I plan to move to Los Angeles to chase my dream of working in the television and film industry. I’m not married, have no kids, and I have $2,500 saved to live on until I can pick up a couple of jobs. I may have to finance a car, though. I’m not sure mine will survive the trip. Under these circumstances, how much of an emergency fund should I shoot for?
So, you’re looking at moving to California with $2,500 in your pocket, a car payment, and no job waiting. This is a disaster waiting to happen, my friend. Don’t get me wrong. I want you to live your dream, but I don’t want it turning into a nightmare.
There’s no way I’d take a car payment to California. And you’re going to need a lot more than just $2,500, unless you have a job lined up. Even if there’s work waiting for you, $2,500 will disappear in about 20 minutes in Los Angeles.
Slow down and take your time. Plan a trip to the coast and figure out what your living arrangements and expenses are going to look like first. Then, line up a job that will pay you enough to cover your expenses. In the meantime, save up enough money to fix your car, or if it’s in really rough shape, to buy a good, used one.
Once all this is done, then you make the move—without a car payment. Moving when you’re broke with no job prospects and a car payment hanging around your neck is a recipe for disaster!
Dave Ramsey is America’s trusted voice on money and business. He’s authored four New York Times best-selling books: Financial Peace, More Than Enough, The Total Money Makeover and EntreLeadership. The Dave Ramsey Show is heard by more than 5 million listeners each week on more than 500 radio stations. Follow Dave on Twitter at @DaveRamsey and on the web at daveramsey.com.