Emergency Fund for DINKs

**Frugalicious** · 01-02-2008, 10:05 PM

Originally posted by threebeansalad View Post

I'm mulling over my savings plan and goals. One major goal is to able to buy a home in 3.5 years. Due to our work situation, DH and I will most likely be re-locating in Summer 2111 and would be looking to buy our first home at that time. Unfortunately, we don't know WHERE that move will be to, so its hard to estimate how much $$ we'll need (I can say we can rule out super high COLA area like San Fran and NYC, although DC is a possibility). So, we've set a goal of savings 50K in cash by that point. I have confidence this goal can be attained, and likely surpassed.

However, I'm trying to figure out how much we should have in an EF after the 50K or whatever is spent. I know the 3 month rule, but the likelihood of us BOTH simultaneously losing our income just seems highly unlikely. How are other DINK couples calculating EF needs?

Well, we are DINKS too, (childfree) but we did things kinda backwards.
We had 56K in EF and now down to 11K and 2 home mortgages. One is a rental.
Our goal is to save up to at least 30K with 2 homes.

So, I guess 15K would be fine for your situation.

HTH!!

**KatieNK** · 01-03-2008, 07:00 AM

Originally posted by threebeansalad View Post

DH and I will most likely be re-locating in Summer 2111 and would be looking to buy our first home at that time.

Wow! If you are lucky enough to still be around in the year 2111, I think you should have plenty of money saved by then!

hehe, j/k.

I just wanted to say that I live in Delaware and it is one of the cheapest states to live in, if you would ever consider moving here. There is no sales tax, and all other taxes are incredibly low. We have tons of people moving here from DC, Philly and Jersey (and even NYC!) to live in our cheap state but commute alll the way back from where they came for work! It is also a big retirement state. Just wanted to float that idea by you.

I don't have much advice for the EF question b/c right now we don't have much of one...

**bjl584** · 01-03-2008, 07:11 AM

I'm single with no kids, but my EF goal is to set aside 6 months gross salary into a high yield savings account. I know that some will set aside 3 or 6 months of living expenses, but 6 months gross was an easier figure to figure out. Right now I have about 1.5 months saved up. The money is for emergencies ONLY. (I.E. loss of job, etc.) I will not use that money for anything else. (I.E. new car, etc.) That money is in a seperate account.

**sweeps** · 01-03-2008, 07:12 AM

DINKs in general don't need a large emergency fund, because their fixed expenses tend to be lower and rarely would both earners lose their job at the same time.

**jIM_Ohio** · 01-03-2008, 07:31 AM

I'd say 3 months expenses should be the goal. You might go below this at times, but 3 months is 3 months.

Make sure you measure it on expenses, not on income. You might take home 100k, but really only need 30k of it. EF should be based on 30k then (1/12 of 30k=2.5k. EF should cover mortgage payment, utilities and groceries for 3 months.

Moving increases risks. There are risks associated with moving where you want 3 months cash or MORE. Might have a new bill (a county, city or village tax due for example) or might have a new repair (find out hot water heater is busted or A/C does not work). Might find out previous landowner stuck you with a bill you did not realize. So I would error on side of 4-6 months expenses when you move, then lower this to 3 months within a year of moving.

**disneysteve** · 01-03-2008, 09:37 AM

I don't know. You will be relocating which means you will both be changing jobs. What if one of you has trouble finding work? What if one or both of you find you aren't happy in the new jobs? What if you find you don't like the area you've moved to?

I wouldn't buy a house right away upon relocating to a new area. I would rent for a year, make sure the jobs are stable and you like where you are before investing in a home. That also gives you time to learn more about the area and decide what section is best to buy in.

For all of those reasons, I'd want a larger savings cushion to carry us through any problems, so I'm going to recommend 6 months.

**Aleta** · 01-03-2008, 10:25 AM

I agree with Steve. Don't buy a house yet. Live there for a year before you decide to buy. The job situation might change or you may decided that it's not to your liking. Traveling back and forth to see family and friends tend to be an additional expense most don't think about. The emergency fund situation depends upon your particular jpb amd tje benefits that it has. The more insecure that you feel about your financial situation determines the size of your emergency fund. Each person's situation is different. Like others have already stated; it is your necessary expenses not your total gross income.

**disneysteve** · 01-03-2008, 10:42 AM

Another thing to think about is that your expenses will change when you relocate depending on local cost of living. What constitutes 1 month of expenses in your current location might not be enough in your new location.

**Ima saver** · 01-03-2008, 10:53 AM

I would reccommend 6 months also.

**sweeps** · 01-03-2008, 11:03 AM

I'll see your 6 months and reraise you to 9 months.

**Aleta** · 01-03-2008, 11:18 AM

My spouse has been self-employed for years which means that we don't have benefits including vacation, holidays paid, etc. Our emergency fund is larger than most. Should he get injured on the job, we don't have workman's compensation or unemployment insurance to fall back upon. That's why I said each person's emergency fund is different. Also, if you don't have enough disability insurance or have a policy that requires a longer time to apply, you'll need funds to back you up. The emergency fund is about so many different concepts besides employment. Each change in your life requires a differrent look at your emergency fund.

So, when Sweeps raised it to 9 months, I understand why that post was written. There are those that probably should have 1 years worth of expenses.

**PrincessPerky** · 01-04-2008, 09:42 AM

IMO You could go with 'never enough' or you could realize that as DINKs, you have the unique opportunity to remain childless and live like SINKs (single income) without much sacrifice assuming neither of you works at walmart or the equivalent.

Not to mention no kids means no real need for many luxuries of life, so while I would aim to have a livable amount of money for 3-6 months, I would also be prepared to research major cost cutting. Childless you can go spend an hour or two at the library online..I would have the library staff in revolt at having to deal with my 2 year old that long! or if you are into sports and have to watch the big game, for the cost of a beer you can watch it at a sports bar, with company, kids are not welcome there. This doesn't mean it is preferable, just that it is easier to do should you need it. Though I may be weird.

though in the case of wanting to buy a house the EF changes, you have to have enough to cover several months payments of the house, not just your own cut down needs... meaning the size of the EF depends on the size of your mortgage.

**TBH** · 01-04-2008, 04:45 PM

Since you don't know how much you need to save, can't you just save as much as you can? If you save more than you need, so much the better. But maybe it's better to be goal-oriented.

I think 3 mo living expenses should be okay if you're both working, because as others have said you can always tighten the belt if you only have one income for a short time. But don't forget to budget $5-10K for those surprising expenses that come with being a new homeowner.

When we bought our house, the first few months were like this:
"Oh, it's garbage day. We don't have a garbage can!"
"Oh, the bathroom tile is disgusting. We don't have grout cleaner!"
"Oh, the dryer is broken. We don't have enough clothes racks!"
"Oh, it's 50 degrees outside. We don't have a working furnace!"

There were so, so many surprises. I was sort of prepared for the big ones, but the small ones added up too.

I also like the idea of renting for a year. I know so many people who bought the second they moved here and spent the next years wishing they lived in that other neighborhood over there.

**kilcher** · 01-10-2008, 05:15 AM

I would recommend at least 6 months for anyone. But why put a limit on it? You're moving and your future sounds somewhat uncertain. Why not just save everything you can?

Emergency Fund for DINKs