again, having thatlittle financial hug in your
back pocket when you need it.
It's about waking up knowingthat when life happens, and it
will, trust me, you're notimmediately going to be in
crisis mode.
(16:39):
All right.
And especially, man, guys, ifyou're in a relationship, man,
having a backup emergency fundis going to save so much stress
on your relationship, so manymoney fights, so many arguments.
Man, just make it a priority.
And if you've been stuck and ifyou've been overwhelmed and
constantly reacting financially,this is going to be your first
move.
Not because, again, it doesn'tfix everything, but because it
(17:02):
changes how you begin to see andfeel about your money.
And that's where the realchange begins to happen.
Now, again, guys, if you wanthelp from us here at the
DefreeDad team, you want tobuild this step-by-step plan
with real support andaccountability.
That's exactly what we focus oninside Roots.
Now, Roots isn't open all thetime, but I would highly
(17:24):
recommend that you go toDefreedad.com, jump on our wait
list so the next time it opens,that you can consider joining us
in there.
If you're looking for a greatcommunity to help support you,
ask questions.
Again, help let us hold yourhand throughout this entire
process.
All of that is available to youin Roots.
And if you don't join, I wouldjust suggest here as you're
listening to this podcast, keeplistening.
Go back and listen to ourprevious episodes as well.
(17:46):
But start small, start today.
One decision, one step, onehabit, and that's how you begin
to change your entire financiallife and eventually reach
financial freedom.
All right, guys, if you'reready to break free from living
paycheck to paycheck, you wantto reduce financial stress, you
want to build savings andfinally pay off your debt for
good, but maybe you're not surewhere to start.
Don't worry.
(18:06):
We've got you covered here atDeaf Free Debt.
Simplify My Money is sent toyou each and every Sunday to
your email.
It is your step-by-step roadmapin conjunction and partnership
with this podcast to help youhave better financial control.
You're going to learn some easyfollow strategies to manage
your money effectively.
It's also going to help youmake stress-free money
decisions.
These are going to help yousimplify your financial life
(18:28):
with proven tips that actuallywork.
And you're going to gain thetools and confidence to tackle
your financial goals head on.
You can sign up for Simplify MyMoney by clicking the link at
the top of the show notes.
Thanks for joining us ontoday's show, and we will see
you guys on the next episode.
Announcer (18:47):
Thanks for listening to the Debt Free Dad podcast.
Connect with us on Facebook,TikTok, YouTube, and Instagram.
Just search Debt Free Dad.
If you found value in today'sepisode, please leave us a
rating and review.
We so appreciate it.
For resources, show notes, andlinks mentioned in today's show,
visit debtfreedad.com.
(19:08):
Catch you next week.
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