Typically these extra payments are in the range of a few hundred dollars. Where the emergency fund is designed to cover unexpected costs that are several thousand dollars.

I’m not sure about the “skipping” payments. Many loans will still require you to pay the minimum payment each month even if you’ve been paying off extra. That is something I would advice people to ask their lender about before relying on that as part of their financial plan.

Economic policy wonk by day. Personal finance writer by night. I write about investing, debt, and all things related to money. Editor of Making of a Millionaire

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