I guess these are the factors I see in choosing to empty your savings to pay off credit.

1) paying off credit cards frees up cash - that you can use to for day to day life. very good.

1a) empty CC - gives room in an emergency

2) if today you pay off your credit card and tomorrow you have to buy tires ( 600.00 for my car) how many months would you take it you to pay it off? one or two - a good deal. three or four, then the odds maybe be that you need to leave an emergency amount in savings.

here is my new thought based on the idea that too much credit card debt is bad, but a small amount of revolving credit might help you in the long run. sort of modified from the person Stephanie was talking about a couple of weeks ago and the stuff that is being suggested by David's friend.

assuming that you have a savings account - how much has it fluctuated over the last year? None - throw it all at your CC now, you aren't using it. But say it fluctuates by - oh lets just pick an arbitrary number- 4000.00 dollars - that's what should be in your emergency fund.

Trudy , DH wants to know, which captain Jack?

What fruits other than apple have lots of water and lots of fibre?

I think pears may be pretty high in fiber. They're certainly watery. And nummy.

Am I the only one who thinks Mike Birbiglia is cute as a button?

Why do I always forget what those are until I've clicked?

Heh. I mean, sorry. After I posted, I was thinking, "I hope everyone knows what Jack Chick comics are...."

His point is that risk can be calculated (in dollar amounts) and that your return (including the financial ability to absorb emergencies) is much, much higher with investments over savings.

This it probably true, but it is also true that a) am in an industry where pension plan contributions by the employers is the norm, b) that industry means I don't have quite as much freedom with investments as most people do because of conflict of interest rules, c) I will have other money coming in from elsewhere before retirement, and d) I am lazy and risk adverse.

I also have Mr. Kiplings' Mini apple pies, but that's beside the point.

Trudy , DH wants to know, which captain Jack?

Harkness. I've been practicing it. Apparently its gotten pretty good.

Yeah, again - I think he's probably got the numbers on his side, but "no need for savings - just tap into your investments" isn't actually all that practical for a lot of us.

My last post was xposted with David. In reading what his friend had to say, it's clear that he's defining "savings" differently than I was, and that we were arguing sideways. I have no problem with investing in any fairly readily accessible way instead of keeping cash on hand, although I'm paranoid and lazy enough that I don't do that. And I don't have any problem with having credit. Instead, I'm concerned with the increasing reliance on credit card credit, which is not practical or reasonable for non-wealthy people. Since, I don't think your friend was arguing for using credit card debt instead of saving, but for investing instead of saving, nebbermind.

Let me posit it this way, because this is something I personally understand better.

When you play the game of Monopoly you quickly learn that you need to buy properties and develop them in order to win. Because as much money as you stockpile, and as much as you generate a regular income by passing Go, you will quickly fall behind compared to investing your money.

There is risk involved in taking your cash and buying hotels. You have to be cash rich enough to do it and survive your costs. However, if you don't invest your money you will lose.

It's just that notion. That savings in that context provides an illusory sense of security. You have to make your money work for you.

Here's another angle on it: one of the inefficiencies in the market that money managers exploit is that people are fearful and don't understand how finance actually works. Savings is how people respond to their insecurity about not understanding finance.

Mind, I say all this as somebody whose finances suck. So, it's not like I've sorted all this out personally either.

But I think the principles of finance are logical, and how people feel about risk is not.

Here's another angle on it: one of the inefficiencies in the market that money managers exploit is that people are fearful and don't understand how finance actually works. Savings is how people respond to their insecurity about not understanding finance.

Oh, I understand how finances work. I may not always do what I should, or rather as much as I should (again, Lazy), but I do understand them. I also understand that having some extra money available in addition to having investments works for me indivdually because of other factors that other people may not have.

I wonder what the rate of return would be on investing in workers seizing the means of production and smashing the state....

I suppose the risk involved would be pretty high....