You are your own emergency fund
Ever since I started my public debt-repayment journey I’ve given (and received) a lot of advice and after opening my trap and putting my foot in my mouth one too many times, I’ve realized that nobody’s finance situation is exactly the same. What might work for me, won’t work for everybody, it might not even work for most people.
For example, some people may be comfortable carrying low-levels of debt on cards/loans with promotional interest rates because they are actively increasing their wealth in other ways. While others may know they have a raise/new salary coming and are more comfortable paying a little on their debts now and a lot more later. And not everybody can be economical about where they live, the same way that not everybody can be frugal all the time. Everybody’s financial situation is different and all I can really ask is that you are AWARE of what you are doing.
That said, there is one thing I don’t waver on.
Your girlfriend/boyfriend, partner/spouse, parents, friends, credit card or bank loan is NOT your emergency fund.
Your emergency fund is your emergency fund.
Don’t have one?
Then YOU are your emergency fund.
I can’t even begin to count the number of times I’ve seen people say “Well, I don’t have an emergency fund per se because if something happens I can get money from her, him, this, that.”
That is not an emergency fund.
It’s very important to realize that an emergency fund exists for exactly that, an emergency. Whether that’s an unexpected eviction or an immediate need to move, or to help pay for an illness or trip to visit a sick friend/loved one, or an accident or even sudden unemployment, an emergency fund exists so that you aren’t getting somebody ELSE to bail you out.
(Don’t be like Aladdin)
Don’t get me wrong, it’s wonderful that you have people in your life willing to help you out and loan you money when you need it to pay your utilities or even your rent for a few months. But these people are NOT your emergency fund, these are friends/family/loved ones who are willing to bail you out from your spot of trouble. This isn’t even somebody supporting you, this is somebody going out on a limb for you.
And you know? Many of us will have this happen at some point in our lives, and that is OK.
What’s not ok is calling this type of selfless giving from others, an “emergency fund” or referring to expected generosity as you explain why you don’t have an emergency fund. Other people’s money isn’t a fund for you to expect to withdraw from, it’s generosity from people who care about you. Now do the right thing and try not to take advantage of that, ok? Let’s all be responsible adults. Self-reliance is cool, kids!
(Also, getting a new bank loan or putting your problem on your credit card isn’t a replacement for an emergency fund either. Seriously? You’re never going to take control of your finances if you do dumb stuff like that.)
This is why the first thing I’m doing once my student loan is paid in full is to aggressively top-up my monthly payments to my emergency fund. I took a bite out of it in December, but it could be better. (Also, I’d like to make a Fuck You account in the near future. Want to know what that’s all about?)
So, to summarize, whether you have or even need an emergency fund or not, don’t rely on other people’s money for your emergency fund.
Want to get started on your own emergency fund? Grab my ING Orange Key 39814304S1 and sign up today. You can do manual payments or automatic. I bank primarily with another bank but I like having my ING be a separate account I don’t see very often, so I’m not tempted to dip in.