I know most personal finance experts recommend that you have an emergency fund. I never really felt concerned by that for several reasons.
First, because I have always been pretty reasonable with my finances. I always saved a lot, and during any given month, I could just have stopped saving and used that money in order to fund an emergency. This is not true now that I don’t have a steady paycheck, and some months are very lean income wise.
Then, because I am messy. I never had sub-accounts for this or that, nor a holiday or car replacement fund. All my savings were in one place, and I dug into them at any given time. Again, it worked because I am reasonable with money.
And last but not least, I can’t stand having so much money earning me a ridiculous 1% per year in interest! I always think that I am losing so much by not investing it somewhere more lucrative!! Every time I have over $5,000 on my bank account, I start thinking about where that money should be allocated to bring maximum return.
So far, I have been very lucky, and I have never had such an emergency that I couldn’t face it. Should it happen, I would use the bank of mum for a few months, then pay her back when my CD expires or with my rental income. I could also charge my credit card and for once, pay interest for a couple of months or take advantage of the 50+ days zero interest credit. It wouldn’t make financial sense at all to use my 19.9% credit card for an emergency if I just used the cash I had to invest at 8% or pay my 7% loan like I did last time. In July, I received $5,000 from several sources of income and couldn’t have it sit on my account for more that a week, so I paid part of my 7% loan. The feeling was amazing, I saved 10 months of repayment and about $500 in interest. So if I have an emergency this month and end up paying $20 on my credit card in interest, I would still consider it worthy. IT IS A RISKY BUSINESS!! Definitely not for everyone.
I know it’s bad and all, but that is the way that has worked out for me. Mainly due to the lack of emergencies, since I don’t have a car, or kids, my flat is 3 years old, and I am healthy. Knowing that my mum has a huge emergency fund helps too, I would NEVER ask for money for anything else than a real, terrible emergency, but I feel like I’ve got my worst case scenario covered, and now is the time to take more risks with my own money.