Emergency fund. Everyone says to have one. Dave Ramsey says to have $1000 in yours, at least, if emergencies come up (and they will).
I already have $1000, plus I put $150 a month toward my emergency fund. I’d like to have $2500 in it by the end of this year, and $10,000 in it before I make other investing decisions.
One thing I’m not so clear on: what counts as an emergency? When can I use my emergency fund?
My car is in the shop.
It’s a very reliable 2005 Toyota Corolla. It has been mine for two years and this is its first time in the shop (not counting oil changes, which, no, I don’t DIY). It’s due for its 105,000 tune up. Which includes many things, and the shop estimated it would cost around $340.
Not long ago, that would have really cut into my budget. So, old me would either have put it off for a few more (thousand) miles, which wouldn’t even be a savings at all, or would have done it, and added $340 to the ever-growing credit card debt.
New and improved me has a bit more wiggle room in her checking account. However! I’m trying to convert all that wiggle room to student loan payments.
So, what do I do? Take $340 out of my emergency fund?
Divert $340 from the payoff-student-loan race?
Is this an emergency for the emergency fund?