Want Debt Relief? Start an Emergency Fund Now!

Getting out of credit card debt is a tricky thing because most people are not in the type of financial situation in which they can afford to pay cash when emergencies arise. Instead, when people are paying off credit card debt they tend to get themselves in a pickle when an emergency arises and they can't pay. After all, when every available penny is going to paying off debts it is hard to have money left over. Here is the rub, in order to pay off your debts, you need to save some of that money you were going to use to pay off your credit cards.

This is how the general scenario works. Susan has been trying to pay off her credit card for the better part of nine months and using all of her income beyond her budget to pay even more than she has to. This has been working great and Susan has been able to pay off $1,000 more than she originally would from just paying the minimum payments. Then, disaster struck. Susan's car was totaled by a hit and run driver and she owed more than the car was worth. To make ends meet and buy a new car all of the extra money she paid plus some of the other payments were for not when she had to use her credit card to make ends meet.

Now Susan is right back where she started from because she prescribed to a very often used and ill-informed approach to paying off debts. What you must know is that you need to start an emergency savings fund before you can truly start to pay off your debts. It sounds silly, saving money while trying to pay off debt seems like you are still missing the point, but you are doing exactly the opposite.

Instead of using your credit card, like Susan, when you have an emergency you can dip in to the emergency fund as if it were your credit card. If you are thinking that this is great, but where are you going to get a quick $1,000 from there are a few possibilities.

First, you could possibly use an upcoming bonus check or birthday money as a way to jump start an emergency fund. If this is not possible you could simply put back a little bit of your paycheck every month and start saving as you are eliminating debts. Even when you have the lump sum approach it is a good idea to contribute more to your emergency fund every month.

This type of scenario plays out every day across the world and the failing of the "pay it all approach" is much akin to having dessert while you are on a diet. One dessert starts the dominos falling and before you know it, another new diet will be starting any time. Don't jump from one plan to the next, start an emergency fund and payoff your debts as soon as possible.