Comments on: My Take On Having An Emergency Fund

By: Poor Student

Poor Student — Sat, 17 Mar 2012 03:19:26 +0000

I have a line of credit as an emergency fund. That’s what I call it even though I do not have any of the needs that other people have for an emergency fund. As a student I am pretty sheltered from huge expenses.

Getting a line of credit will give you the same thing as a credit card but if there is a large unexpected expense you can expect to save 15% in interest. That is worth signing a few papers for.

It is best to have your savings going towards paying debt or gaining interest with investments I agree with you on that one.

By: MyCanadianFinances

MyCanadianFinances — Wed, 14 Mar 2012 10:19:27 +0000

Exactly! Unlike yourself I do not have to worry about expenses like that, any of the common unexpected expenses people will talk about (car crash, apartment flooding, fire, etc) are all covered by insurance. This is why, for myself, I will not be saving into an EF until after my debts are paid off.

By: MyCanadianFinances

MyCanadianFinances — Wed, 14 Mar 2012 10:17:10 +0000

Personally, I am required to have insurance. But I do also pay less than 300 a year for my apartment insurance. I am also not a house owner so I do not have to worry about paying if the roof caves in or something similar. And if it does, it is my landlord’s insurance that pays for my stuff, and not my own. I agree the situation is very much different if you are a house owner without insurance (I agree with you, everyone should have insurance) but I also mentioned that in above that you should have no potential unexpected expenses. I used the example of owning a rental property, the same holds true for owning and living in your own home.

I am not saying that everyone take their EF and make one lump payment on their debt, because that would essentially leave many people having to live paycheck to paycheck. I am only trying to point out that a few individuals probably could profit from paying off their debt quicker if they did not save into an EF.

By: Michelle

Michelle — Wed, 14 Mar 2012 04:02:26 +0000

We have an emergency fund but it’s mainly to cover any unexpected house expenses. Ours jobs are pretty stable, but just in case we all of a sudden need a new roof or furnace, then our EF will cover it.

By: CultOfMoney

CultOfMoney — Wed, 14 Mar 2012 01:36:41 +0000

I would argue against your line of thought for the same reason I would argue for any type of insurance, because that is all an emergency fund really is, insurance. It is insurance against needing to go into high interest debt, and in some cases have access to money where you otherwise wouldn’t have any access. Let me ask, does your logic hold for fire insurance? What if you knew you unplugged all your electronics before leaving each day? Even if you had a sprinkler system? Would you still buy insurance?