No. of Recommendations: 0
It seems to me that 3-6 months is on the high side,
but I guess it depends on what kind of contingencies
you are trying to cover...is it job loss? How long will
it take you to find a new job if you lost your current
one?

You could also try to get a slightly better percentage
return by putting some of the savings in a money market
account or a CD. They're both generally considered safe,
give better interest than a saving account, and you can convert them to cash fairly quickly & easily.

I agree about the cards being available for emergency cash,
and I think that the $1100 you save by paying down the
credit card bills will serve you well. (Maybe you could even eventually put that money towards your emergency fund!)

In the end, though, you have to look at your situation.
You need to consider all these questions and decide for
yourself how much risk you can accept:
-Do you have a wife/husband and kids to support?
-Or are you single with no big responsibilities?
-Do you have relatives or friends who could help you
if you REALLY fell upon hard times?
-How secure is you current job position, and how easily
could you find a comparable new job?
-If you pay off the credit cards, will you just run them
up again?
-Could your credit card interest rate go up higher in
the future?
-Do you foresee any raises, promotions, bonuses, lottery
winnings, etc, which would help you pay off the cards
more quickly, at a later date?
-Are there other things you could do or cut out of your
budget to enable you to pay the cards off quicker without eating into your savings?

Good luck
-bry

On Wed, 09 Apr 97 17:43:01 -0600, WorkingOnIt wrote:
<<Hi all,

I've seen articles that recommend having 3-6 months' worth of living expenses saved in cash. But what if I have a large credit card debt at 12% interest? Right now, I've got about 1.75 months of living expenses saved up, earning 4%. It would take me another year to get to 3 months' worth.

If I left the savings intact, I could pay off the CCs in 33 months. If I kept, oh, $1000 or something for quick cash emergencies and applied the rest of the savings toward the CC debt right now, I would be paid off in 27 mths, and would save about $1100 in interest. In this case, were a serious emergency to occur, I could always get the cash back off of the credit cards.

Any thoughts or experiences here?

Thanks.

* I am 'WorkingOnIt' :-)*
>>
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