Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
that's a tough ultimate statement to make. Emergency fund amounts depend a lot on what you technically consider an emergency fund, circumstances (dual-income family, single income family, dual income no kids), how secure your jobs are etc.
"6-12" is certainly the arbitrary number, but that is only a starting point.
Only if an 8-month emergency comes along, and if one does, it won't matter where the funds to weather it come from. Accummulating that much in liquid assets would no doubt come only at considerable opportunity cost, and actually holding that much as liquid assets over time would definitley come only at considerable opportunity cost. As any CFP would note right away, there are better ways to do financial planning than by following the advice of TV personalities.
Ok so I have a question, but first a little background.
At my present job, realized I wasnt making enough, kept coming up short on bills and resorted to credit cards (stupid, I know). Now in a $9000 credit card debt hole. So fast forward to present time, FINALLY secured a new job that would allow me to not only pay all my bills, but leave an extra $500 a month. My first thought was to immediately plow this extra cash into paying down the credit cards, but on the flip side I have NO savings whatsoever, so if an emergency hits I will be screwed. So do I spend the first 3 or 4 months building up the savings, or ditch that and focus on paying down debt? Really prefer to focus on cc cards due to interest compounding. What do you guys think?
what interest rate is the CC and how is your credit? I would shop around for a balance transfer offer. Chase Slate is currently the only one i know of that offers 0% AND no fee on the transfer. if you have decent credit, you can do that.
I would save something, maybe 10% of your income, and then put the rest towards extra payment on the CC.
but always get in touch with the CC company and ask for lower interest rates, and play the balance transfer game to eliminate interest if possible.
...and play the balance transfer game to eliminate interest if possible.
This will also shave points off your credit score. And as a rule of thumb, it is a good idea to have as little to do with actual banks as possible. It is good to have and use several credit cards however, never charging more than 30% of your limit and paying each of them off as the statements come in.
This will also shave points off your credit score. And as a rule of thumb, it is a good idea to have as little to do with actual banks as possible. It is good to have and use several credit cards however, never charging more than 30% of your limit and paying each of them off as the statements come in.
it will and it won't. your score will drop by about 10-20 pts when you open a new credit card. but it will also benefit from having higher total credit limits, and a lower debt ration that will result in the higher limit. In the short term, it hurts, but that lasts maybe 2-3 months. So don't do it if you need to get a mortgage or auto loan in the near future. In the long term, it will boost your score because you'll have more accounts in good standing.
i've got numerous credit cards. i only use 2. but i don't close the old cards and i take advantage of 0% offers if they present themselves.
that's a tough ultimate statement to make. Emergency fund amounts depend a lot on what you technically consider an emergency fund, circumstances (dual-income family, single income family, dual income no kids), how secure your jobs are etc.
"6-12" is certainly the arbitrary number, but that is only a starting point.
Yes, very much! If you're, for example, young and single, your job is as secure as any and/or you can easily find a replacement if you lose your current one, your only dependent is a goldfish, and you rent an apartment...in that case, your "emergency fund" might consist of a case of instant ramen noodles, canned goods (soup, tuna, and -- my personal favorite -- cold, canned pasta), and the possibility of moving back in with Mom and Dad. OTOH, if you're married, have 3 kids, one of whom you're paying college tuition for and another will need braces soon, you own a house with 17 years left on a 30 year mortgage, your health has some issues and your employer has just announced a round of "cost-cutting"...well, you're gonna want a pretty sizable buffer to cover any possible problems.
What dings your score is obtaining cards to use the promotional benefits, then walking away from them. Simply rolling debt from one card to the next in order to take advantage of low initital rates will cost you FICO points. You actually have to use these cards to get any FICO benefit from them. All else being equal, opening a single new card will help your credit score. Opening multiple cards over short timeframes will damage your credit score.
all you're doing here is relying on your credit cards to finance your emergency fund.you're paying interest on the money you're "saving" 100 pct of the time instead of a much lower pct of time.if this guy has no cc debt would you tell him to take out a loan at credit card sized interest rates to have an emergency fund? of course not. this is no different.
An emergency fund of $1000 in a savings account is pretty paltry. It's not the same thing as having $30k in a savings account. The deductible for an auto accident could easily run you $500. A round trip plane ticket to travel back to your home town for a funeral could run that much, too. If you don't have the cash to put down on those things, then you have to use your CC and incur more debt. It would take the OP all of 2 months to save up $1000 if he/she can actually put aside $500 a month, not 2 years.
OP, somebody mentioned credit unions, and I second that. It usually "costs" between $5 and $25 to join a FCU (that money stays in your savings account), they pay better interest on savings (such as it is), and they give better loan rates. Many will work with you on improving your credit if that is a problem, including giving you a loan to consolidate your debts at a much lower rate than the CC or banks.
What dings your score is obtaining cards to use the promotional benefits, then walking away from them. Simply rolling debt from one card to the next in order to take advantage of low initital rates will cost you FICO points. You actually have to use these cards to get any FICO benefit from them. All else being equal, opening a single new card will help your credit score. Opening multiple cards over short timeframes will damage your credit score.
you really don't need to use the cards. I graduated college in 2004, and I jumped on one of the then-popular no fee 0% offers to pay off a set $ amount of student loans. Then i took that amount/12 and paid it off in a year. I've used 0% offers in other ways too, when i had some short term higher expenses, rather than paying interest.
I'm sitting on an 804 FICO now, and I'm 31 with a stack of credit cards that have been unused for years. i have free monthly FICO monitoring through me credit union, so i get an updated score monthly. So i can really pinpoint what actions have reduced my credit score. Opening a new card is a 10-20 point hit. but then it creeps right back up to where you were before.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
