[...] 7 Personal Finance Planning Tips from Millionaire Money Habits. [...]

[...] 7 Personal Finance Planning Tips @ Millionaire Money Habits [...]

First off, congratulations on taking control of your finances. It sounds like your on the right track.

I’m not qualified to give financial advice, but I can tell you my opinion of what I would do if I were in that situation.

First, it kind of depends what the rest of your finances look like. However, I normally am a fan of becoming debt free, but because of the low interest rate, you could be better off taking advantage of the time value with investing so you can capitalize on compound interest. But than again, $250 sounds like a lot of money for a car payment.

The way I see it is you want your emergency fund should be in a liquid, fixed-income account. Anywhere else and your money is either:
a) in a more risky vehicle, which means your $5k could be worth $3k when you are forced to cash it in when you desperately need it.
b) you never know when an emergency is going to happen and don’t want to have any difficulty accessing your money when you need it.

You can use a line of credit if you have the discipline to pay it off, but what if:
a) you need the cash because you are laid off from work and can’t get a job for 8 months
b) you have a $10k medical bill and need to use your $5k + an your line of credit

I’m totally satisfied with having cash sitting in the bank because it is insurance, and that has a lot of value. It’s also money that allows me to take advantage of big dips in the stock market or other investment opportunities that come my way.

Hope that helps a bit.

Ryan

I’m doing a few of these tasks, but not all of them I had a few questions hoping you could give some advice:
1. I have a car loan that I’m still paying off at a rate of $250 bi-weekly, it’s for about 13k left, the car is worth about 16-17, should I try to pay this debt off faster? I see it as a lease/financing option, however I can pay it off faster. It is however a personal loan from a family member with very low interest.

2. Emergency fund, how important is this, should it be actual money just sitting there for an emergency, or should it be savings that can be diverted in case of emergency, it would seem to make better sense to get a higher return on 5-6k instead of leaving it in a low interest rate 3% etc savings account. Is using a line of credit as an emergency fund a bad idea? I’m in a field where the job market is very easy to move around in, with no dependents, i don’t forsee any big emergencies anytime soon.

the rest i’m doing.

thanks i enjoy your blog.