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Personal Finances / Buying or Selling a Home


Subject:  Re: When can I qualify for a loan? Date:  4/27/2013  1:54 PM
Author:  inparadise Number:  125190 of 128887

I'm really surprised to see such awful advice from someone I often agree with. Using a credit card that you pay off in full each month is no problem. But for the life of me I can't see how you equate that with an emergency fund.

Because Evan is a high income earner and this is for a short term emergency recourse only, until he saves up enough for a true emergency fund. It's important to separate possible from probable. It's what we do every time we look at a river front property. Is it possible it will flood? Sure...anything is possible, but when that probability is reduced to flooding which you would only survive in Noah's Ark, then it's a risk worth taking. Similarly, while is it possible that Evan will be faced with an emergency he could not predict, during the relatively short time he will need to build his emergency fund, it is not probable. And if it happens he can do one of many options:

1. borrow against a credit card and pay off ASAP
2. "borrow" from Roth
3. "borrow" from Roth to pay off credit card, extending the effective Roth loan to three months instead of two
4. borrow from parents

No, planning on getting deeper and deeper into debt is not a general recommendation, but given the specific circumstances and high pay, I don't feel the potential risk is too great for the reward. It is simply one option of many.

not paying credit card interest in more than three decades
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