Emergency Funds

[LivingAlmostLarge]

Okay so who here has an actual cash EF? Or an invested taxable EF? How much do you have saved? Is it cash or invested?

If you don't (wondering Goldy) why are you using your Roth IRA as an EF? I get that you can take out contributions but I guess it just doesn't sit well with me personally. I can see it's a way to make your money work harder. But at the same time I hate the idea of withdrawing for anything but retirement.

So when my DH and I were young and broke we had $1-5k EF which covered rent for a month basically. Once we bought a house in 2002 we always after that had a HELOC as our "EF" but we saved what we could. In fact our main mortgage was a HELOC and we paid off our debt faster because of it.

Anyway though once we started making more money and could actually save we bumped it up to 6 months cash = $30k. And left it alone, recently due to circumstances it's up around $70k cash but we have personal reasons (moving) that we are uncertain what the next two years or sooner hold. My DH had another job interview.

[JoeP]

We have a cash EF (credit union, low interest) and a bond fund "EF" (much higher interest). The latter is actually used to save for our next car, but serves as a backup EF well beyond our projected expenses until then.

Having $70k in savings is questionable IMHO. Why not invest part of it in something very low risk that you can access without penalty?

[JulieAlbright]

I have around $20,000 cash sitting in various savings accounts. It was significantly higher before the summer but my husband just bought a car. Now we're building it back up.

I also have a Roth IRA and yes I've always noted that in the case of an Emergency that spills over my readily available cash, those contributions are available.

I read Goldy's struggles to get these house closings done and haven't really commented. Mostly because just the stories brings back some of the stress of what we've gone through a couple of times when Real Estate closings have stacked up with a series of Contingencies and then one thing sends 3 to 4 sales tumbling to dust and I really don't want to relive that stress.

Why did she do it this way? People don't always have the luxury of waiting until they have a huge cash balance available to them to move houses. If I were to move today, I'd buy the new house and then once I was settled I'd sell this one. But I've had a couple of decades now to get my finances built up to where that would be an option.

[MonkeyMama]

We have 8 months' expenses in cash and will probably hoard up some more cash for short term expenses and situations. We have always had a strong cash position, which is very useful financially.

We have used our ROTHs as an EF in our younger years when building up wealth. If I had to choose, I would have chosen a cash EF over a ROTH. But the beauty of the ROTH is you don't have to choose. We put the cash in our ROTH space for a few years. Over time we saved enough cash outside of ROTH that we felt comfortable and we invested the ROTH money. Win-win. (Odds would be so slim that I Would ever touch that money but it would have been there for us in an extreme emergency). IT's not a sound strategy if you have to dip into your ROTH every time your car breaks down or you lose your cell phone. Know what I mean? This was to top off our robust EF and to max out our ROTHs when otherwise I would not have felt comfortable shorting the EF for our retirement.

[feh]

The configuration of one's EF will depend on their situation...number of people working in the household, security of job, investable assets, etc.

We keep around $10K in cash. If I know we'll have a large purchase coming up, I'll increase that amount instead of investing our budget surplus. If, for some reason, we needed more than our cash balance immediately, we have short-term investments we could access (short term munis, CDs, I Bonds).

[Permanent Temp]

I have about 4K in an EF. I have about 10K in cash saved up (incl the 4K) but the rest of it is for 5 months worth of expenses. This is because I am a temp and don't have steady employment. It looks like I might have another contract lined up soon though so there's that.

If I get more work soon I'd like to build up the EF to 10K to help with the cost of getting another vehicle at some point.

[krantcents]

I have a variety of emergency funds. I use credit cards for a few hundred dollars. I still pay it off at the end of the month. I have a line of credit for more significant dollars and I have a brokerage account. I am pretty good at planning and usually have not had significant surprises.

[jpham540]

I have $20,000k in my EF, and normally hold at least 10k in my checking account. I have taxable investment but don’t look at it as a taxable EF. My taxable is for long term growth also includes my 401k, and IRA/Roth. At one time I had $40,000 for my EF, but decided that I should lower it to $20,000 and invest it in the stock market since I have time on my side. If my EF gets depleted then I guess I have no choice but to tap into my taxable investment.

[creditcardfree]

We currently have about $45K in money market accounts. I consider $20K our emergency fund. The other cash is for possible down payment on the next home we purchase. I have considered some CDs, but honestly have just been procrastinating!

[disneysteve]

Our money is spread around. We keep a buffer of a few thousand in our checking account. We keep some actual cash on hand. We own some I bonds. We have a money market account. We have cash in our brokerage account. All together, it adds up to a nice EF.

[creditcardfree]

I should also add, that I would never consider my ROTH IRA a part of my emergency fund. I've always believe one should NEVER touch retirement funds until retirement. EVER. I'd rather borrow money than touch that money. I think since I have this philosophy, I'm more likely to save and keep an actual cash emergency fund for the emergencies and cash needs for pre retirement needs.

[dcperilli]

I should also add, that I would never consider my ROTH IRA a part of my emergency fund. I've always believe one should NEVER touch retirement funds until retirement. EVER. I'd rather borrow money than touch that money. I think since I have this philosophy, I'm more likely to save and keep an actual cash emergency fund for the emergencies and cash needs for pre retirement needs.

I agree. I believe EF should be in cash where you can go to the back one day and withdraw.

[Goldy]

We have about 33k in cash and another 15k in series EE bonds. There are some other taxable investments and a bunch of company stock but I don't really consider that my primary EF. I'd like to get the cash up to 40k then focus on other things.

[TBH]

I have about 4K in an EF. I have about 10K in cash saved up (incl the 4K) but the rest of it is for 5 months worth of expenses. This is because I am a temp and don't have steady employment.

I'm in the same boat. My employment is very uneven. Right now I have a sinking fund with 3 months' worth of salary. Including that sinking fund, I've got about $20K in cash, which is very low for me. It's low because I just used most of my available cash to buy a rental property. I am now trying to rebuild cash. Usually I have $30K in emergency funds on top of my sinking fund for my salary.

In the meantime, my emergency reserves include a HELOC and I also moved $15K in my Roth IRA into cash, just in case. Do I approve of using a HELOC or a ROTH as an emergency fund? No way! But until I rebuild my cash accounts, it does give me some peace of mind knowing I have those available.

[jIM_Ohio]

I have $1000 cash at any given point in time.
My budget also has about $1400 of free cash flow each month- this is discretionary money I can allocate if I need to on top of emergencies.