HELP!I'm pouring my heart out here, need advice!*Updated 6/12/07*

[aka-mad4themouse]

Do Not Touch That CC!
You have $1000 in the emergency fund, tap into it! That's why you have it.

You have bonus money coming this month, use it to cover what the emergency fund doesn't. If there's anything left, put it back into the emergency fund.

When next month's bonus comes in, use it to bring the emergency fund back to $1K.

The very last thing that you want to do is add to your CC debt by charging these repairs. Pay the cash. I know it hard to do but you'll be better off in the long run.

 

[tar heel]

Definitely use the emergency fund.

I want to mention another issue because a transmission is a large repair. I am assuming you are getting it rebuilt. Is the person doing it someone with a lot of experience in transmission work? Is there a warranty? If one hasn't been offered, please ask for one. I replaced the transmission with a rebuilt one in my old van -- expensive, but we drove the van for almost 4 more years!

My current van's transmission is leaking fluid but still running okay. The transmission guy (someone who does only transmissions and has an impeccable reputation) doesn't see any reason to replace it until it's really broke, though. I have to make the decision of whether to get a new one with a three-year warranty ($2,400) or a rebuilt one with a 6-month warranty ($1,600). I'm leaning toward the former, but it's a huge amount of $ -- a lot less than $500 a month for a payment, though.

 

[jeancbpugh]

The local dealership (Pontiac) told me I had to replace my van's transmission last November...to the tune of several thousand dollars. I didn't do it. The van is running fine.

Perhaps a second opinion is a good idea when it comes to a repair of this magnitude.

 

[shades]

deleted

 

[tink2dw]

Always Pay Cash 1st 2nd and Last

Always pay cash, you have it now use it!! Save the credit card for the emergency when you have NO cash anywhere in sight. And believe me! You can even get thru those with out a Credit card. I do it all the time.

Then commit this to memory- If there is Extra Cash the kids WILL get sick, the car WILL breakdown, and the beloved pet WILL almost die only to saved by the VET and all WILL cost major Dollars to fix. Thats why we count our blessings,cuz we have no dollars left.

 

[stemikger]

I just had a minor set back myself and used my credit card. However, when the bill came I paid it in full. I have a emergency fund but in this instance I preferred to do it this way. I love Dave Ramsey, but I think you should have one credit card and a FICO score. The trick is you always have to pay it off in full. If you can't pay it off in full and you have an emergency fund, I would use the emergency fund. I have always used my credit cards as an emergency fund and I have been living like this for 20 years and it always worked out. There were sometimes I didn't have an emergency fund and couldn't pay the card in full, but I paid it off as fast as possible. Also, don't use the credit card for anything else. I use it for emergencies only. And only have one card.

I believe that if you are disciplined a CC is not the evil that Dave says it is. However, if you aren't then they are to be avoided the way he teaches.

Dave sometimes talks to everyone like they have no control, but there are people who do and as long as you can pay that bill in full, I don't see anything wrong with it.

 

[Debbie]

I have been following this thread since the beginning, and I am so proud of all that you have accomplished. While you have been making inroads, you have inspired ME, too, as well. For the first Christmas in a lot of years, I am on track. Thanks.

Now, for your vehicle.

Use the emergency fund. That's why you have worked so hard to have one....and it looks like the bonus will rebuild that fairly quickly.

Congratulations on a job well done! Don't panic, just deal with this setback calmly.

 

[mickeyfan2]

Whatever way you get it repaired, make sure it has a warrenty. I would use the $1000 emergency fund and then put the rest on the CC. Pay the CC off with the first check and put the second back into the emergency fund.

 

[luvthatdisney]

Stemikger~

You are correct - if people are disciplined with their credit cards then using them and paying them off quickly would not be a problem.

However, the OP has given her cards to her Dad so in my opinion she does not have the discipline needed to use the cc's in that fashion. They have saved up the emergency fund for emergenices - so I think she should use it. This does qualify as an emergency!!

Kudos to those of you that have the ability to manage your cc's to pay them off every month. I unfortunately cannot seem to do that. And I know there are many others like me. This time of year it is the worst - but I am determined not to use the cc's at all this year for Christmas!!! I would not be in this position had it not been for Dave Ramsey. He is definately a godsend in our lives!

Magic~ you and your DH ultimately need to sit down and talk about what your priorities are - if not using the cc's is a priority for you - then I say dont use them in this instance! Sometimes having to sacrifice a little makes you stronger! Hope everything works out for you - and you get that car fixed ASAP!! Just remember we support your decision whatever it is....

 

[Chicago526]

Use the emergency fund!!! I know it's hard to see the savings disapear, but it's only for a short time until you get your DH's bonuses!!!!

I also want to congratulate you on price shoping the repair. I don't know this for sure, but I'm willing to bet, a year ago you would have just paid the first, and highest, estimate for repair. You've done a great job getting quotes!

BTW, this exact senario is why I feel that DR's "$1,000" emergency fund is too low. When the topic comes up, I always tell people to shoot for $2,000 if they can. Since to goal is to avoid putting emergencies on credit cards, I feel $1,000 won't really cut it, since many, many emergencies often cost more than $1,000, as the OP has learned.

 

[shades]

Isn't the emergency fund rule - "at least 3 months of living expenses" saved? Once you can afford to live for 3 months on what you have saved - you can begin to save for luxuries. If you have to dip into your savings, then that money gets paid back and any luxuries are put on hold until you have at least 3 months living expenses saved up again.

 

[Chicago526]

Isn't the emergency fund rule - "at least 3 months of living expenses" saved? Once you can afford to live for 3 months on what you have saved - you can begin to save for luxuries. If you have to dip into your savings, then that money gets paid back and any luxuries are put on hold until you have at least 3 months living expenses saved up again.

3 to 6 months is the ideal, but while people are trying to get out of massive debt, it is often not possible to save that much. Most posters here are refereing to author Dave Ramsey's approch to debt repayment, which is to first start with a small emergency fund, $1000, then take all your extra income to pay back the debt as fast as possible, only using the $1000 for emergencies like the one the OP had, as to not increase the amount of debt. Only after the debt is paid off, does Dave say you should then work on fully funding the 3 to 6 months living expences.

 

[luvthatdisney]

MagicX2 - where are you - let us know what you have decided to do and if the repairs have started yet!!

 

[grlpwrd]

Yes, if people are disciplined with their credit cards then using them and paying them off quickly it would not be a problem, but the OP is not disciplined yet and/or hasn't reached that point yet..

I hope you used your emergency fund as many have already stated since that is its purpose.

Most of all please don't fall back into bad habits....

 

[MAGICX2]

I was in full out panic mode when I posted yesterday! I have since discussed all with my husband and we have decided NOT to use the CC. What was I thinking? This is an emergency, hence the emergency fund right?!DUH. Also, on the plus side, the mechanic (who by the way is strictly a transmission guy so he knows very well what he is doing) has agreed to let us pay $750 now, and the balance when DH bonus check arrives. He really is a very nice man. Then we will bring the emergency fund back to where it needs to be and hopefully plus some. I feel much better about the situation today. AND, Christmas shopping is almost done and I have not put one centon the cc's. I feel really good that we can live without the cc's and pay bills and buy groceries, and then (maybe) have a little something fun once in a while. You know what, my kids haven't even noticed the difference really. I am so thankful to everyone here. You are my support group, because my friends at work just don't get it. They are in the same boat I was two months ago. I keep preaching it, but as they say it's like preaching to the choir. One of these days they are going to get a real good wake up call like I did. I will keep you posted!

 

[disneysteve]

I have since discussed all with my husband and we have decided NOT to use the CC. What was I thinking? This is an emergency, hence the emergency fund right?!DUH.

Congratulations! Now you're getting the hang of this.

 

[luvthatdisney]

MagicX2 - I am so proud of you!!! It really makes you feel good when you can stand up and say I did it myself - with no help from a cc or Daddy!!!

Cash really does something to you! I hope you felt it! I'm sure your Dad is proud of you as well - this is really a big step IMO!!

 

[aka-mad4themouse]

Way to go!!! I think that you made the right decision, Magic. It will feel a lot better paying that expense off with cash than it will to pay another credit card bill a month from now. Keep up the good work. I think that with your determination, you're going to make it!

 

[nowellsl]

Great decision!!

 

[MickeyFan84]

I just started reading this thread last night but I have to join in with the others who say, "Way to Go, Magic!" You've made a lot of progress and your latest decision not to use the credit card shows that you mean what you say.

One comment on the car... Is this the relatively new car that you still have a loan on? Typically major systems like transmission have a longer warranty period than the 'bumper to bumper' warranty. Have you checked to make absolutely sure that this should not be covered under warranty?

Good luck on your road to financial peace.