Building a Solid Emergency Fund| Debt Rebel Podcast Ep 79

When extra money shows up in your budget, it feels like a breath of fresh air. Maybe it’s a raise, a side hustle check, or just a few hundred dollars left over after bills. The big question is: what do you actually do with it?

Do you throw it at your debt? Save for emergencies? Upgrade your home?

This is one of the most common questions I hear as a financial coach — and one that recently came up inside the Alliance Coaching Program during our monthly Office Hours. In this blog post, I’m pulling back the curtain on that conversation so you can see how real families just like yours are navigating these decisions — and how you can too.

Step One: Build Your Emergency Fund

Before we even talk about home improvements or extra debt payments, you need your $1,000 starter emergency fund.

Think of it as your safety net. Life is unpredictable — faucets leak, cars break down, and kids suddenly need new shoes two sizes bigger than last week. Without a buffer, most families swipe a credit card and dig the hole deeper.

But when you’ve got even a small emergency fund, you’ve bought yourself peace of mind. You’re no longer scrambling when something goes wrong.

Inside the Alliance, we treat this step as non-negotiable: “Do not pass go, do not collect $200 unless it’s going straight into your emergency fund.”

Step Two: The Debt Snowball Method

Once your emergency fund is set, the next place your extra income should go is toward debt payoff. Specifically, the debt snowball method.

Here’s how it works:

1. List all your debts from smallest to largest (ignore the interest rate for now).

2. Pay the minimum on every debt except the smallest.

3. Throw every extra dollar you can find at that smallest debt until it’s gone.

4. Roll the payment into the next debt and repeat.

Why the smallest balance first? Because paying off debt is just as much about psychology as it is about math. When you knock out that first balance, you create momentum. You see progress. And progress is what keeps you going.

One of our members recently asked what to do with an extra $400 a month. My advice? Put it toward the debt snowball. Imagine the power of paying off a car loan just a few months early. Suddenly, you free up nearly $400 a month in your budget — which you can then use for the next financial goal.

But What About Home Improvements?

This is where things get tricky — and real life doesn’t always fit neatly into a formula.

The member who asked this question is a new homeowner. She admitted her bathroom sinks were on their last legs, her kitchen was outdated, and she desperately wanted to knock down a wall in her living room. She also found an incredible deal on a $10,000 kitchen remodel.

So should she save for the remodel, or stick with debt payoff?

Here’s my advice:

• If it’s cosmetic, it can wait. You’ve lived with it this long, and the payoff of being debt-free is worth the short-term frustration of an ugly countertop.

• If it’s functional, it’s different. If you’ve got a roof that’s about to collapse or plumbing that’s failing, that’s a safety issue or a HUGE repair expense later. In those cases, yes — set aside money for home repairs before paying extra on debt.

• If you just can’t stand it, compromise. Sometimes, it’s worth setting aside a small portion for upgrades (like saving $50/month for paint) while still putting the majority toward debt payoff.

At the end of the day, it’s not about following a rigid formula. It’s about aligning your money decisions with your family’s priorities and long-term vision.

The Power of Planning Ahead

One thing I absolutely loved about this conversation was that the member wasn’t waiting until the money hit her account to figure out what to do. She was making a plan before the income started.

That’s huge.

When you decide ahead of time, you take the emotion and impulse out of the decision. You don’t end up with $400 that somehow “disappears” into random Amazon orders and Target runs. Instead, you tell that money where to go — and it listens.

Why Community Matters

Here’s the truth: money decisions can feel overwhelming when you’re making them in a vacuum. You second-guess yourself. You feel stuck. And you wonder if you’re the only one struggling.

That’s why the Alliance Coaching Program exists. Every month, we gather for live Office Hours where members bring their real-life money questions. Sometimes it’s about debt payoff, sometimes about homeownership, sometimes about how to stop arguing with your spouse about spending.

And every time, we celebrate wins, get clarity, and leave with an action plan.

The combination of accountability, encouragement, and practical coaching is what helps families finally stop living paycheck-to-paycheck and start making real progress toward financial freedom.

Your Next Step

If you’ve got extra income right now, here’s your roadmap:

1. Make sure your $1,000 emergency fund is in place.

2. Use the debt snowball method to knock out debt, one balance at a time.

3. If home repairs are truly urgent, set aside money — but don’t let “cosmetic” updates keep you in debt longer than necessary.

4. Plan ahead so your money doesn’t disappear.

And if you want the kind of support that makes this process a whole lot easier (and more fun), come join us inside the Alliance Coaching Program. You’ll get access to monthly Office Hours like the one in this story, plus budgeting co-working sessions, workshops, and a community of families walking the same path.

👉 Make empowered money decisions and join the Alliance Coaching Program today.