pay off debt app

I Paid Off My Debt with My Emergency Fund + iPad Mini Giveaway

Here’s a question I get asked a lot: “When is it okay to use your emergency fund?”

And I usually respond with something vague and unhelpful like, “It depends.” But really, an emergency fund is just for that: an emergency, a life-or-death situation… or at least a serious, unforeseen event where cash would get you out of a serious jam.

Well, last week I went against all conventional personal finance wisdom: I dipped into my emergency fund to help pay off a portion of my student loans.

Why I Used My Emergency Fund to Pay Off My Debt

For me, I’ll never be comfortable with student loans. Debt makes me anxious and limits my opportunities in life. And that’s why I pledged to use all of my extra income toward paying off my student loans, regardless of other financial opportunities I’m missing out on.

But using my emergency fund to pay for my debt? Did I go too far and break my own rules?

I don’t think so. In fact, I consider my debt to be a financial emergency.

One of my favorite blogs, Mr. Money Mustache, puts it best: “Debt is not something you ‘work on’ … it’s a HUGE, FLAMING EMERGENCY!!!

So I did what any sane person would do in a financial emergency: use my emergency fund. Granted, I only took out $600 from my emergency fund. Not a huge deal. But that $600 was the difference between paying off my debt by the end of the year or still having student loans in 2014.

To me, the decision was a no-brainer. But to a risk-averse, emergency-fund loving personal finance fiend, it might seem blasphemous.

What Would You Do?

How you choose to use your emergency fund largely depends on your definition of an emergency.

Maybe Mr. Money Moustache and I are the only ones who would use an emergency fund to pay off loans. But his reasoning resonates with me, and when he describes debt as a killer swarm of bees, it’s exactly how I feel when I look at my student loan bill:


I’m curious to know if you would do the same. Would you dip into your emergency fund if it meant you could payoff your debt faster?

Enter the Pay Off Debt iPad Mini Giveaway

pay off debt app

Whether or not you decide to use your emergency fund to pay off your debt, it’s important to track your debt progress so you can stay on target. That’s why I’m excited to share this new debt management app with you … and give you all the chance to win an iPad Mini 🙂

My blogger buddy Jackie over at The Debt Myth just launched the Pay Off Debt App – the perfect, portable debt management system for anyone who’s in the process of paying off a credit card or student loans. And what better way to use the Pay Off Debt App than on a brand new iPad Mini?

You have tons of opportunities in the raffle below to win the grand prize. And anyone who’s a fan of The Empowered Dollar on Facebook gets an easy entry!

Good luck, and happy debt paying 🙂

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9 thoughts on “I Paid Off My Debt with My Emergency Fund + iPad Mini Giveaway

  1. Debt Blag

    I always say that having an emergency plan is more important than picking some number. If there are other things you can do to mitigate an actual emergency — like having up-to-date health insurance or rolling over a lot of paid time off — then dipping into it or even cutting it more permanently isn’t a terrible thing.

    1. Stephanie Halligan Post author

      I agree. And so longs as “dip into” your emergency fund and not “obliterate” it, I think it’s okay 🙂

  2. Katherine

    We have been sorting out a lot of this lately and the tradeoffs are endless. We’ve got a combined student debt load of ~$88k, and we have one more Master’s left to earn, among the two of us. We otherwise carry no debt. I’m paying 150% of the required payment on my consolidated loan and my wife, a teacher in low-income schools, has an IBR agreement. She’s paying 6x the minimum payment for her income. In 5 years, she’s eligible for partial debt forgiveness because she’s a teacher, and in 9 years the IBR program will forgive the rest, but we want to have as little debt discharged as possible, because everything that’s “forgiven” is taxed as income the year it’s discharged. And being in debt to the Department of Education is way better than being in debt to the IRS.

    We are still building our emergency fund up to 6 months of our current expenses (halfway there!). Until then, we’re happy with our current student loan repayment strategy. After we get to that milestone, we may decide to pay down a big chunk of student debt. Or start a savings fund for baby expenses!

    1. Stephanie Halligan Post author

      I’m blown away by your super thoughtful approach, Katherine! That really is the key to paying off your debt and weighing the trade offs: knowing your priorities and calculating the possible gains. As long as you’re comfortable with your emergency stash and your debt repayment strategy, that’s what matters!

      And congrats on a 3 month emergency fund already 🙂

  3. Candice

    I think it’s important to have an emergency fund – and usually I stick to that rule. However there was a time when we were so close to making our last car payment that I dipped into to finish off the loan and payed it back to my emergency fund within a month.
    If you are comfortable with what you have saved for an emergency fund and you can eventually build it back up, I don’t think there is reason for concern.
    Sometimes it makes you feel better about your situation to make that extra payment to debt rather than saving for a rainy day.

  4. shanna

    I think that it is important to have an emergency plan and fund. I think that if you benefit more in the long run by paying off a portion of your debt or even all of it, then that is wonderful. Besides, can you really put a price on an emergency? Will you only need a hotel room due to a home repair? Could it be the loss of a job or an unexpected bill or something huge? Will you need to cross the country on foot to avoid some terrible something some unknown fear? Hey, I am just reaching here but I think that as long as you have something and try to maintain a solid plan that a temp. borrow is alright!


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