People make lots of financial mistakes for psychological reasons. Keeping needless credit card debt because it “feels good” is precisely the sort of bad decision making that a finance community should discourage. I once had a friend who had $12k in her checking/savings but kept $10k of debt on her CC. Why? Because it “felt better” to see $12k than $2k. It was a small monthly bill, but over the course of a decade, she had paid almost $10k in interest.
But as I’m writing this, I think I thought of a better reason to prioritize a small emergency fund: avoid payments bouncing and overdraft fees. So maybe a small fund is justified for that separate reason.
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I am NOT saying don’t pay your bills! I am saying cancel it if it’s truly non-essential. Phone and internet are essential (that flowchart is weird for calling phones non-essential), but people can live without cable and Xbox live until they’ve paid back the worst debt.
I feel that’s why the flowchart says up to $1000 (I’d personally discard one month of expenses). But you’re also right that it allows you to manage your money without risking quite a bit of fees.
I also agree with you on the cancelling your bills part. I’d even push it further as a cellphone can be replaced (with free voip apps like fongo/textnow) and you can use your library/local mcdonald’s internet if your really in a terrible spot.
I agree, I also find it very complicated. I’m working on an updated version for this community, but I realise it’s quite hard to nail, both in term of content and of design.
Merci pour le commentaire. J’avais créé ce pseudo spécifiquement pour r/personalfinancecanada, puis c’est devenu mon identité principale sur reddit.
People make lots of financial mistakes for psychological reasons. Keeping needless credit card debt because it “feels good” is precisely the sort of bad decision making that a finance community should discourage. I once had a friend who had $12k in her checking/savings but kept $10k of debt on her CC. Why? Because it “felt better” to see $12k than $2k. It was a small monthly bill, but over the course of a decade, she had paid almost $10k in interest.
But as I’m writing this, I think I thought of a better reason to prioritize a small emergency fund: avoid payments bouncing and overdraft fees. So maybe a small fund is justified for that separate reason.
—-
I am NOT saying don’t pay your bills! I am saying cancel it if it’s truly non-essential. Phone and internet are essential (that flowchart is weird for calling phones non-essential), but people can live without cable and Xbox live until they’ve paid back the worst debt.
I feel that’s why the flowchart says up to $1000 (I’d personally discard one month of expenses). But you’re also right that it allows you to manage your money without risking quite a bit of fees.
I also agree with you on the cancelling your bills part. I’d even push it further as a cellphone can be replaced (with free voip apps like fongo/textnow) and you can use your library/local mcdonald’s internet if your really in a terrible spot.
Yes I think you’re right. I think I’ve come halfway and softened on my criticisms of this flowchart somewhat.
I suppose I also think that, from a graphic design standpoint, it’s overly visually complex. I might try my hand at something more straightforward.
Au fait, j’aime bien ton nom d’utilisateur. Il correspond bien à cette communauté.
I agree, I also find it very complicated. I’m working on an updated version for this community, but I realise it’s quite hard to nail, both in term of content and of design.
Merci pour le commentaire. J’avais créé ce pseudo spécifiquement pour r/personalfinancecanada, puis c’est devenu mon identité principale sur reddit.