So I have a savings rate of around 50% in most months...which is on average 800-900$ depending on how much I make. I had about 2K$ sitting in my account and after reading MMM's take on EF, I decided it's time I apply his method. I also use YNAB and the buffer method (spending last month's income for this month's expenses) which also helps out incase I get hit with an unexpected expense.
Since the stock market has been down as of late, it was a perfect time for me to use my 2K$ and invest it. Now, the only money I have in my account is last month's income to pay for this month's expenses and next month's income...that's it.
My question is (because I want to make sure I understand the rules of this), if I get hit with an unexpected expense, is this a good order for me to use in order to clear an emergency situation, meaning, my first line of defense against an unexpected situation would be:
1)Credit card (Interest free for 20-25 days)
2)Pay it off with this month's leftover money and next month since I already have the money for next month, therefore I can budget in advance.
3)If the amount is still bigger than whatever I have in my account, I use the line of credit (interest rate of 6,64%) and gradually pay that off
4)If the amount owed takes me more than 6 months to pay it off, this is where I withdraw my money from my investments that are in my TFSA (Tax Free Savings Account, in Canada, we don't get penalized from withdrawing, however we have to wait the next calendar year to reinvest the amount withdrawn)
FYI, I don't have an HELOC, I only a regular line of credit and 2 credit cards.
So is that a good order or did I make a mistake somewhere? Should I wait 12 months instead of 6 before withdrawing from my investments?