Throwing extra money against your consumer debt is a very good thing to do.  (The credit card companies hope that you don’t do this, because it allows them to charge you interest for a really long period of time, sometimes over a decade.)

So if throwing extra money at your debt is good, throwing more extra money is better, right?  Yes, but up to a point.  If you throw every last spare dime you have at your debt, it drains your bank account, and you’re left with no cash if the car breaks down, if you have a debilitating toothache, if your roof springs a leak, etc.  You have no emergency fund, and out come the credit card again, with an increase in your balance soon following.

The moral:  Build up an emergency fund so that if you need to shell out $500 or $1,000 for an unexpected expense, you have it to spend.  Building this up will slow your debt reduction, but the peace of mind is worth it.

• Welcome to a windy and rainy Carnival of Debt Reduction We're in hurricane season, and early last week there were five named Atlantic storms on the map:  Gustav, Hanna, Ike, Josephine, and Karina.  Hanna is flying up the east coast of the United States as I'm putting this Carnival together. Thankfully Hanna wasn't much where I was on Saturday but......
• Flashback: Have a plan for your debt-free life Savvy Saver hosted Carnival of Debt Reduction #35, and this week's flashback comes from Debt Sense: Once the bad debt's gone, then what? What a great question to ask! It's so easy to get immersed in the debt reduction swing of things that once the debt is gone and there's......

• Pay Off Debt or Save Money? Photo by db*photography A recent Yahoo! Finance article weighed the benefits of paying off debt versus putting your money into savings.  You can read the original article by clicking on the following link: Should You Pay Debt Before Saving? Clearly, there is no one-size-fits-all answer to the question.  The......
• Reluctance to Use Emergency Funds The first step in any good financial plan is to establish an emergency fund to handle life's emergencies and break the cycle of turning to debt. However, some people feel a reluctance to use the fund in an emergency and turn to credit cards to cash flow each bump in......