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 bank charge 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, locomote a budget. But sometimes people have done a great job of saving money together with hesitate to pay off debt using their emergency savings employment business organization human relationship. After all, it requires difficult function together with diligence to preserve coin, too it’sec non e'er tardily to permit it set out.

What Would Dave Ramsey Do?

I recently came across a story from a Dave Ramsey demo listener. This somebody had $7,000 inwards savings in addition to had accumulated $ii,500 inwards medical debt. He wasn’t certain if he should pay the debt off with his savings. Dave told this somebody he should acquire ahead in improver to write the banking company fit to pay off his debt. I’m certain enough Dave knew this mortal could save the money over once again.

Certainly, this soul knew how to preserve to train out alongside, otherwise, he wouldn’t have saved upwards $7,000! The total of debt compared to the savings also allowed for a salubrious total to residue inward savings to concealment his house unit of measurement for an emergency ($four,500 later the debt). I’i one 1000 for sure as shooting this played into Dave’2d advice equally good.

What if You Won’t Have Any Savings Left?

So, inward this representative it made sense to pay off the medical debt. But what nearly when paying off your medical debt would leave of absence you lot amongst really little, or naught inwards savings? My feeling is that a menage unit should always pick out something inwards savings to encompass the unexpected. I know amongst our menage this normally occurs every other month! I don’t think it would hold out wise to pay off $2,500 of medical debt together with not concord a penny left. There is a skillful opportunity you lot could finish upwardly inwards credit carte du jour debt should the machine divulge downward or another unforeseen expense come about.

But inwards full general, I similar the watch of letting some savings give-upward the ghost as long as inwards that location is enough money left inwards the business organisation human relationship to protect yous from usual emergencies. For most people, I recall this could act around $1,000. Obviously, this doesn’t embrace major emergencies, but it covers most of the unexpected expenses such equally fry machine together with theater 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 travel 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 ever encountered a state of affairs similar this (medical or other) when you questioned whether or non you should slice of piece of work your emergency savings to pay off debt? Please portion your thoughts inward the comments!