Comments on: Emergency Funds Are Bullshit

By: Drew

Drew — Wed, 21 Sep 2005 16:02:25 +0000

I agree that emergency funds are BS if you are already in debt. Would it be smart to borrow $2000 on a credit card to just “have around” in case there was an actual emergency? Of course not. But that’s what you are essentially doing if you have $2000 available that you are not immediately applying to an existing debt.

IMHO an “emergency fund” should be at most a couple hundred in cash in case a disaster cuts off ATM/CC access.
An emergency fund exists so you WON’T GO INTO DEBT if there is a sudden financial emergency. If you are already in debt, an emergency fund helps you not at all!

The bottom line is, if you are in debt, having an emergency fund will keep you in debt longer, and increase the total finance charges you pay. Not smart.

By: Michael Kimsal

Michael Kimsal — Tue, 20 Sep 2005 20:45:44 +0000

I think the concept of the emergency fund is primarily psychological. You yourself posted recently “I think I have about $300 in my everyday account … I shouldn�t need the extra cash until next payday, but I�m always wary of not having that little bit of backup.” So even though you say emergency funds are BS, you’re ‘wary’ about not having a little bit of backup.

For people who take things possibly a bit more seriously than you do (don’t know you except through this site, so I don’t know how serious you are about getting out of debt), having money for a week or two isn’t enough, especially when you’ve got family, payments, etc, to consider. Having that peace of mind that you’re not 3 days from being out on the street is priceless for many. Yes, it might cost $29k over a 30 year mortgage, but people who are really concerned about that long term picture will find other ways of paying it off early without dipping in to the emergency fund.

By: MightyBargainHunter.com » The Carnival of Debt Reduction — Issue #1!

MightyBargainHunter.com » The Carnival of Debt Reduction — Issue #1! — Mon, 19 Sep 2005 14:07:32 +0000

[…] y, we’d all be debt-free. “Broke” of Credit Card Victim talks about how Emergency Funds are BS. (Warning: BS is spelled out in the post.) It looks lik […]

By: Credit Card Victim » Blog Archive » Another Little Credit Card Payment

Sun, 18 Sep 2005 13:10:44 +0000

[…] okay, it will all work out in the wash. I’m going to respond to the comments on my Emergency Fund post in the near future. I’ve submitted it to the Carnival […]

By: mbhunter

mbhunter — Sat, 17 Sep 2005 05:52:18 +0000

Hey Broke, ncnblog posted on “snowball debt reduction” recently. You may want to check it out.

By: Karen

Karen — Sat, 17 Sep 2005 02:52:38 +0000

I noticed the same thing as ncnblog. You seem to want to do something about your debt but you
keep using your cards, and your balance rises. Good intentions are just that, usually don’t
help pay down cc debt. As for the EF issue, I think any person with any financial sense at all
has at LEAST $1k put away in case of an emergency, or has that goal. You just did all this math, and no,
and considering your debt, it doesn’t make sense to have a large EF, but something, yes. Have
you done the calculations to figure out how much longer it will take you to dig out when you
keep using your cards?

By: ncnblog

ncnblog — Fri, 16 Sep 2005 21:35:02 +0000

Hmm, I’ve noticed that your debt balance seems to GO UP every month. While I am sure that you have “good” reasons for not having an emergency fund, using your credit card to finance your “emergencies” is not a good idea. In fact, if you are out of debt, on a budget, and planning for future expenses, then you don’t NEED an emergency fund, but only because you will have all of your various future emergencies “funded” on your budget sheet.

By: JLP at AllThingsFinancial

JLP at AllThingsFinancial — Thu, 15 Sep 2005 17:47:03 +0000

All fine and good, but what do you do when an emergency comes up? Pull out the credit cards? Not a good strategy.