Tell me about your emergency fund
![[Post New]](/jforum/templates/default/images/icon_minipost_new.gif){kind=icon}
Anonymous
| No, we don't have a designated emergency fund. Now I am worried! But after maxing out all retirement accounts, we put money into our mutual funds, which is easily accessible. Does that count? |
Anonymous
| does the power ball ticket I just bought count? |
Anonymous
Sure, it counts if you can access it in an emergency, and wouldn't regularly touch it. That's my opinion. |
Anonymous
| On having it in mutual funds: the problem is if the market tanks at the same time that you have an emergency and need to tap your money. During the recent shut-down and debt ceiling fiasco, I got pretty spooked about the fact that a good chunk of our "emergency" cash is in mutual funds, and the value would likely have plunged if we hit the debt ceiling. So I have been rethinking our strategy and am going to be more aggressive about building a larger cash reserve between now and Jan/Feb, when we may be going through this whole shut-down/debt ceiling scenario all over again. |
Anonymous
| About $75K cash give or take. If push absolutely came to shove, family would step in and float me before we had to divest investments. That said, $75K feels about right - I could make a year work on that if I had to. |
Anonymous
|
Currently have $17k (4.5 months expenses)
Aiming for $34k (9 months expenses) Sitting in a Capital360 (formerly ING) account. We're increasing it significantly to provide a larger cushion for when one of us will stay home w/ children (1-2 years) |
Anonymous
| We have all of it, $140K, in a money market fund. |
Anonymous
|
I have 3 savings accounts-
Emergency $1260 [ally bank] $125/month Travel $100 [ally bank] $50/month Misc. savings, to have extra cash on hand $250 [bank where my checking is] $25/month I am 25 and just started being able to save last year. My savings is not even 2 months of expenses so I am trying to build it up but I have a pretty stable job, and health insurance. I guess it would be for job loss or a major health issue. As the EF grows I will use the other savings to pay down some debt |
Anonymous
I agree. For a long time my EF was a HELOC (which can be risky bcs banks have gotten more active about restricting them off after they have been issued, but it was the best way to get some cushion at the time) |
Anonymous
|
Somewhere just over $22K which we calculated as 4-6 months of bare bones living expenses in case one of us lost a job.
We recently bought a house and did not tap into it for down payment, but did liquidate about $55k of stock which we had also long considered as a potential emergency fund. We are now building up a "house emergency fund" which would cover somewhat expected repairs (new furnace, new AC, new hot water heater) since we know those are old but don't want to replace them until we have to. And for those was are worried that they don't have one, I never did before marrying DH. He is way better with money than I am, and also much more pessimistic, and frets a lot if there isn't money in the bank. |
Anonymous
|
We just met with a financial advisor recently and got this all set up.
Our HELOC used to be our "emergency fund" but we are soon buying a new house and dont know if our new mortgage will allow such a generous HELOC as we currently have. We just had to renew it and it was a crazy long drawn out process. Seriously had to provide more back-up documentation than I ever imagined we would. We have about $30k in cash in an acct at Charles Schwab that is our "emergency fund". It is about 6 months of our bare-bones expenses, but those are about to go up due to a new home so we are going to have to add to said acct. Anyway, we have debit cards and checks that we can use to access this account if we need to, but we specifically set it up at a different institution than where we do our daily banking to avoid the temptation to easily transfer money from it into our checking acct. We also have another 60k at Charles Schwab that we actually invest in funds. This is the account that we are going to add to every month with our "leftover" money after bills, retirement, 529, etc. Finally we keep at least 10k (after all bills are paid) in our checking account so that we have a decent buffer, and can use for things like car repairs, the new furnace we had to buy, etc. Im also toying with the idea of opening my own secret savings account w/a credit union I belong to. Just in case. Thanks, DCUM, for putting this idea in my head! |
Anonymous
| $60k in an ING account. This represents 7 months of bills, which seems high because of DD's therapy bills which we could cut in a true emergency. It also acts as our savings that I transfer money from whenever we have extra expenses at anytime. I don't automatically transfer funds into it regularly but just whatever is leftover after monthly bills. |
Anonymous
|
I consider myself to be a financial planner even though I have another career. I always read about the need for a 3-6 month emergency fund and I completely disagree with all experts on this matter. I am wealthy now, but even when I was poor, I never kept an emergency fund. It never made sense to have money earning so little interest.
There are so many different ways to get money if needed: 1. HELOC 2. 401K/TSP 3. Family and friends 4. Credit cards (I always pay off the entire balance, and my credit limits are much higher than I need) 5. Cash value life insurance policy 6. Mutual funds, stocks. 7. Sell an investment property 8. I am a federal government employee which means my job should be more secure than others. 9. My profession is in demand so the chances of an extended unemployment is quite small. 10. I am wealthy enough to retire today if I wanted to. Almost everyone on DCUM could rely on at least 1 of the above. All 10 apply to me. If none of those things above apply to you, then perhaps you need an emergency fund. Suppose I had $60K in a savings account vs. $60K in a mutual fund or investment property the past 20 years. The extra interest/dividends/rent/capital gains would be a HUGE amount! So I have never had a savings account and I keep my checking account as small as possible. Does anyone agree that my approach makes more sense? |
Anonymous
Depends on your personal comfort level and why you need the money/how long you expect to need it for/your realistic chances of paying it back. First off, most aren't wealthy enough to retire today if we wanted to. Nor are we both lucky enough to be guaranteed employment tomorrow if we lost our current jobs. So lets just push those aside as if you put those there for any reason other than bragging on an anonymous message board, yes? That said, some people, like my DH and I, prefer to have cash that we can easily access if we need it. Goes back to our personal comfort level. We have high credit limits, but don't have any 0% interest cards. Not everyone does for different reasons (ours is because we utilize points/miles, when I was younger it was because I had terrible credit). That said, your post made me realize I should get a 0% card in case we do need it, because our rewards cards have btw 12-15% interest, which is terrible if you carry a balance at all. Anyway, I digress. If the nature of said emergency is that you can't pay off what you put on your CC in the short-term, the interest (depending on your card) could be terrible, adding onto the financial emergency. Next, you are overlooking the costs associated with many of your suggested options above. Tapping into 401k/TSP comes with a penalty: borrow from it with interest or completely take from it with no intention to return the money and get charged much higher interest. Along the same, there is a charge to sell stocks. Not everyone has a HELOC. Most mortgage companies are cutting them back/doing away with them because of abuse in the past. And finally, you can't just turn around an investment property overnight. Even if you put a property on the market TOMORROW and get an offer TOMORROW that you accept, 30 day settlement is standard. So while your suggestions are good, they aren't realistic for everyone's financial situation. And might possibly have made people reading your post feel TERRIBLE about themselves for not having the options available to someone who is as wealthy as you claim to be. |
Anonymous
|
I am the PP with the 10 alternatives to an emergency fund.
An emergency to me is something that is truly rare. A major, unexpected medical event, unemployment over a month long, being sued, etc. For almost everything else, we have insurance: like a car breaking down or having to buy a new water heater, or being disabled while working. These aren't emergencies to me. That is part of everyday living. I am lucky that I haven't had any REAL emergencies that I can think of. The cost of having a large chunk of money earning about nothing is higher than the cost of using your credit card or your retirement funds. $60K * 5% a year is $3,000. By not having an emergency fund, I have made well over $60,000!!! ($3,000 * 20 years). With the compounding interest concept, it is actually much more than $60,000. |