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What do you do when you used some of your emergency fund?

July 13th, 2010 at 09:11 pm

Well, I maxed out our emergency fund just as an emergency (sort of) came up. We were on vacation and the temperature was 45 degrees with the humidex - about 105 degrees farenheit. After three days of not sleeping I finally gave in and bought a $200 air conditioner which I purchased from the EF. There's a saying... if Momma ain't happy ain't nobody happy. So it really was a small emergency. In the last month I've paid off $600 on my credit card bringing it down below $4K. So should I now focus any extra cash on bring up the EF back to my target or should I keep pushing the extra cash onto the credit card? I've never had an emergency fund before and am not sure what to do. Help!

Posted in Uncategorized | 4 Comments »

4 Responses to “What do you do when you used some of your emergency fund?”

  1. Miz Pat Says:
    July 13th, 2010 at 10:18 pm 1279059533
    1279059533

    My first priority is to always pay off all the credit card debt - Always. I don't pay interest, annual fees or late charges if I can help it and have only paid late fees a few times when the bill was lost in the mail (and I argued the charges down too!).

    My second priority is to keep saving for emergencies, pay ahead on bills (I have a goal to have 1 months living expenses ahead in my general account). I would put most of it in your "pay off debt" focus but still put 10 to 20% of the left over funding into your emergency account.

    My final goal for my emergency fund will be to have $50K in it - I'm at $5K now so I have a lot of work to do but putting a small amount in and also paying off debt is a big motivator. The 50K represents a year's income for me. The biggest emergency to me is unemployment followed by emergency surgery or massive house damage.

    I congratulate you on getting the Visa balance down - that's GREAT.


  2. creditcardfree Says:
    July 13th, 2010 at 10:28 pm 1279060097
    1279060097

    In your case, I think you can go either way. You had it fully funded, now you are a tad short. I'd probably focus most of my energy on debt and then repay the ef in smaller ways. Refunds, coins cashed in, coupon savings.

    If the amount was significantly larger, I would repay my emergency fund and then back to debt. And I have done this before!!

  3. wowitsawonderfullife Says:
    July 16th, 2010 at 12:03 am 1279238609
    1279238609

    Thanks to both of you for your input. I didn't even think of splitting it up. Great ideas!

  4. Jerry Says:
    July 17th, 2010 at 11:17 am 1279365477
    1279365477

    I like creditcardfree's idea about splitting things up, and I totally agree with you on getting the AC... especially since that much heat can lead to health problems in some people. The insurance of an EF is great, but depending on the size you started with, $200 won't completely kill it, and you can replenish it with other sources as noted above. Good luck!
    Jerry

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