Hey, I just met you, and this is Lazy... get these fast finance fixes and mail me, maybe?

Why I don’t have an Emergency Fund

Written by

Before you shoot me for the title, I do need an emergency fund. In fact everyone needs to have one. However, I had one that's a little non-traditional. Of the people that have emergency funds, it seems like most have them in bank accounts earning very little interest. Some of them are smart and get an account like an ING or Emigrant Direct that pays a much higher interest rate. I can't argue with that plan, but I chose to go a different route.

I set up a Home Equity Line of Credit (HELOC). I've tapped into it from time to time and it's hurting me a bit to pay 8% on the loan. However, I'm making about 19% (16% after adjusting for risk) on my Prosper account. I'd make 8% by simply borrowing more from my HELOC and lending it out on Prosper. With Prosper being new and somewhat unproven, I've decided to hedge my bets and split my money between paying off the HELOC and lending out money.

Back to the HELOC as an Emergency Fund. I think people generally tend to be in the "emergency state" for 6 months and typically they are very rare. If I can earn better than 4-5% more on a 6 month safety cushion than I can in a high interest bank account, I think I'll come out far ahead over 30 years.

Last updated on October 5, 2015.

This post deals with: ... and focuses on:

Best Ideas, Money Management

Don't forget to these five minute financial fixes to save thousands!

One Response to “Why I don’t have an Emergency Fund”

  1. […] shouldn’t have much money in cash at all.  Check out Lazy Man and Money who explains “Why I don’t have an Emergency Fund.”  Lazy Man uses his HELOC as his emergency fund.  I think if you look at the math of Lazy […]

Leave a Reply

Your email address will not be published. Required fields are marked *

Previous: Free Red Sox ticket
Next: Prosper Payment Late
Also from Lazy Man and Money
Lazy Man and Health | MLM Myth | Health MLM Scam | MonaVie Scam | Protandim Scams | How To Fix | How To Car | How To Computer