Hey everyone! Happy Friday. Today, I have another one of my “short” question posts about whether you should have an emergency fund or pay off debt, mainly because I am extremely nosey. I’m assuming all of you are nosey too.
One of the reasons why it’s taking us a little bit longer to pay off my $38,000 in student loans is because I refuse to touch our emergency fund. I am an extreme worrier and am always afraid that something may happen. We have about 5 months of expenses in our emergency fund (could last a lot longer if we cut things out of our budget), and I want to keep it that way.
Luckily, my student loans will be gone this month, so I don’t really have to worry about this question anymore, but I know that others have questioned what they should do.
Now, why don’t I want to touch our EF? Well, our EF covers many, many things. While I don’t think that a job loss would kill us, a combination of many things happening would. My job is stable, but what if all of my freelancing went down the tank, there was a job loss, something bad happened to the house AND something happened to the dogs?
Well, this is where our emergency fund comes into place. Some of you might be thinking “oh, all of that wouldn’t happen in one month.” But, what if it does? Our EF gives us peace of mind! When one thing goes wrong, it always seems like everything else that could possibly go wrong, goes wrong also.
Some recommend that while you are paying off debt, that you keep just the bare minimum, such as $1,000 in your emergency fund. Others suggest that you build up your emergency fund FIRST and then pay off your debt.