This post is the resolution to Amanda's Money Coma I and Amanda's Money Coma II.
When we last saw our protagonist (aka, moi), I had reduced $11,000 in unexpected bills down to $4,435.
Still, my husband and I had to resolve where that money would come from, as it exceed our monthly income. Our three best options:
- A loan from a zero-interest credit card.
- Withdrawing funds from our Home Equity Line of Credit ("HELOC")
- Taking the money out of our emergency fund.
We find tapping our cash reserves to be stressful, and several discussions ensued.
Loan? Credit Card?
We ruled out the credit card as frivolous, and considered our HELOC. About $3,000 of what we owe is for new windows--a major home improvement (and a responsible use of home equity). Then again, in this climate, how could we justify borrowing even five bucks against our home?
Delay What You Can
We've also pushed off the $625 medical bill by contesting it with our insurance company. That buys us until at least January to find another source for that payment.
So, as anxious as we felt tapping our savings account—that cushion is designated for a true crisis—we decided to use cash from our emergency savings. It's quicker, cheaper (no interest) and offers the least amount of hassle.
Between credit cards, loans, and savings accounts, the scramble to find extra cash when you need it can be dizzying (and coma inducing).
I have my first New Year's resolution: a new savings account, separate from our emergency fund, solely for the inevitable and sometimes unexpected expenses life brings. DW financial experts suggest saving at least 5% of your income each month for these curve balls.
Will you join me?