4 Reasons You Shouldn't Have an Emergency Fund and 1 Reason You Should
Financial emergencies come in big and small packages. On the extreme end of the spectrum, you might have lost a major source of income. Or, at the other end, your dog got injured and needs some pricey vet work. Either way, you're facing a financial situation that isn't accounted for in your budget.
That's the rationale behind having an emergency fund. You store up enough money to cover your household expenses for three to six months, and then you wait for something bad to happen. While that feels like a nice, conservative strategy, it may not always be the best financial move. Here are four reasons why.
If you are rolling over balances on credit cards, saving money is going to cost you. Every $1 you save in an online savings account earns you about $0.02 per year in interest. But rollover that same $1 on a credit card and you'll pay $0.15 to $0.20 per year in interest. Said another way, if you have high-interest debt, saving money costs you 13% to 18% per year. Sadly, that means you really can't afford the luxury of saving money.
Source Fool.com
