Friday, October 29, 2010

Is Paying Off Debt an "Emergency"?

Knowing that I'm a bit of a PF nerd, a friend recently posed a question to me:  "should I use my $1,000 e-fund to pay off some small debt?". 

This got me thinking - is debt really an emergency?  Is your irresponsibility {or not - could be different circumstances} really considered to be an emergency of sorts?

I told her that it could go 1 of 2 ways - if it was due to an emergency, yes, take the $1,000.  If it wasn't and you're unsure about your future income, then don't touch it.  I'm going to work with her to get the money reduced in a few months - right now, it's at roughly $7k, so it's a pittance comparatively speaking. She hasn't a foggy clue what a budget is, nor how to save or that she should be packing away a bit for retirement already.

This is my first 'client' for lack of a better term {disclaimer: I am NOT a financial advisor; I'm just helping a chica out!}.  Let's hope this goes well.  I'm going to take a list of ways to save money, use my weekly budget tracker, and make her read Gail's blog daily!


*Canadian Girl

1 comment:

  1. No, I don't think that it would be considered an emergency. Debt is debt, and it should be kept separate from your assets. Your friend should still keep their emergency fund in tact in case a real emergency comes up.