Why You Need an Emergency Fund While in DebtThis is a post created for Debt Roundup by Erin of Everything Finance Blog.

Are you so focused on paying off your debt that you’ve chucked savings out the window?

What if something were to happen to you? Is debt such an important emergency that you’re willing to risk leaving yourself vulnerable to even more debt?

This can be a sensitive topic in the personal finance world, but I do believe that everyone needs something saved up depending on their situation, even if it’s just $100.

When you’re in debt, you’re already running at a deficit – an unexpected expense can throw a wrench in your plans if you’re not careful.

That’s why I’m going to review 3 reasons why you need an emergency fund, even when in debt.

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An Emergency Fund Can Break the Cycle of Debt

If you have consumer debt, then you might be familiar with the vicious cycle of debt that never seems to end. The interest you’re paying can become unbearable, and your minimum payments alone might be forcing you to cut back on spending.

The last thing you need to worry about is being able to afford an unexpected expense. However, if your bank account is hovering around $0 and you have just enough to get by, you’re going to run into a lot of trouble if something happens.

Owning a home or a car, having pets, or having children means a number of things can go wrong at any point. That can be a little overwhelming to think about when considering the amount of debt you have. Do you really want to add to it?

If you can set aside anything extra at all to build up an emergency fund, you should. I’m not recommending that you stop paying your debt in favor of saving – not at all! – but if you can spare $5/week, any amount will help. That’s the amount you won’t have to pay interest on should something happen.

Would you rather continue paying your debt, have your car break down, be hit with a $500 bill, and have to use your credit card? Or would you rather save a little bit every month, have that $500 in your savings account, and handle the expense without worry?

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An Emergency Fund Can Give You Peace of Mind

Experiencing anxiety around your financial situation is normal when you’re in debt. After all, it’s not fun to feel like you’re powerless or helpless when it comes to your money.

The reality is, you’re not powerless or helpless. You can help yourself by establishing an emergency fund. Once it’s in place, you’ll have the benefit of knowing you have a plan in case something happens.

Having that bit of savings stashed away will help you sleep better at night and give you the confidence you need to take back control of your finances.

If you’re already under a lot of stress with your bills, do yourself a favor and find a way to save. You’ll feel relieved once you realize you don’t have to worry about anticipating expenses.

An Emergency Fund Helps Create the Habit of Saving

Many people get into consumer debt for one simple reason – they spent more than they earned. For that reason, saving money might be a bit foreign to you, because you’re used to spending it.

Hopefully you’ve been taking Grayson’s great advice here on the blog and have been chipping away at your debt, and not getting into more of it. Along the way, you might have learned that paying off debt takes discipline.

Saving takes some, too, and it can be difficult to find the motivation because there’s no “end game” like there is with paying off debt. Of course you want to be debt free, but with saving, what are you working toward?

Well, saving will help you stay debt free, because you’ll have the cash reserves to handle any expenses that come up. Saving money will also compliment the discipline you’ve been developing to spend less.

While saving $5/week might sound silly to you, it’s not, because you’re getting into the habit of saving, and that’s what’s important. Financial success is largely based on the money habits you have. When saving becomes normal, you’re more likely to succeed.

Related: Save what you can with Digit!

Start Saving!

If you’re tired of stressing out about not having enough money to cover you in case an emergency happens, then start thinking about how you can save money. If you’re paying extra on your debt, is there any way to divert some funds to savings? Can you get a side gig or second job where your entire pay goes directly into a savings account?

By the way, you can save while paying off debt. Here’s how!

Creating an emergency fund may be rudimentary, but too many people don’t bother saving because they’re only focused on their immediate goal of paying off debt. Think about your future and your financial well-being. When your debt is paid off, but you have no savings to your name, how are you going to feel? You’re better off getting into the habit of saving now so that you can continue to build wealth after your debt is gone.


Erin M. is a staff writer at EverythingFinanceBlog.com, a blog dedicated to every topic related to personal finance. We talk about investing, saving, budgeting, paying off debt, and more. Follow us on Twitter, Facebook, and Pinterest.

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