Once you've paid off all debt except for your home, you're on what we call Baby Step 3! This is the point in your financial journey where you're going to save up a large emergency fund to help you weather life's storms. It will cover things that you CAN'T budget for; the true emergencies that most people without a plan tend to go into debt to cover. Things like the time between a job loss and finding another position, a hospital visit, or a leaky roof. Here's how to do it: 1. Calculate your monthly expenses. This is the amount of money you need each month to pay rent/your mortgage payment, your essential bills like water, electricity, gas, buy food, and care for yourself and your immediate family. 2. Make a choice. This emergency fund should be able to cover at least 3 to 6 months worth of expenses. Whether your fund is 3 or 6 months worth is entirely up to you. Are you single with a small rent payment each month? 3 months may be plenty for you. Are you married with 4 children? Ha...