Use some emergency fund to pay debt?

Submitted by themeowsmeows t3_11ehr5t in personalfinance

Wife and I current have about 11k saved up of emergency fund which is about exactly our 3 months of bill.

We have about $15k HELOC high interest debt of about 8.5%. We got it around covid time and didn’t think that the feds would raise the rates that much.

We do have parents on both sides that are well off that can help us out in case I do get laid off or let go (I make the most between us so I support most of the bills).

Thinking of taking out maybe half of that or “1 month” of “emergency fund” out of that 11k and paying our debt. Thoughts?

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Knipfty t1_jae4dyi wrote

I would tighten the budget, drop 10k on it and pay it off as quickly as possible. Then rebuild the EF.

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innkeeper_77 t1_jae7087 wrote

This but it might be a good idea to leave at least one month in the emergency fund. 8.5% is bad, but not EXTREMELY bad.

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themeowsmeows OP t1_jaejxkr wrote

I decided to take out one month of savings to pay the HELOC.

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Levertki1 t1_jae9xjl wrote

Pay down Heloc now. It will still be there if you need in an emergency.

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themeowsmeows OP t1_jaeg44e wrote

You mean use HELOC as emergency fund??

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Levertki1 t1_jaeltgo wrote

Yes until you get on the positive side. Why pay when interest when you can make most go away. Get it to zero, pay off any other debts(other than house). Build emergency fund/ increase retirement savings.

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_Nuba_ t1_jae2zmn wrote

How fast could you pay it off if you don’t?

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RobEreToll t1_jae3dvu wrote

Maybe use about 8k to get ahead of interest, try to pay 2x monthly interest and try to save $250/mo until your savings gets to 6k, then make as large of payments as you can without starving until payed off.

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