Emergency Fund - do you have one?

kristinecfp · #1 (**permalink**) 12-12-2006, 10:12 PM

I was just writing about emergency funds in my blog, and thought I would do a quick poll to see who actually has an emergency fund?

Also, do you keep the recommended 3 to 6 months in your emergency fund?

I probably average about 3 months, but would prefer to have 6 months since I'm a small business owner and my income fluctuates.

Thoughts, comments?

JanH · #2 (**permalink**) 12-12-2006, 10:17 PM

We have an emergency fund. We have debts, also. I know I should pay off the debts, but I need to have the fund for my peace of mind. I'm trying to compromise and increase the fund and decrease the debts at the same time. Slower, but I feel better. My goal is to have a year's worth of income into the fund. As for debt, my goal is zero!

Budgeteer · #3 (**permalink**) 12-12-2006, 10:28 PM

My wife and I have 6 months of living expenses in our emergency fund. It's not 6 months of income; when figuring our emergency fund, we didn't include savings, taxes, 401k, etc, because we wouldn't need to pay for those things if we found ourselves in a situation that warranted tapping into our emergency fund.

Which brings me to a question - you mention that you 'average' 3 months. Do you use it regularly? We maintain a small amount of slush money for smoothing month to month costs, but our emergency savings is absolutely and totally untouchable except in an emergency. A withdrawal is never (and hopefully never will be) made from that account.

kristinecfp · #4 (**permalink**) 12-12-2006, 10:38 PM

Budgeteer - yep, I hate to admit it, but I do dip into my emergency fund to smooth out my income fluctuations. I am self employed so my income fluctuates a lot. As my business grows I will increase my emergency fund to 6 months and I will not need to dip into it, but for now, I'm a dipper.

kristinecfp · #5 (**permalink**) 12-12-2006, 10:43 PM

Quote:

Originally Posted by JanH

We have an emergency fund. We have debts, also. I know I should pay off the debts, but I need to have the fund for my peace of mind. I'm trying to compromise and increase the fund and decrease the debts at the same time. Slower, but I feel better. My goal is to have a year's worth of income into the fund. As for debt, my goal is zero!

Jan - I agree that you should save for an emergency fund while paying down debt. For peace of mind, and also to establish good saving habits. If you wait until your debt is paid off to start saving, you may never start!

Good luck on your goals!

The Budget Man · #6 (**permalink**) 12-12-2006, 11:52 PM

Quote:

Originally Posted by kristinecfp

Jan - I agree that you should save for an emergency fund while paying down debt. For peace of mind, and also to establish good saving habits. If you wait until your debt is paid off to start saving, you may never start!

Good luck on your goals!

So how do you get an emergency fund if you are always having trouble getting around to saving?

Here's a suggestion that works for me.

I consider saving as a bill. I decide how much I need and the add it to my bills section of my budget. I'd never cheat on paying a bill so I always end up saving the money I set out to save.

I'm too busy to spend hours working on my budget so I use a program that works for me and automatically tells me how much I need to put away each pay.

Enjoy Your Money
The Budget Man

www.PersonalityBudgeting.com
The budget that works for me and it might just work for you too!

LuxLiving · #7 (**permalink**) 12-13-2006, 04:13 AM

Quote:

Originally Posted by kristinecfp

I was just writing about emergency funds in my blog, and thought I would do a quick poll to see who actually has an emergency fund?

Also, do you keep the recommended 3 to 6 months in your emergency fund?

I probably average about 3 months, but would prefer to have 6 months since I'm a small business owner and my income fluctuates.

Thoughts, comments?

We do.

No. We keep a year of income in our emergency fund.

Bookie · #8 (**permalink**) 12-13-2006, 05:13 AM

I do have an emergency fund. Actually, I have two of them.

Keep six months living expensese in an on-line savings account. This money is not to be touched except in the direst of circumstances. It is augmented monthly by automatic funds transfer, and I'd like to see it climb to a full year's expenses.

Locally, I have two savings accounts that I also fund monthly. One is used for annual and semi-annual expenses (insurance, tags, taxes); the other is used for -- emergencies.

Unbudgeted expenses that would disrupt my cash flow. I like the term "slush fund" used earlier. There's a difference between an emergency and an inconvenience, and I like to be ready for both.

.

rduell · #9 (**permalink**) 12-13-2006, 05:17 AM

I am working on getting an emergency fund in place. Right now I'm just aiming for $1,000 but eventually I want to see at least 6 months' worth of expenses in there.

#10 (**permalink**) 12-13-2006, 05:24 AM

paid off the debt, saved up about 3 month's worth of expenses.

I didn't have an emergency fund while in debt so it didn't make sense to me to bother with it while getting out of debt. had I needed, I would have used a credit card for an emergency setting myself back a bit (the same net effect drawing money away from debt repayment for a fund would have had).

now I have a constant flow going into the account so it grows regulary, like Budget Man adding to it is a bill, not an option.

my occupational situation is extremely stable so 3 months probably would be fine but I'm shooting for 6 anyway.

Diolla · #11 (**permalink**) 12-13-2006, 05:41 AM

My emergency fund is what I am working on now. I keep a little of it locally for little emergencies but the rest I save in an online savings account. I am aiming to have it fully funded (6 months) by the end of next year (2007).

I have a set amount transferred automatically but usually have some extra to move there at the end of the month too.

humandraydel · #12 (**permalink**) 12-13-2006, 06:11 AM

I have a month's worth of expenses saved. I also have 3 weeks of vacation stashed away, so that's almost 2 months of expenses (in case of losing my job, the only emergency I can think of).

I prefer to invest the rest. Mutual funds are liquid enough, IMO.

Broken Arrow · #13 (**permalink**) 12-13-2006, 06:15 AM

Kristine, if you prefer, the forums does include a feature to make polls.

Like Bookie, I have two emergency funds. Three if you want to count my credit card.

The first one is a baby (as in tiny) fund, that's designed for quick access in the event some cash is needed immediately.

The second one, a full emergency fund, is placed in a high yield savings account. That one takes a couple of days to transfer and access, but it's either more than 3 month's gross, more 6 months of bare minimum living if I lose my job, a cheap car if my current one breaks down, or enough to get into a legal divorce battle with my ex... um, whichever comes up first.

Fizgig · #14 (**permalink**) 12-13-2006, 06:38 AM

Yup - my 2006 goal was to get a 4 month emergency fund of basic living expenses - no frills. Right now I have it up to 3.8 months, 5.2 months if you count the extra income I get from renting out the garage apartment at my house. (I don't really count it - but the extra cash is nice.) It'll be close, but it WILL be at 4 months by January 1st. I'll bring it up to 8 months in 2007.

I also have a smaller emergency fund for the house. I don't escrow my taxes and insurance, and I have transfers with every paycheck to a house account. I pad it by about $1500/year, but it's only at about $1300 now because I had to replace my front door.

PrincessPerky · #15 (**permalink**) 12-13-2006, 07:25 AM

We have a 'double baby one' (about one months pay) and are working on paying off the car before we increase it too much.

disneysteve · #16 (**permalink**) 12-13-2006, 08:02 AM

I don't really have one specific account that I've designated as an EF. What I do have is:
Regular checking account - about $5,000
Money market with checkwriting - about $3,000
Online money market account - about $13,000
Series I Bonds (designated for my daughter's Bat-Mitzvah) - $25,000
1 year CD purchased 7/06 - $10,000

There are also a couple of small accounts scattered around, like the money market in my brokerage account, a little account with my insurance agent, etc. They all add up to less than $2,000.

So all together, about $58,000 in readily accessible cash funds. That's more than 6 months of my income and closer to a year of expenses. And then there are always credit cards. Combined credit limits on our 4 cards are nearly $100,000. We also have life insurance on both of us and disability insurance for me. So we're pretty well set if anything happens to either of us.

genmed · #17 (**permalink**) 12-13-2006, 08:36 AM

We do have an emergency fund, and I like to keep 6 months in it; however right now it needs a some funding to build it up.

creditcardfree · #18 (**permalink**) 12-13-2006, 09:01 AM

Yes we have an emergency fund equal to about 4 months of expenses. We also have a savings account as a slush fund...works great for us.

We recently used the emergency fund when my husband changed jobs and there was a large gap between paychecks (have to love the government). Once the pay caught up we added money back to the EF.

When building up our EF I would put any cash I could get my hands on into the account. This included cash gifts, tax refunds, rebates, cashed in coins, garage sale funds, and any other unexpected funds. It adds up quickly and you start looking for money in unusual places.

Aleta · #19 (**permalink**) 12-13-2006, 10:11 AM

My husband is self-employed so his salary varies. We had approximately one year of emergency savings until our health insurance went up by $154 a month. You also have to increase your savings as the things increase. We also keep a reserve cash fund for emergencies as well.

MonkeyMama · #20 (**permalink**) 12-13-2006, 10:32 AM

Today we have 1 months of expenses, but we are working on it.

We generally keep 6 months expenses, and that is what I feel comfortable with at the bare minimum. We just used up a lot of it and plan to replenish it to 3 months within a year.

For the long-term I Would like to save up a year of expenses. But it may be a while.

I like to feel like I am prepared for the worst... Needless to say I do not enjoy having only 1 month in the EF right now. But having saved up so much early on gave us a lot of freedom this last year when I took a lot of unexpected time off work. Nothing beats the security of a good e-fund, I can attest to that...