Emergency funds are essential to a stress free financial household, but how they are handled can vary so widely between individuals, it’s hard to know what to do when it comes time to plan for the curve balls life can and will throw at you. Some go the conventional way, while others take more complex and dynamic approaches, but it’s safe to say, those in the know have a plan for emergencies and a fund to back it up.
This particular method of using an emergency fund is taboo among many, but I have to say kudos to Budgeting In The Fun Stuff for building up a huge emergency fund, analyzing the risk and return, and spending 75% of that fund on paying off debt. She details her decision in a post titled 7 Reasons We Decided to Use the Emergency Fund to Pay Off Debt.
And there are plenty of other ways to handle your emergency fund. Here are a few more:
Your Credit Card is Not an Emergency Fund! Using your credit cards for an emergency fund is a bad idea, but there is a difference between relying on a credit card for major emergencies, and using one in an emergency situation. [Financial Highway]
Personal Finance Basics: Negative Events Will Happen To You. Plan Ahead With Insurance And An Emergency Fund. “Money magazine says that 78% of us will have a major negative event happen in any given 10-year period of time.” That statement alone sends shivers down my spine and makes me wonder if my emergency fund is big enough. [Smart On Money]
You Need An Emergency Fund: Expect the Unexpected There are far fewer articles out there that detail what you should do when the times comes to dip into that fund. How do you handle using your emergency fund when the unexpected hits? [Moolanomy]
3 Financial Principles You Can Depend On! Though emergency funds are listed third, they are equally important and dependable as the other principles found in this article. [Bible Money Matters]
How Do You Feel When You Have to Use Your Emergency Fund? When the time comes to actually spend that money you have been saving up for this very reason, an emergency, does it effect you mentally? [No Debt Plan]
Fourth Step to Build Wealth: Establish an Emergency Fund. In this article, discipline is cited as the secret to establishing an emergency fund. It takes a lot of effort to put away enough money to weather a storm like job loss or a medical emergency. [Dividend Monk]
Is It Worth It to Have an Emergency Fund, or Should I Pay off My Mortgage Instead? Would you leverage the chance of not having an emergency against the financial benefit of paying off your mortgage early? It never hurts to run the numbers. [Invest It Wisely]
Beyond the Emergency Fund: The Frugal Pantry Project. Once you are satisfied with the amount you have in your emergency fund, do you look for other ways to prepare for emergencies in your life? [Frugal Dad]
Do You Put Your Emergency Fund To Work? Having your emergency fund separated out from the rest of your money is a good idea. There are many choices of where you can put your emergency fund, some of which have a higher return than others but with a higher return come a few down sides to consider. [Personal Finance Firewall]
Dipping Into Our Emergency Fund.There should be a distinction between your emergency fund and your regular savings but when and where do you draw that line? [Five Cent Nickel]
Perfect Example As To Why You Must Have An Emergency Fund. Some people have never heard of having an emergency fund. When Murphy’s Law takes hold of their lives, they have no choice but to dip into debt to cover unexpected expenses. [Enemy of Debt]
(photo credit: tripleman)