What = 3 - 6 months' living expenses?

[LuxLiving]

We just decided to go with a year's gross to be on the safe side! Now then when The Hubster was laid off for the first time in over 40 years about 2 years ago it was a lifesaver! Still because we didn't quite have a full years income in the ef at that time we cut things to the bare bones. Thank God I had a full pantry.

What we found at that time is that what we actually HAD TO spend was only about a fourth of our take home pay.

Currently our figures show that we are somewhat comfortably living on about 1/2 of take home pay and are putting back about 45%. Now some of this money that is put back is for major expenses that will come no matter what like the 6 months auto insurance, house taxes, house insurance etc. The things we pay yearly.

At any rate I figure at the bare minimum we could last maybe 2 years on the years salary we currently have IF we slashed everything to the barest of bare and left the heat / ac off.

[aurielle]

Originally Posted by LuxLiving

We just decided to go with a year's gross to be on the safe side! Now then when The Hubster was laid off for the first time in over 40 years about 2 years ago it was a lifesaver! Still because we didn't quite have a full years income in the ef at that time we cut things to the bare bones. Thank God I had a full pantry.

What we found at that time is that what we actually HAD TO spend was only about a fourth of our take home pay.

Currently our figures show that we are somewhat comfortably living on about 1/2 of take home pay and are putting back about 45%. Now some of this money that is put back is for major expenses that will come no matter what like the 6 months auto insurance, house taxes, house insurance etc. The things we pay yearly.

At any rate I figure at the bare minimum we could last maybe 2 years on the years salary we currently have IF we slashed everything to the barest of bare and left the heat / ac off.

Now that's an E-fund to be proud of!

[abowers]

I'm going with #3.

Originally Posted by tinapbeana

if we both lose our job, we may be able to qualify for medical assistance or cobra.

FYI -- Using COBRA would really up what you would need to consider your living expenses! Depending on how much of your insurance your company's paying for...
I.e. I was paying $104/month for just myself for Medical, $10/dental.
I quit my job to start grad school -- Cobra was $338/month for medical + $20/month for dental. EEP!

[MonkeyMama]

I go with #2 because it is easy. Heck I rounded up a little bit. It just comes up to a round $5k/month so I figure $15-$30k (3 - 6 months) in the EF will make me pretty happy. Since I never see my gross pay I don't really figure it. No health or other coverages whatsoever so it doesn't matter - I am used to paying the max possible I guess - bah.

I am sure I Could live on $30k for well more than 6 months if I had to. But I rather err on having too much in the EF I guess.

[Snoopy2645]

Well when you can try to put as much as you can in EF & I also stockpile lots of stuff so in the event of a layoff we could live off lots of my items for along time!!! And dh was layed off at one point & I wasnt working at all so we cut everything to the bare bone & I sold all non nescessary stuff on ebay that I could find!!! It didnt last long & he ended up getting the unemployment which wasnt much better than nothing think it lasted a month before his job brought him back.

[BCHGRL]

Why not 6 months gross pay? That would be a very comfy security blanket.

Unless you have a separate e-fund for other emergencies, just calculating enough to cover your monthly expenses won't cut it. What if a necessary appliance breaks? What if you are laid off during the holidays?

[BCHGRL]

Check out no. 6 in this article:

http://www.bankrate.com/dls/news/deb...agement_a1.asp

[rduell]

That was a really good article. Thanks BCHGRL! I didn't know that about the holds that gas stations can put on your account if you use a debit card.

[LuxLiving]

Rduell, we've managed to alleviate this risk by buying the majority of our gas at the local station a few blocks from the house. They consistently have low prices and the clerks there know we are good for the money because of our repeat status w/checks that always cleared. They never put a hold on our account when we use our debit card. We also gas up four vehicles there every week so we're good customers as well.

[tinapbeana]

Originally Posted by abowers

FYI -- Using COBRA would really up what you would need to consider your living expenses! Depending on how much of your insurance your company's paying for...
I.e. I was paying $104/month for just myself for Medical, $10/dental.
I quit my job to start grad school -- Cobra was $338/month for medical + $20/month for dental. EEP!

actually, i went through a layoff this summer and it was a very interesting exercise. the terms allowed me to keep DH and myself on my work benefits at the same rates for as long as I got a severance check. DH works, so when severance stopped, we hopped onto his benefits. we're lucky, because as long as one of us is working we'll be able to have coverage.

in the even that both of us are laid off *knocking furiously on wood!* our budget is set up so that we can pay all of our monthly needs and obligations with what we would both bring in on unemployment. any money in the EF could then be used for cobra if necessary.

[PrincessPerky]

I go with #2..it happens to be a nice round number (was anyway) and it is low, making it a managable goal....
though right now we are aiming for 3 months, I think eventually 6 or 12 would be nice, but mini goals are more manageable.

[aurielle]

Originally Posted by PrincessPerky

I go with #2..it happens to be a nice round number (was anyway) and it is low, making it a managable goal....
though right now we are aiming for 3 months, I think eventually 6 or 12 would be nice, but mini goals are more manageable.

I second that. I've been through some very dire straits and survived on much less than 3 month's EF at the #2 option. I also need to save for other things, like a replacement car, a new bed, etc. I'll need to replace those within the next few years and I don't make THAT much money so I can't be saving up an EF forever.

[laceshawl]

My budget is pretty tight. I would opt for #2 and if I had to use the EF, stick to the current budget and keep putting money aside for things like appliance repairs. There would also be a little money there for things like the occassional meal out or trip or a little splurge. I think it is important to allow yourself some little treats even when you need to be very careful with money, or you get too discouraged.

[rduell]

Originally Posted by LuxLiving

Rduell, we've managed to alleviate this risk by buying the majority of our gas at the local station a few blocks from the house. They consistently have low prices and the clerks there know we are good for the money because of our repeat status w/checks that always cleared. They never put a hold on our account when we use our debit card. We also gas up four vehicles there every week so we're good customers as well.

We do the same. The gas station we use is on the very next block and our daughter that's in college now worked in their sub shop her junior and senior year of high school. So we are very familiar faces in there.

I just had no idea that other places did it. It's a good thing to know for when I'm traveling.