I am a typical Indian "good son" living in California with parents and in-laws in India. My wife and I are the first generation on both sides to be living outside India and in a financial position to support our family still living there. We are both 31 with a decent income.
Both my parents and my in-laws did not have enough savings for retirement and a house, so being a good son and daughter, we helped them to build their homes. The total bill was around $55K. Now we are extremely low on cash savings for emergencies, and we cannot mention this to our parents (and it wouldn't solve much, either). Currently, we are investing about $10,000 a year in a 401(k), and we bought a house two years ago that has earned us about $125K of equity. But both of those possible sources of money are what we consider our nest egg, so we can't count on those for emergencies.
Unfortunately, we have also been hit by infertility treatment bills and are now expecting $15,000 to $30,000 worth of treatments. I am counting on lifetime low-APR credit card balance transfers for these. This is stressing me out. I am trying to save up aggressively to accumulate enough to pay off the balances, but it's slow with all the mortgage payments and medical bills and three families to support in India.
Please tell me -- what should I do? Am I on the right track?
--Behind the Eight Ball
Dear Behind the Eight Ball,
Though you've had a number of financial challenges, in many ways you are far ahead of most of your peers. In what ways? You're saving for retirement, are uncomfortable with credit card debt, and are actively concerned about establishing an emergency fund. You can also be very proud of your contribution to your larger family's well-being, though I know this has strapped your personal resources. All of that spells out to me that you are a highly responsible person and one who is sure to come out on top in the end.
In the meantime, you'd like to know what you can do to get yourself back on more firm financial footing and to save for future emergencies. Here are some things to consider:
- Playing the 0% balance transfer game with credit cards is a good strategy to try and avoid interest payments while you are chipping away at the balance. You have to be vigilant about dates, taking care to transfer balances at the right time, but if you can stay on top of it all, it can be an effective way to manage debt short-term.
- If the 0% balance transfer game doesn't work for your purposes, you may consider taking out a home equity loan to pay off the balances on your credit cards. You'll want to check and see if the interest is tax-deductible, a possible perk.
- In an emergency, you could certainly cut down on the amount you are saving for retirement, though this is a last resort. If your employer matches your contributions, you would lose out on free money, plus you'd end up paying income tax. If you're in the 25% tax bracket, for example, that $10,000 you currently sock away would dwindle to a mere $7,500 after taxes.
- If you have flexible spending through your employer, check to see if fertility treatments are eligible for reimbursement. If so, when it comes time to designate your flexible spending limit, you can factor in those treatments and have the money taken out of your pay before taxes.
- Get creative when trimming your budget. The small daily savings can really add up.
The most important thing, emergency or not, is to stay focused on your goals, which it sounds like you have done. Keep socking away as much money as you can; few people ever regret saving too much.
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Fool contributor Elizabeth Brokamp is a licensed professional counselor who regularly talks money with her honey, Robert Brokamp, editor of The Motley Fool's Rule Your Retirement newsletter. To get your money and relationship questions answered, send her an email .