No, using an emergency fund to pay off credit card debt isn’t a good idea

It seems like I’ve been finding a lot of financial questions online lately. I guess that’s good–it means people are thinking. The best question I’ve found this week is whether you should use your emergency fund to pay off credit card debt.

Mathematically, it makes sense to do so. But one thing I remember hearing time and time again as we were paying off massive quantities of debt was not to empty bank accounts in order to do it. The reason for it was simple: Life is unpredictable.Emergencies happen. Some years they’re bigger than others, and some years have more than others. Last year, the radiator in one of our cars blew unexpectedly. The car was able to limp to the nearest garage that was open on a Saturday, and maybe $400 later, it was fine. I don’t remember the exact amount anymore. This year, the garage door opener shredded one of its plastic gears and had to be replaced. That was more like a $150 repair because I bought the garage door opener and installed it myself. But, still, it was unexpected, and even though I was able to put that particular repair off for a couple of months, it was still something I eventually had to take care of.

Sometimes emergencies are big. There’s nothing quite like coming in to work and finding out your job doesn’t exist anymore. It happened to me early in my career, and it happened to me this year too. I hate it, but I can’t control it. When I started my contracting career way back in 2005, one of the first things my then-boss said to me was to save up six months’ worth of salary just in case something happened. It happened to him, and it can happen to anyone, he said. While it took eight years, in April 2013, something happened.

Did I raid the emergency fund then? Actually, no.

I figured out how we could live on a few hundred dollars per week. Through various means, including my back pay and severance, we had that much. Dipping into the emergency fund to eat steak once a week wasn’t a legitimate use of it. A medical emergency that forced us into COBRA so we could get treatment, on the other hand, would have been a legitimate use of emergency money.

That garage door opener incident? That happened when I was in between jobs. We lived without the garage door opener until I was working again and had earned a few paychecks. Now that I think about it, our toaster oven broke right around the same time too. My wife found a slightly used Black and Decker model for about $5. Problem solved. That kept us from taking $40 from the emergency fund.

Use of the emergency fund, then, is nearly a last-resort option. It’s there to keep you from going back into debt under onerous terms.

And then when you do have to dip into it, you replenish it just as quickly as you can. That way if–God forbid–something else happens, you’ll be prepared.

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