How Big Should Your Emergency Fund Be While You Pay Off Debt?

How big should your emergency fund be while you're paying off debt? Here are a few suggestions to help you start building your emergency fund today.

How big should your emergency fund be while you're paying off debt? Here are a few suggestions to help you start building your emergency fund today.Ahh…the good ole’ emergency fund. If you’ve ever read any personal finance blogs, I’m sure you’ve heard that you need to have one, even if you’re in debt. But if you’re building your emergency fund from scratch while simultaneously trying to pay off debt, it can be difficult to know how much money you should sock away in your emergency fund each month – let alone know when you should stop saving to focus solely on your debt.

Here are a few different theories about how big your emergency fund should be while you pay off debt.


It’s pretty rare to find someone who thinks you should put off saving in an emergency fund entirely until you’re debt free, but there are a few people who subscribe to this line of thinking. The reason it’s a pretty rare line of thinking is that there’s always a risk of emergency. Many emergencies tend to happen when you’re a homeowner or car owner, or both. But, even if you don’t have a house or a car, there’s still opportunities for emergencies to arise.

You never know when you’ll be in an accident on public transportation, get hit riding your bike around town, or come down with an unexpected illness. Likewise, a family member or close friend could have something happen to them that ends up costing you money too. For example, you might find yourself faced with the decision of whether or not to fly across the country to be at the bedside of a sick loved one. We hope it never happens, but it could.

If you don’t have an emergency fund these things might cause you to rack up more debt, which is the last thing you want to do.

Emergency Fund = $1,000

One of the most standard suggestions is to build up to a $1,000 mini-emergency fund while you are aggressively paying off debt. This is the suggestion of financial guru, Dave Ramsey, and lots of people in the personal finance community.

A $1,000 emergency fund might seem like a lot, but it really won’t get you very far if you have a true emergency.

I’m currently paying off debt, and I’ve decided that, once I hit that $1,000 emergency fund mark, I’m not going to stop my monthly contributions to my emergency fund. However, I will breathe a bit easier when I hit the $1,000 mark.

How Much Should I Save Every Month?

Once you’ve decided how much you want to have in your emergency fund while you are paying off debt, you need to decide how to go about building your emergency fund.

Some people will pay only the minimum payments on their debt while aggressively building their emergency fund to their pre-determined amount. Others will continue to pay off debt faster by paying extra toward debt and setting aside a flat amount toward their emergency fund every month.

Either method works just fine. You just have to decide which way makes the most sense to you.

I decided to put at set amount toward my emergency fund every month while paying more than the minimum payments on my debt. However I’ve also put extra into my emergency fund during months where I have a higher than normal income from my side hustle.

The bottom line is that you probably need at least a mini-emergency fund while you pay off debt. How you build it is up to you.


2 thoughts on “How Big Should Your Emergency Fund Be While You Pay Off Debt?

  1. The mini emergency fund of $1,000 got us through most of our emergencies as we paid off all non-mortgage debt. We were lucky. Now, we’re at the stage (following Ramsey) of aggressively saving up a large emergency fund. I find it hard not to focus on the mortgage debt. I get a bigger charge out of debt repayment than I do out of saving. I do like Ramsey’s emphasis on focus though. I’d rather save aggressively for this e-fund than save at a slower pace.

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