An Emergency Fund is Important
There are several reasons why an emergency fund is important.
In the past, I have advocated trying to pay off debt before having even a basic emergency fund fully funded. I doubt I will ever believe that again.
Divorce does that to you. Makes you see things in a way you haven’t before.
I know now that having some cash on hand is super important, because a credit card just can’t make up for needing to get your hands on money quickly, and the anxiety of not being able to do so isn’t worth the miniscule amount of interest you could save by getting debt paid off sooner.
So, the first thing I’ve been doing has been trying to build up my own emergency fund, with a deposit of $100 twice a month. It’s money I can barely afford to save, but it’s money I absolutely cannot afford to not save.
If you are debating the wisdom of paying off debt versus saving for an emergency, I would advise you to put some money away. At least the minimal $1,000. Preferably more.
What I realized quickly when the divorce started was that most emergencies cost well over $1,000, including a retainer fee for a lawyer and a crown for a tooth.
So Dave Ramsey’s advice be damned. My basic emergency fund is going to have $2,500 in it before I go back to putting any extra funds towards paying off debt early.
So should yours.
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