What = 3 - 6 months' living expenses?

[bjl584]

Re: What = 3 - 6 months' living expenses?

No need to look into it too much. I'd say just use your monthly gross income as your baseline for your emergency fund savings.

[vishenda]

Re: What = 3 - 6 months' living expenses?

For me, here's how I calculate it.

Take an 'average' month of expenses (including gas and other transportation) and multiply times 6. You wouldn't be driving to work, but you would be looking for work, going on interviews, and honestly taking some time to 'just get away from it all'.

Your salary really doesn't factor into it because you can always buy with credit cards. So figure out how much _should_ go out each month. (yeah, it'll be a very scary number)

[Gruntina]

Re: What = 3 - 6 months' living expenses?

A good thing to keep in mind is to keep all receipts for anything related for job hunting such as gas, interview clothings, doc /career testings cost as it can be used for a tax write off.

[lrjohnson]

Re: What = 3 - 6 months' living expenses?

I do #3, for 6 months worth.
Or I'm doing #1 for 3 months worth.

[Gruntina]

Re: What = 3 - 6 months' living expenses?

I do #3, for 6 months worht.
Or I'm doing #1 for 3 months worth.

Lol! that is so true!

[LuxLiving]

Re: What = 3 - 6 months' living expenses?

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]

Re: What = 3 - 6 months' living expenses?

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]

Re: What = 3 - 6 months' living expenses?

I'm going with #3.

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]

Re: What = 3 - 6 months' living expenses?

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]

Re: What = 3 - 6 months' living expenses?

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]

Re: What = 3 - 6 months' living expenses?

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]

Re: What = 3 - 6 months' living expenses?

Check out no. 6 in this article:

http://www.bankrate.com/dls/news/debt/Oct06_debt_management_a1.asp

[rduell]

Re: What = 3 - 6 months' living expenses?

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]

Re: What = 3 - 6 months' living expenses?

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]

Re: What = 3 - 6 months' living expenses?

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.