Dear Dave,

My husband opened his own commercial painting business in May. He knows he will have about three months in the year where heís making little to no income. Weíve gotten $1,000 set aside for our Baby Step 1 beginnerís emergency fund, but because of that down period he would like to skip paying off all our debt except for the house, which is Baby Step 2, and move to Baby Step 3 and put an emergency fund aside. I can understand his thinking, but I wanted your thoughts on the idea.

ó Melody

Dear Melody,

Baby Step 3 is not a fill-in-the-gap measure for income you already know wonít be there. Baby Step 3 is an emergency fund†of three to six months of expenses, and the scenario heís talking about is not an emergency. He knows itís coming, so it is not an emergency.

I think he needs to re-work his business model. This guy needs something to do during those three months, so he doesnít drop off to no income. Also, if youíre going to set some money aside for a down time, that would not be Baby Step 3. It would be a line in the budget where youíre setting some money aside, because you know a problemís coming.

If something happens around the same time every year it becomes predictable, and itís not an emergency. So, itís not really a matter of the order of the Baby Steps. You budget†for this down time, or even smarter, figure out a plan for his time during these months, based on his skill set, that will earn some money.


You still need one

Dear Dave,

Iím debt-free except for my home, and Iím about to start Baby Step 3 of your plan. I will be will back on active duty in the Navy soon, and they provide certain types of relief funds for its members depending on where youíre based and other factors. With this in mind, how should I approach Baby Step 3?

ó Brad

Dear Brad,

For Baby Step 3, I tell folks to have three to six months of expenses set aside in an emergency fund. You have incredibly stable employment, so you would probably be okay on the three-month side of that equation. And you wouldnít need quite as much emergency fund money as if you were a straight commission†salesman.

However, my guess is youíll still have emergencies that will be your responsibility to cover. Everyone needs an emergency fund, Brad. But in your situation, youíll probably be okay with one thatís closer to three months of expenses rather than six months of expenses.

Thank you for your service to our country.


ó Dave Ramsey is CEO of Ramsey Solutions. He has authored seven best-selling books, including The Total Money Makeover. The Dave Ramsey Show is heard by more than 13 million listeners each week on 585 radio stations and multiple digital platforms. Follow Dave on the web at and on Twitter at @DaveRamsey.