A few days ago I asked the second question in my ‘Smart or Dumb’ series. I was torn between using some of my emergency fund cash ($1000) to help pay off my remaining debt this month. I’ve been carrying debt since 2011 and I am only $2,700 away from being debt free. As any reader of this blog knows, I’m very anxious to be done! So anxious that I was debating where or not to dip into my e-fund to eradicate this debt once and for all.
Overwhelmingly, the response from you all was NOT to dip into the e-fund.
Lauren from Stacking Twenties advised that I hold onto my emergency fund just for my sanity’s sake: “I know it’s tempting to, but you’re not saving yourself much time and having that cushion is SO valuable, even if just for your sanity – you don’t want to be out of debt but right on the edge again.”
Lisa Boo pointed out that having $2000 is really different than having only $1000 in terms of a safety net: “Having $2000 in your E-fund puts you in a way better place than having $1000 would.”
And in my heart of hearts I know they’re correct. I am at a point where I am absolutely craving debt freedom but not at the cost of my sense of security. My financial security is and always has been pretty tenuous. A large part of why I became so motivated to get out of debt ASAP was to give myself a firmer financial footing earlier in life.
So uprooting my emergency fund, even just by half, doesn’t seem like the wisest idea. I did have a $750 expense come out of nowhere this month and that is going to push my debt freedom back by a few weeks. I know rationally that a few weeks is not a big deal and that the end really and truly is just around the corner.
Really, having that cost come up illustrated how smart and good it is to have a cushion of any size around. I didn’t have to dip into my e-fund for this cost, but even just a little higher and I would have had to. It is really nice to have a safety net in place.
Emotionally though, that $750 was a blow. Being right around the corner seems almost harder than being miles away for me. As I’ve been doing the entire time, I’m throwing everything I have towards this last $2,700. If I’d been able to put that money towards my debt, I’d be sub $2000 right now. As it stands, I am still closer to 3K than 1K, I have added weeks to my payoff schedule and I have to worker more hours to replace that money in my debt payoff scheme. Le sigh.
However: my e-fund is safe and sound and will remain so. I will continue to work my butt off until my debt is finally vanquished. I have two more months left. After the last eight months, two more is practically nothing.
Thanks once again for the advice readers! It is, as always, appreciated.
Kara Perez is the original founder of From Frugal To Free. She is a money expert, speaker and founder of Bravely Go, a feminist financial education company. Her work has been featured on NPR, Business Insider, Forbes, and Elite Daily.
2 Replies to “Smart or Dumb: The Decision is In!”
New reader here (hi!) so still need to read up on your backstory. But your plan to conserve your e-fund makes total sense. We’ve been there on debt, and feel your pain. Just keep going — you’re so close, and it will feel amazing when you’re done.
Welcome! Stick around, see what’s going on over in this corner of the web. =) Yes, I’m feeling good about my plan and can’t wait to be done!