Author Topic: Interest on Credit Card or Dip into Emergency fund?  (Read 2666 times)

wealthviahealth

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Interest on Credit Card or Dip into Emergency fund?
« on: November 24, 2014, 03:50:48 AM »
With several big travels coming up and with all of the extra purchases that come along with the holidays, I will be slightly short on cashflow to cover some upcoming bills.
I have an adequate emergency fund and channel most all of my savings into stocks and I rarely dip into either of these unless I absolutely have to for motivational reasons.

If i put these charges on my CC instead of cashflowing them, the total damage in interest would be around $5-8. I hate the idea of getting charged interest at all but I think that I dislike the idea of dipping into my EF or stocks even worse. It feels like progress lost when I do and will often take me a bit longer to "payback" my EF as opposed to a CC where there is much stronger incentive to pay it off quicker.

Does any one else have this mental barrier? What are your thoughts?

couponvan

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Re: Interest on Credit Card or Dip into Emergency fund?
« Reply #1 on: November 24, 2014, 04:37:31 AM »
Um - I am going to be unpopular, but if you can't CF your trip, maybe you shouldn't take it.  However, I would probably never worry about $5-8.....not worth my effort. 

Villanelle

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Re: Interest on Credit Card or Dip into Emergency fund?
« Reply #2 on: November 24, 2014, 05:56:41 AM »
Neither.  Time to cut back on your holiday spending. 

That said,  if you refuse to do that, then I thin the EF is the way to go.  Paying interest when you have money in the bank is silly. 

jamal utah

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Re: Interest on Credit Card or Dip into Emergency fund?
« Reply #3 on: November 24, 2014, 11:32:03 AM »
I say use the EF.  The whole purpose of the EF is unusual expenses.  You don't want to start a habit of carrying a balance on your CC even if it only for the short term. 

Catbert

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Re: Interest on Credit Card or Dip into Emergency fund?
« Reply #4 on: November 24, 2014, 12:54:15 PM »
Well, first choice is to skip the trip.  But if that's not in the cards then I would use CC because this is not an "emergency".  Since you're mentioning such a small amount of interest you would pay, I assume that you could pay it off in one extra cycle.  Live and learn.

frugaliknowit

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Re: Interest on Credit Card or Dip into Emergency fund?
« Reply #5 on: November 24, 2014, 01:05:39 PM »
No, don't pay interest.

Going forward, maybe you need a "buffer account" for uneven expenses or a travel account.

wealthviahealth

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Re: Interest on Credit Card or Dip into Emergency fund?
« Reply #6 on: November 24, 2014, 06:08:55 PM »
No, don't pay interest.

Going forward, maybe you need a "buffer account" for uneven expenses or a travel account.

I like this idea, thank you for the suggestion.

Since most of my cash goes into stocks or my ef, Im usually not sitting on much discretionary spending money but a buffer account that holds $250-500 could be just what I need. Using this wouldn't feel like a failure as I wouldn't count in in my net worth totals the way I do the rest of my accounts.