Personal finance advisors recommend that every consumer should have a basic emergency fund that would cover three to six months living expenses. If you’re diligently working at getting out of debt this may seem unrealistic. If you are fighting credit card debt that carries high interest rates as high as 18 percent or more it would, on the surface, make sense not to leave large sums of money in the bank gathering a low interest rate.
Many facets of American life are unexpected. Sudden job loss, medical needs, car repairs and other emergency situations usually do come as a surprise to those who suffer through them. If you are actively working at reducing credit card debt the financial stress these problems cause can be completely overwhelming.
To gain command of a debt problem one must pay down that debt consistently without adding to it along the way. The problem of credit card dependency arises when there is no other option but to use plastic to pay for life’s unexpected expenses. An emergency fund, even if it is small, can keep you from continuing the vicious cycle of credit card dependency.
What would be a reasonable amount to keep on hand prevent the need to break the credit cards out? If you are heavily in debt, start out small. Try to get $500.00 to $1000.00 set aside as your “don’t touch the credit card” fund before you begin paying extra toward debt reduction. Remember to continue paying at least the minimum payment toward that debt while getting you fund together. When you have a safety net set aside, you should start paying more toward the debt, but continue to add smaller amounts to your fund.
Getting into debt is usually easy. Getting out of it takes determination and sacrifice, but don’t sacrifice your, or your family’s security.
