How To Sustain Your Emergency Fund Even When In Debt

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Sustaining an emergency fund may be the last thing that comes to mind when you are in debt. Most people would utilise the fund to pay off the debt. However, most experts would say that it is still wiser to keep away a fixed sum, sufficient to cover any potential emergencies for the next three to six months. To do so while in debt could be challenging, but with these quick tips, it would be more manageable to pay off your debt and build your emergency fund at the same time.

Consider the possibilities of creating an emergency fund

When thinking about emergency funds, the most basic form would be having some cash stowed away. However, while in debt, it would be unlikely that you have extra money on hand unless you have taken up a Singapore payday loan. As such, consider creating and sustaining an emergency fund early.

One way to create a safety fund would be to open a small savings account. Each month, be sure to deposit a portion of your savings until the account holds a substantial amount. After attaining that goal, let this account be untouched. This means, avoid using it and only access the account in the event of urgent emergencies. If possible, utitlise other savings you have on hand without needing to retrieve from this savings account.

Have a designated credit card for emergencies

Having a card that you only touch during emergencies could steer you away from greater debt. However, if all your credit cards are in debt, you need to come up with an alternative savings plan.

You could start by allocating 5% of the sum you put towards paying your credit card debt into savings. For example, if you pay $600 towards your monthly credit card balance, you can aim to put at least $30 into your savings as well. Then, in a few months, you would have saved a decent sum whilst pay off your credit card debt.

If you have multiple credit card debts, an alternative is to consider looking into Singapore consolidation loans. Depending on the terms, this could simplify your debt repayment process and reduce your interest payments.

Staying motivated while paying off debt and keeping an emergency fund

Although it might not seem significant, staying motivated during trying times could aid your journey in paying off your debt. Debt may not be the best position to be in, but you could get out of debt with the right mindset and payment plan.

Instead of focusing on the lack of an emergency fund, direct your energy towards learning to build one. Having a comprehensive savings account that matures and gain interest could be a better option than allowing the sum to be simply stored in the bank.

Another way you could keep yourself going would be to set concrete goals. Perhaps draw up an empty chart and indicate the sum you would like to pay back in the next six months, in the next year, as well as set a deadline you wish to clear the debt by. As you gradually pay off the debt, you can gain a sense of accomplishment in filling the chart. Also, not forgetting that paying off your debts successfully can improve your credit score.


Having debt on your shoulders can be overwhelming. At the same time, creating and saving for an emergency fund may sound like added stress, but it relieves pressure in the long term. That’s because with an allocated sum as your safety net, you would be ready for emergencies, able to take a breather as you pay off your debts and improve your credit score.

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