The goal of Dave Ramsey's Baby Steps is to get out of debt, then create a financial situation and future where you can build wealth and live and give like no one else. The first Baby Step is to save a $1,000 Emergency Fund.
An emergency fund is insurance between you and life. It is only an emergency if it is urgent, necessary and unexpected. Some of you may have no money in savings and will need to start from $0 to build up this emergency fund before you can start tackling your debts. Some of you may have several thousand in savings, but also have debts. Everyone's situation is different, and for some people, the $1,000 emergency fund is already done. But the reality is that only 4 in 10 Americans have $1,000 in case an emergency happened. Over half of Americans are in Baby Step One, or need to be. This $1,000 means that if you were to have a car repair, water leak, or ER visit, you'd have the cash to pay for it without it derailing your plans to pay off your debts. If you drain your emergency fund, you simply stop paying your debts (except the minimum payments) and replenish your $1,000 emergency fund.
Baby Step One isn't meant to make you comfortable and it's not meant to make you feel good. If you feel like that just isn't enough and you're vulnerable, GOOD. You need to get out of debt (Baby Step 2) as quickly as possible so that you can move on with your life. Only having $1,000 to fall back on gives you the motivation to pay off debt that much faster. For you, $1,000 in savings may be the most you've ever saved and that is okay because most of America is broke. So it's okay to create your emergency fund, be a little different, don't be average. You're about to do big things!