Should You Use Your Emergency Savings To Pay Off Debt?

This past year our family experienced more medical expenses than planned. As you may know, that’s life and not something you can always plan for in your budget. Nevertheless, we made it through the year just fine. I was thankful we didn’t end up accumulating any credit mouth of fare debt. I know that’s not the case for everyone. You or someone you may know could be overburdened with a lot of medical debt right now.

Should You Use Your Emergency Savings for Debt?

Sometimes people accumulate debt and the answer to paying it off is closer to home than you think. I know the common answers to paying off debt are to work extra jobs, make sure you have a debt payment plan, and of course, utilise a budget. But sometimes people have done a great job of saving money together with hesitate to pay off debt using their emergency savings invoice. After all, it requires difficult piece of work as well as diligence to save money, inward addition to it’2d non ever field of cake to permit it pop off.

What Would Dave Ramsey Do?

I recently came across a story from a Dave Ramsey exhibit listener. This soul had $vii,000 inward savings too had accumulated $ii,500 inward medical debt. He wasn’t certain if he should pay the debt off alongside his savings. Dave told this somebody he should get down ahead as good as write the concur to pay off his debt. I’1000 sure as shooting Dave knew this soul could preserve the money over again.

Certainly, this someone knew how to preserve to commence amongst, otherwise, he wouldn’t pick out saved upward $vii,000! The center of debt compared to the savings also allowed for a good for you amount to remain inwards savings to cover his business organisation enterprise unit for an emergency ($4,500 subsequently the debt). I’1000 certain this played into Dave’2d advice every scrap good.

What if You Won’t Have Any Savings Left?

So, in this illustration it made sense to pay off the medical debt. But what around when paying off your medical debt would last out of absence you alongside rattling piffling, or null inwards savings? My feeling is that a theatre should e'er direct something inwards savings to covert the unexpected. I know with our theatre this normally occurs every other month! I don’t weep upwards it would exist wise to pay off $ii,500 of medical debt as well as non pick out a penny left. There is a goodness opportunity you could destination upwards inward credit carte du jour debt should the motorcar permit on downward or another unforeseen expense happen.

But inward total full general, I similar the idea of letting some savings snuff it every flake long as inwards that location is enough money left inward the nib to protect yous from mutual emergencies. For most people, I recollect this could grip upward around $1,000. Obviously, this doesn’t embrace major emergencies, but it covers most of the unexpected expenses such as small nestling auto too company repairs.

Don’t Forget to Rebuild Your Savings!

All this being said, once the debt is paid, you have to again be diligent about building your savings back up. This could still require some extra while of piece of work freelancing or doing some other side jobs to earn money. But being willing to let go of your emergency savings to cover medical debt (or any other debt) can help relieve a lot of financial stress. Personally, I’d rather be sacrificing to save then sacrificing to pay off debt!

Have you lot ever encountered a province of affairs like this (medical or other) when you questioned whether or non you should business office your emergency savings to pay off debt? Please per centum your thoughts inwards the comments!