Post # 1
If you had exactly the right amount in your “emergency fund” to pay off your debts would you do it?
for example you have $10k in debt and 10k cash.
You would be able to build up the EF with the money saved paying off the debt, but that would take time.
Financial advisors usually have strong opinions for doing either. What do you Bees think?
Post # 3
I wouldn’t deplete my emergency fund to pay off debt. You just never know when you’re going to need that emergency fund for something urgent/immediate.
You could always pay more than your minimum payment to make the debt go away more quickly, but paying it off in full now isn’t worth losing the security you have in an emergency fund.
Post # 4
I would pay off the majority of debt and save a little in cash still (like 2k in your example).
Post # 5
I would pay off 9k in debt and keep 1k as an emergency fund. I think Dave Ramsay suggests a 1k emergency fund.
Post # 7
At the very least, pay half of the debt and save half for emergencies. I’d be inclined to pay $8000 of the debt and save $2000 for emergencies. That way you can breathe easier by not having the weight of that $8000 on your shoulders.
Post # 9
pay off some of the debt, and keep some saved for emergencies
Post # 10
I’m not financial advisor by any means so I’m not sure if I would do the “right” thing. However, I think I would keep some cash and pay off some debt.
How much would depend on how long it takes me to save up. Using your example… if I can save back up to $10k in a reasonable amount of time, then I’d probably put $6k towards debt and hold on $3 just in case I need some cash quickly.
Post # 11
Suzie Orman suggests 8 months of your bills/mortgage/etc as an emergency fund
Post # 12
I would pay off around $5k-$8k (depending on apr’s/interest) and still keep a nice chunk for actual emergencies. But if interest is high, I’d try to cut that debt amount down as much as possible asap.
Post # 13
It depends on what kind of debt I have, and what the interest rates are on the debt I’m holding and the return I am getting on the investments in my emergency fund.
Example: If I had credit card debt with 17% interest and I was only making 6% on my investments, I would pay off the debt.
If I had a mortgage with a 4% interest rate (which is tax deductible) and I was earning 6% on my investments, I would keep that money invested and keep paying my mortgage monthly.
Post # 14
@Choosgirl: Yeah I’ve usually heard six to eight months. And for me, that’s definitely more than a couple thousand!
Post # 16
I would make sure I had 6 months of complete living expenses, and put the rest towards debts.