another look
In a recent column, Liz Pulliam Weston, of MSN money (a regular read of mine) advised that retirement comes before paying off credit cards, which comes before an emergency fund.
First of all, how timely! I just got finished griping two days ago about not knowing how to prioritize my goals for the little money I have.
Secondly - how contrary! Everybody and their mama wants to talk about the emergency fund coming first and foremost. Then again, everybody and their mama has different situations and priorities. On the real, I get that, because if something goes down, it’s nice to know I’ll have at least a small cushion before I’m forced have to start getting myself into more debt. Having an emergency fund is great! But seriously, Ms. Weston says that retirement comes first because for every time you don’t invest for retirement, you lose money. Even in the short time since I’ve been hosting this blog, I’ve said that numerous times. It’s true. But it still is interesting to see her put the emergency fund last.
I understand the reasoning. Theoretically, I can afford to use my credit as an emergency cushion if I need to, without worrying, provided I’m not already in too much debt. I think for someone with my level of debt in proportion to resources, that’s not quite true yet. But I can make it true, if I make my consumer debt go away.
If I were to follow this reasoning, then paying myself first (as is often advised) would really mean paying my FUTURE self first - payroll deductions for the 401K before my pay even hits my account. (I’ve noticed, by the way, that most folks with a positive net worth have a lot of retirement assets.) Then I would knock out as much debt as I can. Once that’s gone/under control, then I can start beefing up the emergency fund. Actually, that is already the plan, pretty much. But I gotta fit the house in there somewhere, and the wedding, too. Hmm? How ’bout this hierarchy of priorities for my discretionary income?
retirement|debt repayment|house and wedding|spending account so i can be cute|emergency fund
How’s that sound?
