After giving it a little thought, I'm going to follow the advice that was given to me earlier this week. I'm going to put the debt reduction on hold (beyond minimum payments that is), and focus on building an emergency savings cushion. I'm going to save $4000 in cash to augment my investments. At their present value, that gives me little over $7500 that I can use in case of emergency if I absolutely have to. That gives me at minimum 3 months to work with. If I take in a renter, sell my car and get whatever job I can while looking for a permanent one it will last closer to 6 months. My freezer is already full, so I only have some dried staple stocking to do.
Once the $4000 is built up, I'm going to switch gears back to debt reduction again. As much as I'd love to have 6 months worth of cash savings, I don't want to be letting those balances sit and accumulate interest while I'm doing it. I'm building a cash reserve for the sake of liquidity, but it still makes more sense for me to pay off the debts before focusing on building up savings. Credit isn't supposed to be used as an emergency savings account, but building up a stash of cash to avoid paying interest on your debt while your debt balance sits there generating interest doesn't really make sense. Hence the savings limit.
*shifts gears*
Moving forward again.
3 comments:
That's what makes personal finance... so personal. I love it. So many decisions to make, where to allocate your money.
It's all about balance.
I think that having an emergency savings is a great idea. You just never know what might happen or when you might need it.
I think thats a good balance between being prepared and still getting the debt reduction done. hope work settles down, times like this are stressful!
Thanks guys :) Here's hoping things will settle down soon.
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