Quote:
Originally Posted by JustDave
I think of our emergency fund as treading water financially until things get back on track. That means all of the bills are paid with minimal disruption of our normal life. Obviously we wouldn't go out to eat, but I'm not sure we'd be cancelling Netflix on the first day either.
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I tend to agree, but I also know that this is often a mistake that buries people. They wait too long before cutting back and going into survival mode. That's happened to many people in the past year or two. They lost a job and figured they'd find something quickly so they didn't make any major cutbacks. Next thing they knew, it had been 6 months or 9 months and still no job prospects but they had burned through their savings maintaining the same lifestyle. Had they slashed spending from day one, their savings would have lasted for many more months. Sometimes they do it to "protect" the children and try and go on as if nothing has changed. The reality is that the kids know what's up and would rather give up premium cable and trips to McDonald's than have parents who are stressed and fighting about money all the time.