What constitutes use of an emergency fund? Urgent advice needed.

[Math_Rocks]

Okay, we are on the cusp of having a $1000 emergency fund thanks to our tax refund, something we haven't had in more than a decade (savings not the refund!). We started a DMP last month and within 20 days, 13 of the 17 creditors we want to include were "on board" and agreed to the plan. But the other 4 (one a GE account and the other 3 owned by Barclay's) are making our lives miserable. I am getting calls day and night, mostly at home, sometimes at work. They said they didn't receive the proposal. Had DMP company send them again. Said even if they receive a proposal, it will take up to 60 days to process. So, since first entering the DMP and scraping together that huge payment, we have now missed a payment to them (but not yet 30 days late) so late fees have been applied which pushed a couple accounts over the limit which of course means more fees. They say they will continue to call until the accounts are brought current. So, the advice I am looking for: should I take some of the emergency fund and bring these accounts current and hope they will eventually accept our DMP's proposal? Or tow the line and continue to say that all we are paying is what we paid through the DMP (i.e. don't touch that money)?

I am so pleased that so many of our creditors were even more agreeable than I had even hoped for and yet these two creditors, four accounts are making this so overwhelming and terrible for us. I dread having someone here when they call and, when I answer, they are so demeaning and rude to me.

Please, please give me some advice!

[llecs]

Bump...

In a traditional sense, making CC payments isn't an emergency. An emergency fund is in place just in case your income drops tomorrow, your transmission gives out, your house has a major problem like broken AC/heat, water pipe break, medical issue and so on. IMO, paying a CC isn't an emergency. Life will go on as normal without making the CC payment. Yes, you'd have the annoying phone calls to deal with. Also, if anything did happen in the future and the emergency fund isn't there, then you'd certainly wish that you didn't pay the CC over whatever is happening at the moment.

Now that doesn't preclude making a payment now without touching your emergency fund. Add up the total minimum payments for each of the 4 and work extra hard to come up with the money. Look around the house and sell off stuff you never use, don't want, or need. If in a snowy area like I am and it snows, offer to shovel someone's driveway for extra cash. I was talking to a friend over dinner and despite walking with the occasional assistance with a cane, someone paid him to sweep snow off cars at the tune of $25 each. Did 5 last snowfall and basically made approx $125/hr. Heck, I'd do it (I learned last week that you should never clear snow off a car using a shovel). Look for other ways to cough up money like get rid of old, unwanted books or CDs. There are stores out there that buy stuff like that. If living in a Metro area, Craigslist would be a great asset. I know of some people who put stuff up for sale in the morning and by the afternoon, they had cash in hand.

ETA...forgot, but try calling Junny and GEMB. Maybe you can negotiate a one-time deal with them where you pay a reduced amount, get a payment deferred, or spread out the minimum over more than one day.

Message Edited by llecs on 02-19-2010 07:11 AM

[Jazzzy]

Hi Math_Rocks,

Do you have other lates on your report...or will these be the first?

I would keep the report as clean as possible. I think IIlecs has good points. I would try to get the cash elsewhere. The purpose of a DMP, however, is to get you out of this as whole as possible. Me??? I'd use the cash if I had to in order to keep a clean report...but, if this late will join many others on your reports, then I wouldn't.

[Math_Rocks]

No, this would be our first lates. A friend I talked to last night about it also made a good point: if I come up with the $ now, they are just going to come back next month expecting me to come up with an additional amount. Whether they agree to the proposal or not, I think we need to stick to the payments the DMP came up with. If this is a one time thing, then, like llecs said, maybe we need to keep turning over rocks to find something to produce the $ WITHOUT touching the emergency fund.

I cannot even begin to say how much relief I had been feeling about putting that money aside. I lost my mom 3 years ago and my dad is pushing 80 and not in great health AND more than 2000 miles away. Without CC, I need that reassurance of knowing that if something happens, I have a way to go.

llecs, I'm not making excuses - I agree with your idea of finding extra money just haven't figured out how. I've spread the word that I can do math tutoring to no avail. We live in the South so the snow thing isn't an option (not that my back would have been healthy enough anyway!). And one of the most frustrating things about our current financial situation is that its not like we have been blowing money on nice things that we can turn around and sell now. Our cars are 4 and 10 years old. Most of our furniture is from graduate school or before and getting to point of needing to be replaced. We might have some movies and/or CD's we could part with but we live in a small town. Where would be the best place to sell them? I hate feeling like the CC's have me backed into a corner.

[marty56]

Since it would be your first lates, I would also stick to the DMP plan and not touch the EF.  In 4 years, those lates won't be as much of a factor then and you have 4 years to do GWs.  I dont say this lightly but unless you can get the cash from another source, you will really need the EF money during DMP.

[Anonymous]

I also suggest that an emergency fund is when an actual emergency arises.  The car breaks down, the air conditioner, the refrigerator.  Good luck on the tutoring.  Try to make any extra money that you can.  Get a quick part-time job if needed.  You'll be glad that you have that extra money if needed.....

[llecs]

Math_Rocks, I've got knocked down. And what matters is not how you fall, but how you get back up again. In fact one of my favolite movie lines in on a latter Batman movie. Bruce Wayne's child charachter fell down and cried and his dad hovered over him and asked, "Do you know why we fall?....So we can learn how to get back up again". What doesn't kill us really does make us stronger.

One thing that always helps me, and this sounds corny to some (most get it though), but I use self-talk to motivate myself to move forward. I'll say stuff like "I'll get through this. Nothing's going to get in my way. My income will go up this week. New doors are opening everyday. Those CCCs will never get me down. In fact, they'll stop calling and everything is going to be OK."....or along those lines. But I'll talk to myself out loud a good hour each day. It's amazing how quickly you feel at peace and how motivated you get to make necessary changes.

Last month I had a pity party with myself. I invited DW but she didn't want to come. Anyway, I had cut my income by 10% in order to help save a company I manage. I came to the realization that our pregnancy isn't covered by health insurance after getting a couple thousand in bills last month. Our transmission is acting funny on our car. I put a shovel into the glass of my car while shovelling snow. We had a couple of family situations. DW's only pair of eyeglasses broke. We got called away on a couple of trips which involved a bunch of $$$ for plane tickets, hotel, etc. My EQ FICO dropped. Seemed like everything was caving in. But in an odd way, I suppose, this motivates me. This fires me up. It's when I'm at the bottom of the ninth with two outs and I'm losing by 5 that I get fired up. Everybody loves an underdog. It's situations like these that push me harder and further than before and puts me in a position to be in a better place than before I got into this mess. And through verbal reaffirmation and work, things are already happening big time. But it isn't harvest time quite yet, if you know what I mean. We have a saying in our house: "Figure it out!". We make the impossible possible.

I didn't direct the above to you, because I haven't walked in your shoes, but was for me. I know things will work out.

[haulingthescoreup]

It sounds like it's different in a DMP, but for those not in one, I'd suggest a credit emergency fund --four months' worth of minimum payments on your CC's and regular payments on your loans. That way, if you lose your job or get hammered with some other financial disaster, you don't have to watch your credit going down the tubes.

And more than four months' worth would be even better, of course.

[Jazzzy]

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@Math_Rocks wrote:

I cannot even begin to say how much relief I had been feeling about putting that money aside. I lost my mom 3 years ago and my dad is pushing 80 and not in great health AND more than 2000 miles away. Without CC, I need that reassurance of knowing that if something happens, I have a way to go.

llecs, I'm not making excuses - I agree with your idea of finding extra money just haven't figured out how. I've spread the word that I can do math tutoring to no avail. We live in the South so the snow thing isn't an option (not that my back would have been healthy enough anyway!). And one of the most frustrating things about our current financial situation is that its not like we have been blowing money on nice things that we can turn around and sell now. Our cars are 4 and 10 years old. Most of our furniture is from graduate school or before and getting to point of needing to be replaced. We might have some movies and/or CD's we could part with but we live in a small town. Where would be the best place to sell them? I hate feeling like the CC's have me backed into a corner.

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The aspect of your father possibly needing you is a factor you need to consider. Make sure you have enough cash set aside for that.

Have you ever sold anything on eBay? That's a nice place to pick up some quick cash if needed. I've never dealt with Craig's List, but I know people sell through there as well.

[Anonymous]

I'm inclined to say, though not strongly suggesting, that you tap into the EF to pay the accounts current. The DMP proposal may fall through. You may be able to work out something directly with the OCs individually, which BTW have you tried? Some are very amenable to closing an account, dropping interest rates, and letting you continue to pay monthly until it's PIF and with no adverse CR dings.