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One really stupid article about EFs

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    One really stupid article about EFs

    http://www.investopedia.com/articles...e-bad-idea.asp

    First the guy assumes that income == expenses, and then asserts that EF proponents say that you must build a large (3, 6, 8 month) EF before doing anything else (like paying down debt).

    #2
    He seems to miss the fact that the very reason many people get into credit card debt is because they have no savings. So when the car needs a repair, the only way to pay for it is to charge it.

    He also seems to think that having medical insurance eliminates medical bills. I don't know what planet he is living on. In my world, I have a $4,700 deductible plus copays and coinsurance, along with things that aren't covered by my insurance like vision and dental care and mental health care (for the most part).

    I do agree that things aren't black and white, all or nothing. You shouldn't be directing all available funds into an EF while carrying 19% credit card debt. You should split things up so that you are taking care of everything.
    Steve

    * Despite the high cost of living, it remains very popular.
    * Why should I pay for my daughter's education when she already knows everything?
    * There are no shortcuts to anywhere worth going.

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      #3
      Originally posted by disneysteve View Post
      I do agree that things aren't black and white, all or nothing. You shouldn't be directing all available funds into an EF while carrying 19% credit card debt. You should split things up so that you are taking care of everything.
      Not even DR says that you should build up a huge EF before hitting the cards...

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        #4
        The author of this article runs a financial website and a forum. Looks like he has also written a few books. I guess I know to stay away from his advice.
        Brian

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          #5
          The question is do you want out of debt, or do you want to have less debt. People like the idea of no debt, but rarely commit to staying out of it (consumer debt). They just don't have the discipline needed for saving. I find the same discipline needed for paying off debt is needed for saving. That's why people can't pay off CC OR save money. They fail at both because it takes the same principal of taking money that you can spend and putting it towards something more needed without being forced to(late payment, minimum payment, risk of loss). I now tell people who are wanting a credit card, if you can't save 500 or 1000 dollars you don't need a credit card. You won't pay it off.

          Asking someone to save 3-6 months exp without an EF and they have CC debt is like asking an obese person to run a marathon when they have trouble just going up stairs without getting winded. They might get excited and start, but they simply won't finish. Then they will feel like a failure and that budgeting/saving is too hard and give up.

          Poor advice and out of touch with reality.

          People who want to get in shape and lose weight don't go out and replace all the food in their house. That isn't realistic for most people. They have to start with moving away from certain foods and buying better as they buy food. Moving into better money habits is the same. You have to start with what is really doable. You can't just hit erase and put everything in order (like restocking a kitchen all at once). takes time, each choice moving you into a better spot. We be humans, and this is our nature.
          Last edited by GoodSteward; 01-05-2017, 12:57 PM.
          Everything happens for a reason. Sometimes that reason is you're stupid and make bad choices.

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