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Friday, April 24, 2009

Using the emergency fund. . . .

One of my cats has some kind of itchy-scratchy thing going on, that has resulted in some major discomfort for her. After trying some home remedies (including changing her food, in case that was the cause of it) I finally broke down and took her to the vet. $300 dollars later, I walked out with my cat, some EXTREMELY expensive cat food (care to feast on peas and venison, anyone?), and drugs galore.

Now, this is not the kind of thing I would consider to be an emergency. I did put the charges on my credit card, and want that debt GONE as soon as possible, but I was hesitant to use my emergency fund cash to pay it off (I have almost $1700 in my EF right now).

Then I started thinking, and yes, actually doing the math. I get 1.5% on my ING Direct savings account right now (I can't believe I started at 3.75% before the economic bust. . . I'm salivating at the interest I could be earning---and will earn again at some point in the not-so-distant future). I pay 9.99% on my credit card. Sooooo, an intelligent woman would figure that I'd be 'earning' 8.49% by paying off the credit card (9.99 minus the 1.5% I won't be earning on that money).

Is my math correct on this (more importantly, is my LOGIC correct)? It seems to make sense. Why would I willingly pay 9.99% interest when I'd only LOSE 1.5% interest if I took the money out of my emergency fund?

Of course, the trick is to replace that $300 over the course of the next few months so my EF is nice and healthy again.

6 comments:

Esperanza said...

I think your logic is spot on!

Anonymous said...

Pay off the card. That's a no brainer. No need to rationalize. You have a cat that got sick. Just pay for the cat and go back to paying off debt.

KristinBrianne said...

Your logic is great... but more importantly you took care of your furry child. Part of a responsible pet owner is the knowledge to get medical attention when necessary and to care enough to do so. You did that, and I think you're better off for that.

marci357 said...

Your math is right.... It's fine to use the card at the vets - but now pay it off right away - then make the payments you would have made to the credit card to your EF instead - and you'll be ahead as you won't be losing the interest.

Anonymous said...

Side comment . . . my cat has a food allergy that caused her major tummy ailments (throwing up blood and the lining of her tummy!) and we finally settled on expensive vet cat food too (Green peas and rabbit, thank you very much ;-) ) Expensive, but VERY worth it. Within a month, she gained her weight back and is full and sassy again. A year later she is still on the diet (financially, it's expensive, but it really IS the best thing for her, so that's just gonna have to be okay. I can cut back eslewhere ;-)) and she is healthy and happy and the joy of my life.

So, yes. . . . pets are expensive but gosh, we love them so and they provide so much joy . . . you want to do what is best for them. ;-)

L in ATL

Finally Frugal said...

I agree---paying for a pet's care is a no-brainer. . . .I can't even begin to describe the relief that I felt when my little cat started feeling better! Her purrs are worth $300 and more!

To L in Atl: I'm wondering about food allergies myself~~~my cats HATE the expensive stuff I bought, but I don't want to go back to the cheapo stuff, either (the food dye alone makes me want to gag for them) I wish there were some sort of budget-friendly homemade food I could make for them. . . .

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