Emergency funds or loan repayment which comes first
Every individual should have a decent amount of money as emergency funds that would help them during tough times. Most of the time these funds are kept only as liquid funds or easily accessible funds. If there are many members in the family the emergency funds value will also differ. It will initially look like the funds are to be reserved only for one individual as not all the individuals in the family would need it at the same time. But we have had situations where at least two members of the family would need emergency funds. It is safe to keep sufficient funds for emergencies.
I recently got a loan and in order to process things faster, I decided to touch my emergency funds. I was thinking so much about this and even thought that I should never touch the emergency funds. Mostly these emergency funds are used only for medical emergencies but there can be situations where the funds would be required for other emergencies too. Even though I have used my close to 5k dollars worth of funds to invest in something, I was wondering if I should continue to repay the loan or push those funds to my loan amount and make sure my loan is closed as early as possible.
According to me, an emergency is a situation when there is a dire need for funds and sometimes how much money we try to save may not be sufficient at all. Even in the worst case, there is a high possibility that we can pay with funds that we can borrow from another investment or with the closure of some of the fixed investments. Someone in our family had a health issue recently and luckily the kid also had health insurance taken which took care of most of the bigger expenses. But depending on the situation, it can be hard for us to decide if the money we are holding would be helpful or not. In that case, borrowing would be helpful with a discipline that we would pay it sooner.
I would say it would be great to reduce the Loan amount first with part payments so that in the long run the burden would be lesser. This way it is quite possible that we can also keep looking for other investment opportunities and at one point we would have balanced out and that can be a good time to maybe create some emergency funds. This way the main task is also not burdening and at the same time we would also have some emergency funds to take care of the expenses.
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Borrowing to invest is literally a bad idea to me, but the risk can come in when we are 110% sure that there will be a definite profit.
Emergency funds is very good, but we are often too busy to think of such idea.
Lack of emergency funds has lead to the loss of several lifes due to the inability to provide money for emergency situation.
And lastly, I think paying back borrowed funds should be done as quick as possible, because not everyone might be comfortable having unpaid debts.
Very well said. 👍
The loan you take, is it for business for personal development? If it is for business you can pay it all but if it is for personal use I will suggest you save your money for emergency because it might be difficult to get a loan quickly when you actually need the fund for emergency. On the other hand, if it is for a business, you can make money to fund whatever emergencies that might come up. My thoughts though
Yeah true it is hard to get another loan when there is already an active loan.
Thanks so much for reminding me of my plans for the emergency funds that l had tempered with, from my experience, borrowing to pay debt , is something that
Is more dangerous and it shouldn't be engaged.
I will go for refill the emergency funds first, the loan you can pay month a month and in extreme case declare yourself in bankruptcy and case solve.
Emergency fund
I'd pay off the loan as it is costing you interest. If your savings are short during an emergency, it's easier to borrow again to cover the difference if you have been paying off the debt. If you haven't been paying down, then it's more difficult to borrow more.
Yeah borrowing more can become difficult.
This is quite a valuable insight, I will go for emergency funds first, however my loan repayment depends on how pressing and demanding it is required of me to pay
My personal opinion, get that loan done with... You'll have more cash flow after that anyways.
You guys do things differently I've noticed... You tend to pool your money, the whole family chips in with that. Over here were all just for himself 😂😂
You know what I mean right?
Yeah true. That's something we have been following generations after generations. It is cost effective to run a family.
Collecting loans to invest in your business is not a nice idea, because anything can happen. You might invest in a business and then it might crash and the whole money is gone. I will strongly advise that if you want to take a loan, you should try to make sure you have backup plans in case anything happens.
Of course one should put aside some of the money that one has, which works in one's bad times, but we made a mistake here, we put all the money back into the market and after that now. As the market is going down till now, we have not been able to get anything out of here.