Chapter 2 of 5
The Emergency Fund Dilemma
Debbie has $3,200 in savings. Her car needs $1,800 in repairs. Should she drain her emergency fund or put the repair on a credit card at 22% APR? She models both paths — and discovers a third option she hadn't considered.
Key Insight
The credit card costs $396 in interest if paid over 12 months. But draining the fund creates a 4-month vulnerability window. The optimal path: pay $900 from savings, put $900 on the card, and rebuild to 3 months within 90 days.
Model This Scenario