The debate on emergency funds vs paying down debt first

I was at my kitchen table last month when my furnace died, costing $1,200 to replace, and I had to pull from my small emergency savings instead of putting that money toward my credit card balance. Do you guys prioritize a full 3 month cushion first or tackle high interest debt even if it means being exposed to surprise costs like this?

3 comments

3 Comments

sage_green1mo ago

Did you end up having to put that furnace repair on a credit card or did your savings cover it? I went through something similar a couple years ago when my car transmission gave out, and that experience taught me to keep at least $1,000 in savings before really attacking my debt. For me, having that small buffer stopped me from adding more to my high interest cards when stuff went wrong. Once I had that mini fund I felt way better about throwing everything extra at my debt payments each month.

the_jennifer1mo ago

Ngl, a small buffer is the way to go. Throw the rest at that debt.

anderson.piper1mo ago

Honestly, people act like you need three months of expenses saved before you can even look at your debt. That furnace story just proves you need a couple grand max, not some huge cushion. Throw everything at that high interest stuff unless you're living paycheck to paycheck.