Several conversations over the past few weeks have made me take pause and reconsider my debt payoff strategy. I dove headfirst into debt payoff at the expense of saving a full emergency fund and, frankly, my peace of mind and protection as well.
The shame! Somehow I subconsciously believed that I’d be fine. Pay off debt! Pay off debt! Go forth and conquer!
But what if I lose my job? What if I have to fly from China to the States tomorrow for a family emergency? What if I need to pay for a surgery?
As of Sept. 7, 2018, I have less than $400 in savings in the States. Soooo very un-wise! (Un-wise sounds much better than stupid, right?) I got too excited about paying off debt and didn’t replenish my starter savings a.k.a. emergency fund when I dipped into it in December 2017.
“Paid In Full” be calling me, man! It just keeps calling me. These three words give me the same giddy feeling I get when someone places an unexpected gift in my hands—pure, unadulterated joy.
Now I have to switch gears. If I overpay FedLoan Surviving before resuscitating my savings, I can’t call ‘em up and ask for it back. It’s time to put myself first.
And if you don’t have an emergency fund, then it’s time to put yourself first, too.
What is an emergency fund?
An emergency fund is a buffer between you and unexpected things that come your way. It is usually saved in a liquid account (i.e. savings account or money market account) for relatively easy access.
Let’s not think only in terms of an emergency but in terms of an opportunity to solve a problem or take advantage of something awesome with your savings.
Years ago, my cousin in my head, Patrice C. Washington, suggested calling it an Opportunity Fund. Words matter. If you keep calling your savings an Emergency Fund or Rainy Day Fund, then that’s what you’ll attract—emergencies and rainy days. Who wants to save for that?! Opportunity Fund or Sunny Day Fund sounds so much better.
Full disclosure: I only use emergency fund for SEO purposes. I agree with Patrice.
Learn 10 questions to ask to figure out how much to save.