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Emergency Fund Update = $1,500


I really didn’t expect us to reach our next emergency fund goal so soon. I checked and double checked my numbers and there was no reason why I couldn’t contribute to our savings account to bring it up to $1,500. So I went ahead and did it tonight.

Two things really helped to make that happen. We finally sold the old truck in our garage and my husband also got payment for a project he’s been working on (separate from his temp job). The rest we were able to contribute from regular earnings. The way things are looking, we’ll also have some more extra money before the end of the month.

Now it’s time to decide what to do with it. We could put more to savings or put some towards our debt to reach that wonderful halfway mark for paying off our credit card debt ($18,807).

It’s weird, because as much as I love paying off our debt, I also love having money in our savings account. I’ve become addicted to stashing money away.

I almost thought about flipping a coin, but instead I will take the extra money that we will have and split it in half. Half will go towards our debt and half will go towards our savings. With doing it that way, I feel like it’s a win-win for both goals.


  • Reply Aric |

    I am in the exact same position. I’ve built up a decent emergency fund and now have a little extra every month to put toward savings or paying off debt. I’ve read some articles on the matter and they all seem to say different things. Put the entire amount toward debt and then after being debt free, you can build savings fast. However, if you build savings and not pay off debt, you will pay a lot in the long run.

    My brother did the first, he put every dime toward paying off debt and is now living debt free. I personally love having money in the bank, so I think I will split the difference and put any windfalls toward debt. Hope that helps!

  • Reply The Chef |

    Well its your personal choice that you keep money in your account or reduce the debt, but i would suggest that their is a cost associated to carry cash called inflation so it is a better idea to reduce debt, or invest that cash so that it can generate returns above inflation rate.

  • Reply Mrs. Micah |

    The Chef has a good point. Though if you’re not yet investing because you’re still saving up the money for it (like me) then putting it in savings makes sense. Or if you’re building a bigger emergency fund/cushion because of your uncertain financial situation with your husband’s job.

  • Reply Tricia |

    If my credit card debt wasn’t at 0% right now, I think I would definitely pay off the debt. Since it’s at 0%, I feel like there is less pressure (although I really want to hit the halfway mark).

    I’ll have to project our cash flow for the next few months. My husband’s temp job is in full swing and we heard how many hours total he has to use (the budget for him was finalized). I can factor that in now. I wasn’t including that before.

    We also may be having a minor windfall from cashing out a whole life policy. There will be more about that once I know more about that πŸ˜‰

  • Reply Dedicated |

    I think your decision was fine. Especially with Christmas coming soon. This would be a good time to insure Christmas spending.

    I’m so glad things are moving in a better directions now for you.

  • Reply Mar |

    Just make sure you have term life insuranec in place before you cash out the whole life policy (but you knew that already, right?). I really admire the resolve that your family seems to have to continue along your path of saving and getting out of debt.

  • Reply Tricia |

    Dedicated – Good point about Christmas. I’m trying to keep a little buffer in our checking account for that.

    Mar – One of the things I’m waiting on is the paperwork for the term life insurance policy we just bought for my husband. Once I get that (which should be shortly – they cashed the check), we’ll start initiating cashing out his whole life policy.

    It’s all new to me, so I’m going slow to make sure we don’t mess anything up! πŸ™‚

  • Reply FinanceAndFat |

    Congrats! This is an issue I’ve been looking at recently on my blog. I’ve racked up almost $1000 in ’emergencies’ this month and it got me thinking that maybe $1,000 just isn’t enough. I only chose that figure because of the Dave Ramsey plan, and who knows, maybe when he came up with that $1,000 was a lot more money than it is today. πŸ™‚

    Like you, I think I have decided to shoot for $1,500 – $2,000 while continuing to pay off debt. Though I would also add that the debt bothers me more than the savings comforts me so I have to consider that as well.

  • Reply pfmoron |

    I would do exactly what you are doing. With the debt at 0% I would definitely build up my Emergency Fund. But I wouldn’t abandon paying off the debt completely, especially so close to the halfway mark. Accomplishing both in the near future will be a major psychological boost.

    Congrats and Good Luck.

  • Reply mapgirl |

    “ItÒ€ℒs weird, because as much as I love paying off our debt, I also love having money in our savings account. IÒ€ℒve become addicted to stashing money away.”

    Me too. It is killing me right now to stop my 401k contribution to focus on paying my other debts. I know that it’s only temporary till the end of the year, but I wish I could find more than $100 to put into savings each month right now. It’s all going to pay down debt, which is good, but not nearly as satisfying as watching a nest egg grow.

    Must. Stay. Focused. Till. 2008.

    That dental bill of mine has got to go!

  • Reply Da Big D |

    Keep with the two prong approach. You need the emergancy fund and pay down some debt. Once you get the fund to where you want, open a small brokerage account and start putting money there. While you are not killing off the debt you are working towards your futre. Every dollar you do not save NOW is $10 less in retirement.
    Try not to obsess over that 1/2 mark. Its a great goal, but the real goal is living the life you want. Remember success is a Journey, not a destination.

  • Reply Trixie |

    Congratulations on your emergency fund increase! (And on even building one in the first place).

    I found you through blog her and have been really enjoying your site.

    Take Care,


  • Reply Eva in TX |

    I’m glad things look brighter. They do for us now, too. I also think an emergency fund of 2K is smarter.

  • Reply Sistah Ant |

    Congratulations. I am sometimes torn between debt repayment and savings, but right now I’m concentrating on debt, too. My e-fund is only $1K.

  • Reply mab |

    Personally, I would go with paying off the debt first but only because you typically pay more interest on credit debt than you make on an emergency fund. (When was the last time you earned a 12% return on your money in a savings account?)

    That being said, if you’ve got 0% interest on the debt then it’s less of an issue. The important thing to remember though is the 0% is usually for a (relatively) short period of time so you’ll probably want to slash as much as you can before the interest clock starts ticking!

    Then again, it’s always a nice feeling to have a stash of cash in the bank….

    In the end, a 50/50 split isn’t a bad idea, given all the factors. πŸ™‚

  • Reply Brent |

    I’ve chosen to pay off my debt (most of which is at 0%) than keep building our emergency fund. We have $1000 in the emergency fund but feel paying off debt is the better thing to do.

    Having cash built up is good but having so much more in debt is a bigger stress than not having more cash.

  • Reply Groovy Mom |

    I have the same mind struggle at times — where to put the money, debt or savings? I agree with what Brent said, though, debt is stressful!!

    Congrats on the fatter pockets πŸ™‚

  • Reply Kathryn |

    Good on ya …

    One of the things money allows is opportunity and deliberate choice. Congrats, you are at the point where you can choose whether to put extra towards either debt or savings or both. That’s a lot better position to be in than having a broken down car and desperately wondering whether to pay by credit card or go to a check cashing place.

    Your family is at the point where you can deal with an emergency without it creating a money crisis as well. Great job, keep up the good work. You’ll be down to half your original debt in no time.

  • Reply wealthy_1 |

    It sounds like things are looking up for you and your family. You sound very upbeat!

    I think that if I already had the money for Christmas set aside, I would reduce the debt. Although your credit cards have 0% interest, you still owe them the money. I say “collect your cash” from the credit cards! You’ll feel like you lost ten pounds.

So, what do you think ?