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Old 06-05-2019, 06:30 PM   #17 (permalink)
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Originally Posted by Xist View Post
The scenario is that you already have credit card debt, so if you put money in savings, you will pay unnecessary interest.
The whole idea of putting money in savings--not a lot, but enough to float you through an unexpected expense--is that you then won't have to put that on your credit card when it inevitably happens and you have nothing on which to fall back, where it will generate more interest you will then have to pay. If you have another source of funding, like a family member willing to loan you money, good on you--but most people don't and would be well-served by putting something away even as they pay down their debt, as an insurance policy against unforeseen but likely expenses (of course, most people don't have the savings and aren't paying down their credit cards, but that's another story). Study after study has found that the majority of Americans don't have the funds on hand to cover a sudden $500 expense, which could easily happen to anyone at any time just due to the unpredictability of bodily accidents and medical conditions, car accidents, and weather, among other things.

You can say, those things won't happen to me because I pay attention and I'll see them coming and plan for them. But you can't plan for your appendix rupturing or someone rear-ending your car at a stoplight or a wind storm tearing up your roof. Those things come out of nowhere. (Well, actually you can plan for them--by putting away a little money just in case).
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