@Singleguy – that’s really cool that you could help your friend!

@Fiscal Musings – that is exactly how we run our retirement savings. We “pay ourselves first,” then figure out where to get our daily expenses from. You don’t even miss the money.

@Frugal Dad – I halved my premiums by raising the deductible. Insurance companies are a racket, if you ask me. If I had enough money, I wouldn’t have insurance – I read that in California, if you put a deposit in to the state, you can skip insurance. And homeowners and life insurance would not be necessary if I already had the cash.

@Adfecto – In our house, the emergency fund is only for emergencies. It really depends on how tight your budget is – you might want to rework your budget to include items like clothing or textbooks, as these are recurring expenses. Things like the air conditioner stopping working, the fridge not working, or the car not having brakes constitute an emergency in our household.

We have one credit card that is only in case one of us dies or a tornado hits or something. That would be a true “emergency” and the only reason we would use a credit card. I know, I know, I’m missing out on tons of points and cashback deals, but I know how I am and I need things simple right now.

If it is a relatively minor expense that we would have no problem paying for in full over the course of the next month with our regular cash flow, I don’t mind putting it on one of the credit cards as long as it gets paid off by the end of the month. But I try to always go to the savings first as to not get into the habit of using the cards.

If you’re having trouble deciding between a real emergency and just discretionary funds, you may want to set up a second savings account for those items specifically. It doesn’t have to be nearly as big of a savings pile, but having $500 bucks on hand for a few pair or shoes, a fun night out, or other non-emergency type items that often come up.