Dear Mary: I have been working on your principles of debt-proof living for several years, and things have been getting better. My contingency fund, while not fully funded yet, is growing. Currently, I have about $2,000 saved. Yesterday I had a car accident. I must come up with the $1,000 deductible to get my car fixed. I don't want to put it on my credit card, even though the interest is only 7.99 percent. I have enough in my contingency fund, but it will kill me to use about half of what I have saved. I have no choice when it comes to fixing the car. I have to get it repaired. Should I use my contingency fund or put it on a credit card and then pay it off quickly? -- Holly L., California

Dear Holly: Use the money in your contingency fund to pay for this unexpected emergency. Because you have read my book "Debt-Proof Living," you know that the purpose of your CF is to help you to cover your own emergencies. Use it now, and be grateful that you are prepared financially for this life event. That means the plan is working. You never should pay with a credit card if you have a way to avoid it. While it may be low in the world of credit cards, 7.99 percent interest is a terrible price to pay for not being prepared for the unexpected events of life.

Instead of making payments to a credit card company, save like crazy to put money back into your contingency fund.

When you have money, you have options. Being broke rids you of those options. You should feel good knowing that you are not at the mercy of some greedy credit card company. Your diligence has given you the option to fund your own emergency.

Dear Mary: Our office manager informed our staff that Aflac will be providing us with supplemental insurance, including disability, cancer, accident, dental, etc. I'm confused about whether I need these policies. -- Angie, e-mail

Dear Angie: Aflac supplemental insurance is top-notch, but it's not free. The Aflac marketing materials pitch this as one of the reasons a business should offer their supplemental insurance: "We enable you to provide additional protection without any direct costs to your business." Premiums come out of employees' paychecks, and that can get expensive.

I would not recommend a healthy person carry single-purpose insurance. Take cancer coverage. Statistically, the chances of you getting cancer are low. If you do, your health insurance would cover it. If you have no dental insurance, you might want to consider signing up for that, but read the coverage terms carefully. Some of the Aflac premiums can be paid with pretax dollars, making them somewhat more attractive, but it will not pay for routine visits to the dentist.

As a general rule, I find Aflac supplemental insurance to be a luxury -- nice, if you can afford it.

Do you have a question for Mary? E-mail her at mary@everydaycheapskate.com, or write to Everyday Cheapskate, P.O. Box 2135, Paramount, CA 90723. Mary Hunt is the founder of DebtProofLiving.com and author of 17 books, including "Debt-Proof Living." To find out more about Mary and read her past columns, please visit the Creators Syndicate Web page at www.creators.com.
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