Most Americans can't afford a $1,000 emergency expense

It does make sense to pay down the credit card debt first, almost always. The interest rate on cc debt is so high that it should almost always be your first choice. And you CAN consider it as your emergency savings. If you owe $10,000 on credit cards, paying $200/month just in interest, and you manage to whittle that down to $8,000/$160, you are much further ahead than if you stayed at $10,000/$200 on the credit cards and went to $2000 in savings earning maybe $10 a month in interest. If you suddenly need $1000 for an emergency, and use your credit card, you're back at $9,000/$180, still ahead on your credit cards. And you continue working on the credit cards until you've re-couped the emergency spending, as well as even more of the original debt.

Savings less debt is the same figure, regardless of where the debt is owed and the savings are held. The bottom line is what you need to address (again, with a few exceptions). Therefore, your best bet is, when you're in a "negative equity" situation, you're in debt. The first move is to eliminate the debt with the highest interest rate first. It, in effect, begins to earn interest for you at that interest rate, tax-free.

 

Ah I see. I've been pondering my financial strategies re: 401k these days as well...

 

$1,000? Yeah, not happening. With $1,000 I could get my vehicles working, collection action stopped on my medical equipment, and possibly go to the doctor to get my medications refilled.

I have a friend, 26, who has two years (yes, years) worth of funds, in that if he lost employment he could pay his bills and maintain his standard of living for two years. He's going to school to be a hedge fund manager, go figure.