some of the advice a bit strange such as dipping into their emergency fund to pay off credit card debt.
With secure jobs your emergency fund is not an Issue if you have debt with high interest rates,I enjoyed the show but found some of the advice a bit strange such as dipping into their emergency fund to pay off credit card debt. Also wouldn't necessarily agree with the 'snowball' method for paying off their debts, but I presume that was just to change their behaviour rather than the option which made the most financial sense (i.e. paying off the debt that costs you the most)
I enjoyed the show but found some of the advice a bit strange such as dipping into their emergency fund to pay off credit card debt. Also wouldn't necessarily agree with the 'snowball' method for paying off their debts, but I presume that was just to change their behaviour rather than the option which made the most financial sense (i.e. paying off the debt that costs you the most)
It was clearly correct to use the emergency fund to clear the credit card debt.
Think of it like this. If you had no credit card debt and no emergency fund but a credit card limit of €14,000, would you take out €5,000 cash on your credit card so that you could have an emergency fund? I hope you wouldn't.
If you have a good limit on your credit card, then you don't need an emergency fund.
Brendan
If you do not pay off your credit card you are paying interest on interest if your are in secure employment like they were and you are rolling over your debt, If I remember correctly the presenter pointed out if they /you had a debt of 3500 euro stopped using there Credit Card and paid the required amount required by Credit Card Company it would take them 9 years to clear it and would have paid more than 3650 euro in interest ,That's fair enough and a good point. Personally I'd feel really uncomfortable not having an emergency fund (especially with two young kids). I'd completely understand the logic if that was their only credit card debt and it was holding them back, but they still have so much other debt to pay off. There was also no mention of any plan to build the emergency fund back up again after the holiday
That's fair enough and a good point. Personally I'd feel really uncomfortable not having an emergency fund (especially with two young kids). I'd completely understand the logic if that was their only credit card debt and it was holding them back, but they still have so much other debt to pay off.
I enjoyed the show but found some of the advice a bit strange such as dipping into their emergency fund to pay off credit card debt. Also wouldn't necessarily agree with the 'snowball' method for paying off their debts, but I presume that was just to change their behaviour rather than the option which made the most financial sense (i.e. paying off the debt that costs you the most)
It was clearly correct to use the emergency fund to clear the credit card debt.
Think of it like this. If you had no credit card debt and no emergency fund but a credit card limit of €14,000, would you take out €5,000 cash on your credit card so that you could have an emergency fund? I hope you wouldn't.
If you have a good limit on your credit card, then you don't need an emergency fund.
Brendan
Isn't there a risk that, in an emergency, the credit card may not be available, as the bank might withdraw your availability to credit.
I have not heard of a credit card company reducing a limit because someone has lost their job.
Brendan
No, having no income has no impact on credit score here. Only defaulting on repayment does.If your credit score changes, and having no income will change it
No, having no income has no impact on credit score here. Only defaulting on repayment does.
Yes, banks can withdraw the credit facility on either a credit card or overdraft, but in practice they only do in specific circumstances.
And the linked article - apart from being UK based, you might notice it's from March 2009.... A bit of a cleanup at the height of the crisis doesn't make something common practice.
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