If you do not have an emergency savings account that can cover up to at least eight months of living expenses, you need to get very serious about funding that account ASAP.
To come up with the money for your savings fund, I want you to just pay the minimum on your credit cards, nothing more. Will that hurt your FICO score? Well, only if the credit card companies lower your credit limit or close down you cards altogether. If they do not close you down and you are not charging any new items on them and you keep paying the minimum due on time, you should be okay. But there is a chance that even if you do the right thing, your FICO score could be hurt.
I want to be very clear: I still believe getting out of credit card debt and making sure your FICO score is as high as possible is incredibly important. For those of you with a fully-funded emergency account, please make it a priority to pay off any credit card balances as soon as possible. My new advice is solely for those of you who do not have an emergency savings account or have too small of an account. The single most important action to take in this severe recession is to build savings so you and your family will have money to cover your basic necessities if you no longer have an income coming in. As you have heard me say before: Hope for the best, prepare for the worst. And right now we all need to be redoubling our preparation efforts.
More recession rescue advice from Suze Orman