What if My Emergency Fund is Not Enough? Discussion

Editor’s Note: As part of a special project on The PerkStreet Blog, we’re offering a free question and answer columns on Saturdays with Customer Columnists Clint and Katy Davis of Davis Coaching. If you have a question you’d like to submit to get advice from these financial coaches, email it to

I’ve been working to get out of debt for the last 2 years and I’m in the home-stretch. I have an emergency fund of $1000 and have never had to use it. But what if I had an emergency that cost $3000? I understand it is a starter fund, but what if a $3000 expense fell in my lap tomorrow?

-Jake, Twitter

Hey Jake,

congratulations on the progress you’ve made so far. As you said, the $1,000 is a starter emergency fund. Will that cover every emergency or unexpected expense that pops up? Definitely not. But it will cover most of them in a given 2-3 year period while you bust your butt to get Debt Free. If you were hit with a $3,000 emergency, that $1,000 would allow you to pay a large portion of the emergency expenses and would buy you time to make other payment arrangements. For instance, if you had an unexpected $3,000 trip to the E.R., you could pay $1,000 up-front and work with the hospital to make payment arrangements for the balance. You would then re-build that $1,000 starter emergency fund as fast as possible and treat the hospital bill as another dent in your debt snowball plan. Keep up the good work, Jake!


We should be getting a sizeable tax return. I want to use the money to attack debt, but my wife wants to use it for a trip to Hawaii. What should we do?

-Ellis, Twitter


it sounds like you and your wife are dealing with some conflicting priorities. Practically all couples have to learn to work through this type of situation. Communication is the number 1 keys for getting on the same financial page with your spouse. If you haven’t done so in a while, the two of you need to sit down and lovingly discuss your current financial situation, your financial goals, your dreams for your future and the specific actions and sacrifices you’re each willing to make in order to achieve that life you want. Talk about why you each want to get out of debt what your motivation is for making some sacrifices. Clint and I made the decision to forego several vacations, trips and luxuries because our goals of becoming Debt Free, eliminating financial stress and experiencing financial security far outweighed the sacrifice. Now that we’ve achieved a great level of financial freedom, we are able to enjoy those luxuries without any feelings of guilt or stress.

During your conversations, you may uncover that your wife really has a deep need to get away and relax. If that’s truly her priority right now, maybe you can work out a compromise where you use part of your tax refund money for a long weekend at the lake, pay off debt with the rest and begin making plans for the Hawaiian getaway you’ll take to celebrate becoming  Debt Free and saving your full 3-6 month Emergency Fund.  This journey is all about creating the life you really want. It does take temporary sacrifice, but it’s all worth it once you’re on the other side. Thanks for the question, Ellis!

Clint and Katy Davis are PerkStreet Customer Columnists and founders of Davis Coaching. As financial coaches, their passion is helping people become and stay debt free! Their personalized coaching is designed to help you get your financial life where you want it to be. Like personal trainers for your finances, they can help you develop a specific plan to achieve your goals, and provide the expertise and accountability to get you there. If you’re ready to take control of your financial life, visit Davis Coaching online, check out the Davis Coaching blog, and connect with Clint and Katy on Twitter and Facebook.

Leave a Reply

Your email address will not be published. Required fields are marked *