Emergency fund first?
If you are researching about how to get out of debt online, you are going to find many different opinions on starting an emergency fund or paying off your credit card debt first. There is no 100% right or wrong answer to this, you need to take a look at what is best for yourself.
“Establish an emergency fund — even if you have credit card debt.” — Sallie Krawcheck, CEO and cofounder of Ellevest. Sallie states to start an emergency fund no matter what, which makes sense as an emergency can happen at anytime and you will need to be using your credit if you don’t have a savings. However you could be paying more in interest down the road because it will take longer to pay off your debt.
“Your emergency fund is not an investment, it’s insurance with one purpose; to protect your family.” — Dave Ramsey. On the other you have Dave who states that you need to start a savings fund of $1,000 before paying off any debt. He advises doing this so that you don’t dig yourself a deeper hole then you are already in. This is also a great way to start, as you won’t be using your credit cards in an emergency, which is adding fuel to the fire.
As you can see there isn’t a wrong or right way, both ways will work. You need to decide what is best for you, and will keep you motivated to pay down your debt. We can all agree being financially free is something that we all deserve.
