stop saving

[LivingAlmostLarge]

In a way I have a funny comment, but yesterday I asked my DH for a little bit more of the "emergency" fund to perhaps give me float. I've been rather lax about our budget but for the most part I'm usually okay. He said no way and said if I got used to the extra float, in 6 months I'd ask for another $5k. Fine.

But what struck me as funny is I asked him "when can we stop saving into our emergency fund?" DH "never. It just keeps growing for an emergency. We don't take money out we just put it in."

Sigh. I can find the humor in his comment. But how many here are of that mentality? How do you guys loosen the purse strings?

[kork13]

I can understand his sentiment, and to a point, I agree entirely. It's gotta be a pretty severe event to make me withdraw from my emergency fund, and giving the expense account an extra float isn't one of them. I would personally draw from general savings (or cut expenses then cash-flow the float increase over a few months) & leave the EF untouched.

Also, I do continually add to my EF even though it is essentially complete at this point. However, that monthly addition is only $50-$100/mo to keep me covered as my expenses slowly yet invariably creep upward over time. So that's mostly how I "loosen the purse strings"... Basically by reducing the amount I'm putting in to the EF vs. toward other savings goals. I think I would only ever totally stop adding to my EF if/when it grows to the point of having more than a years' expenses in my EF alone, which IMO would be a little excessive (for me). It's that way for me in relaxing my spending as well -- my budget revolves around my savings first, so any amount of money that is going anywhere except my savings/investments is going to come in the form of reduced savings. I accept that reality, but it's a choice that I have to (get to) make at that time. I'll always save, it all just depends on how much I choose to save.

I think the other factor (for me at least) is that I keep my EF completely isolated from the rest of my savings. I have separate savings accounts for a few different savings goals (emergency fund, home maintenance fund, and "general savings"), plus my investment & retirement accounts. If you keep all of your cash in a single big account with all of that in a single pot, that would be a different story IMO, in which I'd say "go for it".

[bjl584]

I struggle with this too. How much is enough. I feel that I need to keep putting into my EF even though I have adequate funds should any foreseeable event occur.

[Nika]

At some point, emergency fund and savings become mixed.

For example, we invest our EF (to fight erosion from inflation) so it is subject to fluctuation, so adding a little more on auto invest is a good idea. That way it is being kept from going too low.

But after a certain number, it becomes just "savings" and not just for emergencies.

[disneysteve]

At some point, emergency fund and savings become mixed.

I agree with this. We do not have a specific, designated, isolated emergency fund. We have money in a variety of places that we can draw from if needed. We have a buffer in our checking account. We have a CD. We have I bonds. We have a cash balance in our brokerage account. We have a Capital One account (formerly ING). We have money in our Paypal account. So in the event of a major problem, we would take from several different places as needed. And we continue to add to accounts as we are able.

[Blessed]

oops double post!

[Blessed]

We dont keep adding to the EF anymore. It is a years income which would cover 2 years expenses. We do have lost of sinking funds though so we keep adding to them. We are putting the majority of our income in retirement currently.

[feh]

But what struck me as funny is I asked him "when can we stop saving into our emergency fund?" DH "never. It just keeps growing for an emergency. We don't take money out we just put it in."

Sigh. I can find the humor in his comment. But how many here are of that mentality? How do you guys loosen the purse strings?

Is your EF truly just an EF, or is it also used for large, infrequent purchases?

[LivingAlmostLarge]

We have a separate EF. Which is continually growing. Don't ask me why. I think my DH likes to make me live on the same income. We have a car loan @ 1.9% but I have to budget that into our monthly expenditures. No using taxable accounts or using EF to pay it off. Nope I have to keep it as a bill.

I think money goes in but never comes out. I make deposits into the DH bank and I don't see it again period. Next car I bet I'm back in debt having to figure out how to pay for it monthly while money we save is still set aside. Sigh.

[dawnwes]

When I want more $$, I find ways to cut it elsewhere. Is there anything you could cut?

For example, I go back to simple cooking (one meat, one veg., one starch) for dinners......no salmon or steak that month. Cheaper foods like rice, oatmeal instead of cereal, etc.....

[disneysteve]

I think my DH likes to make me live on the same income.

I don't necessarily have a problem with this. Keeping lifestyle steady while income grows is a great technique to build wealth.

We have a car loan @ 1.9% but I have to budget that into our monthly expenditures. No using taxable accounts or using EF to pay it off. Nope I have to keep it as a bill.

I think money goes in but never comes out. I make deposits into the DH bank and I don't see it again period. Next car I bet I'm back in debt having to figure out how to pay for it monthly while money we save is still set aside. Sigh.

I have mixed feelings on this one. I've posted before that I bought my car last June (2012) and took out a loan to do so. We have a half-million dollar investment portfolio but I still took a loan rather than taking out savings to buy the car. Why? No great financial reason. The interest rate was low. Our investments are doing well. I preferred cash flowing the car payments at an accelerated rate. I ended up paying off the loan in 14 months without touching savings except for the down payment. The amount of interest paid during that time was minimal. In the meantime, our investments continued to grow and earn at least as much as the interest we were paying and more.

[feh]

I think money goes in but never comes out. I make deposits into the DH bank and I don't see it again period. Next car I bet I'm back in debt having to figure out how to pay for it monthly while money we save is still set aside. Sigh.

Ok, then his position doesn't make sense. Agree on a dollar amount that needs to be in the EF; when that is reached, surplus money can be used for other purposes.

[JoeP]

We always contribute to our EF, I think $100 auto-deposited every other week. If it is in a savings account earning a whopping 0.012% interest, then it makes sense to move a portion to something safe but less liquid. So yeah, we keep growing the EF, but skim some off when it reached a certain level. Both piles comprise the EF, one primary, and the other secondary.

[adviceseeker]

There are times that I am tempted to use our emergency fund. Like using it to eat at a good resto or using it if there is a good sale and we have no budget for it.

What I do is I borrow from our emergency fund. Once I get money from it, I make sure the money that I "borrowed" will be returned in a month's time.

It's better to have an emergency fund growing as it can be really useful in the future.

Cheers!

[LivingAlmostLarge]

DS perhaps we never really discuss spending more money because honestly I don't think I'm a spender in general.

I guess 6 months EF = $30k, what is the rest of the money in there for? We have say $25k extra in there almost a double EF or 1 year of generous expenses. Truthfully we could stretch that two years with unemployment, etc.

I'd like to skim it for what I don't know. Maybe not live so tight?