Broke Millennial by Erin Lowry: Thoughts on Chapter 3

Chapter 3: Do you have a gold star in personal finance?

You don't just save up for retirement. You also need to save up for an emergency fund. It should be easily accessible like a "basic savings account so you don't have to sell stocks to get your money." And emergencies only! Ex: getting laid off or fired, car wrecked, house damaged

• Kinda got that going. I do have a savings account, and I usually only deposit money into there. The only time I've transferred money out was when I am making my Roth IRA contributions and buying stocks. Both of which I need to learn more about, but I'll get to that eventually......
• One issue I have: I just save money. I don't know how much I should have saved though. 

Emergency fund should cover 3-6 months of expenses. If you're self-employed, it's "wise to set the target higher, with 6-9 months of expenses....." Funds can include cash and cash-equivalents (money market funds or certificates of deposits (CDs))

• Personally, I think I'll just use cash. Makes things a little easier for me. I did CDs before, and if I remember correctly, there is a penalty for withdrawing early. I have no idea about money market funds.

Debt-to-income (DTI) ratio "is a key factor lenders use to determine whether to give you a loan." It's your monthly debt payment over your monthly gross income. Also if DTI gets too high it'll be very hard to "pay off your debts on your existing salary." Bankruptcy. DTI limits vary between lenders, so "it's best for you to have a DTI of 40 percent or less."

• Didn't know lenders used DTI. I always thought it was just the credit score check. Now that I think about it, maybe that's factored in your credit score......
• Monthly debt also includes credit card payments, not just loans! Didn't know that.
• Honestly, I think a DTI of 40% is quite high. That's almost half of your gross salary. And then taxes, healthcare, and retirement take away from your gross. So in the end, the money you have left to pay off the debt is even less! But I guess if you are buying a house or car, you have to take on some debt....