I've read about six books from front to back now on the topic of personal finance.
I'm surprised how infrequently the experts have anything close to the same opinion. They really are divided on a number of issues. I was surprised to see that I had formed some of my own. I normally have quite a few, you see, but I wait to form anything strong until I've educated myself some more.
The Emergency Fund
Suze Ormand says no emergency fund until all credit card debt has been paid off. I disagree. I feel that I have a good reason to disagree; my husband has been laid of twice in the last year. He was working in leasing and estimating for the construction industry and down here many people have lost their jobs. Both times we had enough money saved that we were able to pay our bills until he found another job. Unemployment helped a lot, too. Without that savings we would have been screwed and even deeper in debt.
Ms. Ormand also says that your emergency fund can temporarily be credit cards. She also suggests that once all your debt is paid off, you apply for as many cards as you can until you have about eight month's worth of income available as your limit. Then you don't use them unless you need them. This would be a recipe for disaster in our family. I would imagine that most people would be the same way. Like telling an alcoholic, "Hey, I know you aren't going to use this alcohol unless it's a real emergency--maybe a buddy loses a leg and you need to cleanse the wound--but you should have enough laying around anyway." My name is Lizz and I have a problem with credit cards. Therefore I have a bare minimum. And some would argue that you don't truly need any.
One of the authors, I think it might have been in the Automatic Millionaire but I'm not sure (I returned the books I had read as soon as I read them--I'm awful about late fees and am trying to change that), suggests that you should not stock up on things that you use. You should instead use the money you would have spent on these items and save it. Then, when you need it, you buy one of the items.
I never used coupons or anything like that until I came across The Grocery Game. It's been an inexpensive education that has really changed the way that I shop. We get razors, shaving cream, body wash, toothpaste, feminine products... you name it and we have gotten it for free or very very cheap. Name brand items that we use. At first I was so excited about getting free stuff that I "bought" a lot of things we wouldn't use. It didn't go to waste, however. My best friends have five kids so I cleaned out my stockpile and gave them lots of goodies.
Still, why would you pay $9.99 for a razor when you can get it for free? Or pay $3.59 for a cleaning solution when you can wait until they are B1G1 and then use coupons to get two for $0.27 each?
Yes, we're spending money each month on things we'll use in the future. It's not a "necessary item" right this second. And yes, we could be earning interest on that money. However, by doing things this way we've done amazing things to our grocery bill and we've saved thousands of dollars on things we needed anyway. (I kept a spreadsheet for a long time. I hit a thousand about four months into The Game.) I still have some items left that I bought last summer when they were dirt cheap. Do razors spoil? No.
The author suggested that having a closet full of toilet paper isn't the best use of money. I suggest that the author has never found their favorite uber-expensive TP on sale of twelve cents a roll. (The one brand loyalty we have is to Charmin.) It's a definite "need" item and paying the normal price is crazy.