Question

Raysa’s car needs a car part replacement that costs about $500 dollars. Raysa’s budget is tight, and the only extra money she has is $300 in her emergency fund.

What possible impacts can the car part replacement have on Raysa? Check all that apply.

Raysa may have more debt if she uses a credit card to have her car fixed.
Raysa might have to delay other purchases until she can build up her funds.
Raysa may need to cut down spending in other areas to pay for the unexpected expense.
Raysa might worry less because she has enough money in her emergency fund to cover the cost.
Raysa might have to delay achieving her monthly financial savings goal to get her car working again.

Answer 1

- Raysa may have more debt if she uses a credit card to have her car fixed. — Yes. She’s $200 short, so charging the remainder could increase credit-card debt and interest costs.

- Raysa might have to delay other purchases until she can build up her funds. — Yes. With limited extra cash, she may postpone nonessential purchases.

- Raysa may need to cut down spending in other areas to pay for the unexpected expense. — Yes. She could reduce discretionary spending to free up the extra $200.

- Raysa might worry less because she has enough money in her emergency fund to cover the cost. — No. Her emergency fund ($300) is not enough to fully cover the $500 cost, so she’s still short and likely won’t feel fully relieved.

- Raysa might have to delay achieving her monthly financial savings goal to get her car working again. — Yes. Using savings or diverting income to pay for the repair can push back her savings target.