If you had a mortgage (or other debt, or just good secure investment opportunities, like one's RRSP), which would you do:
(This isn't a poll because I'd rather hear your reasons than tally opinions)
1) Keep an emergency fund
2) Pay whatever excess funds you have into your mortgage//RRSP and have a line of credit for any emergencies
I'm siding with #2 as long as you are assured that your line-of-credit won't get cut back in the event of a major emergency. I think of #1 as a guaranteed loss of growth to protect yourself against what is supposed to be an unlikely event.
If you choose to do #2, you're spending your emergency fund frivolously, you're just optimally allocating it. If a real emergency hit, you could withdraw on it (maybe not instantly, but if you racked up debt against your secured line of credit, you could just repay it when you renegotiate your mortgage, right?)
Any comments?
(This isn't a poll because I'd rather hear your reasons than tally opinions)
1) Keep an emergency fund
2) Pay whatever excess funds you have into your mortgage//RRSP and have a line of credit for any emergencies
I'm siding with #2 as long as you are assured that your line-of-credit won't get cut back in the event of a major emergency. I think of #1 as a guaranteed loss of growth to protect yourself against what is supposed to be an unlikely event.
If you choose to do #2, you're spending your emergency fund frivolously, you're just optimally allocating it. If a real emergency hit, you could withdraw on it (maybe not instantly, but if you racked up debt against your secured line of credit, you could just repay it when you renegotiate your mortgage, right?)
Any comments?