Emergency Fund

[Fester82]

How much of a emergency fund should I have before I throw everything at the credit cards? Thanks in advance. 

[Jnbmom]

---

@Fester82 wrote:

How much of a emergency fund should I have before I throw everything at the credit cards? Thanks in advance. 

---

They usually recommend 6 months worth of what your bill are .

[coldfusion]

Mininum of 3 months living expenses, optimally up to 6 months.

[SouthJamaica]

---

@Fester82 wrote:

How much of a emergency fund should I have before I throw everything at the credit cards? Thanks in advance. 

---

My philosophy is that savings aren't really savings if you're paying a high rate of interest on your credit cards.  I'm not a believer in having a large emergency fund which earns next to nothing while I'm paying high interest rates to credit card lenders.

[Fester82]

Since I first posted this. I was talking with a friend.  He said a book he read recommends start with a $1000 fund. Then pay off the cards.  After that then work on a fully funded emergency fund. I'm just trying to get thoughts from different angles. So afraid to mess up again. 

[TheRedHat]

There is no magic number. It all depends on each person's specific situation and comfort level. Have a budget for your monthly and yearly expenses and plan accordingly.

[203bravo]

Yep ---- that is Dave Ramsey's advice.

[Anonymalous]

---

@Fester82 wrote:

Since I first posted this. I was talking with a friend.  He said a book he read recommends start with a $1000 fund. Then pay off the cards.  After that then work on a fully funded emergency fund. I'm just trying to get thoughts from different angles. So afraid to mess up again. 

---

The most likely emergency expenses are a medical crisis, or having to take your car into the shop, or something related to your house like having to buy a new water heater. Having a thousand to a few thousand can cover those kind of expenses, or at least put a significant amount down on them. So I think that's a reasonable minimum buffer. A fully-funded emergency fund (3-6 months income or expenses) is more for very large or sustained costs, like if you're suddenly laid off or lose your home.

[Aeon]

It depends on your personal risk tolerance and your job/income stability. I do not think $1k is enough for an emergency fund for anyone save for someone who has very, very little in expenses each month. I think one month's worth of net income is the bare minimum one should have as a financial cushion. It doesn't make sense to pay high interest rates if you're sitting on a lot of savings making very little, if any, in interest. Use your savings to pay off debt and rebuild your savings. Just be realistic about ongoing and upcoming costs and save for them, even if it means paying down debt at a slower rate. 

[Horseshoez]

---

@203bravo wrote:

Yep ---- that is Dave Ramsey's advice.

---

Ugh, Dave Ramsey, the charlatan of credit; yeah, he may get a few things right from time-to-time, but I would strongly advise ignoring everything he says.