Saving for emergencies

Madchickenlady

I have been slowly and surely dealing with my debt since joining this site, this has mainly been looking for ways to save money on my day to day living costs and planning on paying off my debt but today I was wondering if it would be a sensible move to try and put some money by for emergencies, it wouldn't be much because I am on a tight budget but part of the reason I am in debt is because of unexpected bills and emergencies that I end up putting on my CC , or do I just throw all my available money at the debt to get it paid off quicker while accepting that if I do have an emergency it will probably have to go on the CC

kbl

that's exactly what we have had to do for the past few years, have (just about) managed the day to day stuff but as for broken washing machine, car tax, insurance..... the list goes on and on, but could we heck as like budget for them so they HAD to go on the cc. We are now slowly getting into a better position, and plan to attack the cc with most of what we have while saving a small (about 5% of what we can pay off) amount to use when needed. Hoping that even a small bill not put on the cc will add up, and the necessity to use the cc as our emergency will end eventually. (sorry for the long winded reply, hope it helps a little )

matttye

Yes throw money at the debts and use the cc in an emergency.

Benefits of this are that you'll pay less money in interest now, and you might not have to use it. Worst case scenario is you'll be back where you are now, but best case scenario is you won't have to use the card for an emergency and you'll save heaps in interest.

urg123

I actually think that having an emergency fund is a good idea even if you are paying off debts. In many cases it saves you having to resort to the credit cards and adding to your debt.
when I was working on paying off my debts, part of what I needed to do was re-educate myself to not use credit cards. I think sometimes it can be seen as counter intuitive to have money available when you are working so hard to deal with your debt but a small emergency fund of even a couple of hundred pounds can help you to continue paying off those debts without the worry of what if. The thing to do is not see it as savings.
That's my tuppence worth.
urg

Chrisblue1962

This is soooo spooky...I woke up this morning pondering about this very topic as my situation is the same as the OP and I presume other respondents.

I know most people will say pay off debts / credit cards, etc first and put emergency spending on a credit card but I think a good compromise would be to build up a modest emergency fund of, say, £100.00 and then throw remaining funds against debts / CCs, etc.

...but there again, I am inclined to agree with mattye so now I'm now more confused than ever! lol

Other solutions / ideas most welcome

Frugalsod

urg123 wrote: »

I actually think that having an emergency fund is a good idea even if you are paying off debts. In many cases it saves you having to resort to the credit cards and adding to your debt.
when I was working on paying off my debts, part of what I needed to do was re-educate myself to not use credit cards. I think sometimes it can be seen as counter intuitive to have money available when you are working so hard to deal with your debt but a small emergency fund of even a couple of hundred pounds can help you to continue paying off those debts without the worry of what if. The thing to do is not see it as savings.
That's my tuppence worth.
urg

It does depend on what form of back up you have. It is always good to have some cash around the home for whatever I have a couple of hundred for that purpose. I am only losing 20p interest income a year for that privilege.

Rather than save with the lousy interest rates you would be better to overpay your credit card so could use that in emergency. Paying off debt at 21% is better than earning 0.1%. The other alternative is to have an overdraft facility. It all depends on what type of emergencies you expect to face. You need to have an idea what is a risk.

Madchickenlady

Hi everyone and thanks for the ideas, My instinct is telling me I need to re-educate myself not to rely on the cc especially as I won't be having another one, but I see the sense in throwing the money at the cc and cutting down the interest, my debt is on an interest free deal at the moment for 26 months so I would like to clear it within that time if possible. I think I will go with the option of concentrating on paying off the card first and then put emergencie on the cc, if I am reallylucky I won't need it. My emergiences are usually unexpected vet bills for the chickens or problems with the boiler/central heating but I have that insured now so shouldn't have to pay out for them

Frugalsod

Madchickenlady wrote: »

Hi everyone and thanks for the ideas, My instinct is telling me I need to re-educate myself not to rely on the cc especially as I won't be having another one, but I see the sense in throwing the money at the cc and cutting down the interest, my debt is on an interest free deal at the moment for 26 months so I would like to clear it within that time if possible. I think I will go with the option of concentrating on paying off the card first and then put emergencie on the cc, if I am reallylucky I won't need it. My emergiences are usually unexpected vet bills for the chickens or problems with the boiler/central heating but I have that insured now so shouldn't have to pay out for them

If you already have your debt on an interest free deal then you could build up your bank balance because if you use the zero interest credit card then you will get hit for interest if you use it. If you have it in a bank account then you just use that instead. As long as you are paying enough for the credit card to be cleared in 26 months then you could save all the excess for a rainy day fund.

matttye

Madchickenlady wrote: »

Hi everyone and thanks for the ideas, My instinct is telling me I need to re-educate myself not to rely on the cc especially as I won't be having another one, but I see the sense in throwing the money at the cc and cutting down the interest, my debt is on an interest free deal at the moment for 26 months so I would like to clear it within that time if possible. I think I will go with the option of concentrating on paying off the card first and then put emergencie on the cc, if I am reallylucky I won't need it. My emergiences are usually unexpected vet bills for the chickens or problems with the boiler/central heating but I have that insured now so shouldn't have to pay out for them

I think you're making the right choice.

The only real reason you might need an emergency fund whilst paying off debts is if you really struggle not to spend on the card(s) willy nilly. Some people might find going "cold turkey" a safer option than keeping the cards and using them for emergencies.

If you have the discipline to only use the cards in genuine emergencies, it makes great financial sense to do so and throw more money at the debts.

[Deleted User]

Do you own or rent?

Bublin1

Google Dave Ramsey and his advice.
He recommends that you save £1000 for emergencies and THEN tackle debt. This is what I did.