Is it still called an emergency fund if there isn’t an emergency?

The hardest part of my financial situation is the unfinished nature of where I am.

We’re in the middle of a really big project – probably the biggest project we’ll ever have – building our own home.  The problem is that it hasn’t been an easy build and we don’t have a big pot of ring-fenced money to complete it, we are pulling funds in from different projects as and when it is needed, which is a way of working that brings it’s own stresses.  Sometimes the funds are just sitting there, waiting to be used, but other times, alas,  cashflow is not our friend.

We also have a house/business which we would love to sell, but cannot shift at the moment due to the economic situation and the house market.  Sometimes this is good (when bookings are good and we’re pulling even) and sometimes this is bad (we don’t always pull even!).

All this means that we don’t have a rock solid basis to work from in terms of our debt.  We’re certainly better off than we were a year ago in terms of overall debt, and we’re generally moving in the right direction, despite having to constantly find more money.  But it’s hard to find an overall figure and say “yay!  We paid off £x.xx debt last year!”, when I know full well that there will be a huge bricklayers’ bill coming in in two months time which will set us right back.  Money comes in and money goes out.  We can never tell exactly what proportions it will move in either direction which means that a budget is pretty useless for us.

It also means that I am very wary of overpaying certain debts – I carry some debt on a 0% card.  It was a great deal and I’ve been very happy to move my credit there and dump the interest payments.  However, my 0% deal finishes if I start spending on the card again.  (It’s only 0% on the transfer balance, any extra payments are at 18.9%  Youch!).  So I can see a scenario like this:

I overpay 0% card by £1000.
Next month, I get a plasterer’s bill for £1000, but don’t have the cash as I paid it into the 0% card.
Only way to pay plasterer is to use 0% card, which means that my £1000 is now on a 18.9% rate.

It hasn’t happened yet, but only because I’ve been very careful and not overpayed credit cards except to clear them entirely.  So, how to pay down my remaining debt gradually whilst not affecting my deals and still keeping enough cash to cover our outgoings and any little “surprises”?

I think it’s time to start an “emergency fund” .  I don’t plan to use this in the same way as Dave Ramsey recommends, but rather as a buffer zone between me, building bills, debt repayment and extra income…  Hopefully, in this way, I can be prepared and plan to pay down debt without ever risking my carefully chosen card deals!