No. of Recommendations: 11
An emergency fund actually sounded like a good idea to me a while back, but the more my eyes open up the less I see the sense in it right now, unless someone wants to pay me > 17% on that money.

I get it. I was where you were in the past.

For a while, I was throwing every spare dollar I had to high-interest credit cards, pleased that I was saving money. Then my car would get a flat tire, or the washing machine would stop working. And since I had no money set aside for these freak occurrences, I would have no recourse but to whip out the credit card to pay for them. Definitely a three-steps-forward, two-steps-back thing.

I've had other people argue with me about this, but here's what works for me. Any extra money I can find, I don't immediately send to a credit card. I set it aside in a savings account until the balance of the account equals the balance of a credit card. Then, if nothing seems to be on the verge of breaking, I pay off the credit card with one giant payment.

Then I repeat the cycle. Set aside spare monies into a savings account, plus the minimum payment that I had been paying the first credit card, and continue.

Again, people will shriek that this isn't the least-expensive way to pay off debt--and it isn't--but it works for me. Last year I had unexpected expenses of several thousand dollars. Ten years ago I would have had no choice but to put them on credit. But I had the money in the bank. I was hoping to pay off a loan with it, but instead I prevented myself from getting deeper in debt.

I also stopped worrying about flat tires.
Print the post  

Announcements

UGC Disclosure Notice Regarding Credit Card Posts
Community board discussions about credit cards are not provided or commissioned by banks who may have advertising relationships with The Motley Fool. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.
TMF Credit Center
The Motley Fool Credit Center arms you with real tools and simple messages, that will help you in every credit situation.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.