Do I have enough EF?

[corn18]

As it sits right now, I have enough saved up in my emergency funds to cover:

4.6 months of current expenses
9 months of emergency spending (no dining out, gifts, vacation, reduced spending in other areas...)

If I total up all my liquid funds (car, non-retirement investment, cash) I have enough to cover:

24 months of emergency spending.

I think that's enough. Appreciate your thoughts.

Tom

[HappySaver]

I think job stability affects your needs. But in general your EF sounds good to me!

[MonkeyMama]

Agreed with Happy Saver. Depends what kind of emergencies you are saving for and the odds of those emergencies happening in your situation. But overall, sounds good to me.

[autoxer]

That is a very healthy emergency fund. Once you have decided that is enough, are you going to start spending more instead of saving?

I'm also wrestling with the decision about how much is enough. In the last year, I have ratcheted up my savings rate and I currently have about 6 months in savings and 9 months in a brokerage account. I don't necessarily need to maintain this savings rate for my long term plans, but I'm no longer comfortable spending money the way I used to. There are things that I want to spend on, but I kind of feel guilty about it.

[corn18]

That is a very healthy emergency fund. Once you have decided that is enough, are you going to start spending more instead of saving.

Thanks to advice here on SA, I made a commitment to live off of my salary (minus 401k savings) and save all of my pension and bonuses. So the EF monthly savings will go into a taxable savings account with no designated purpose at this point. I really want to buy a vacation / rental property to get some non-salary based cash flow going. So maybe it can go towards a down payment on that.

Tom

[CrisAdams]

If you maxed out the 401K, how about also putting money in a Roth IRA?

[corn18]

IRA's are max'd out as well. I do a backdoor Roth for my wife and me because I am over the AGI to do a straight Roth.

[Nika]

I try calculate my "EF needs". with a little bit of padding.

For example, are you really calling to cancel all cable/internet bundle the day of the emergency? Most people won't, so I just build it into the number.

Or "no eating out" at all. Sounds right in theory, however, depending on the emergency, might not be realistic. Sure, if you lost your job you may not eat out. But what if the emergency is medical or of another sort? From experience I know that after you have a draining day at the hospital, looking at grocery circular or cooking might be far from your priorities. You will not care about those things, and eat out just because the place is there or on the way, not for any kind of entertainment purposes.

[corn18]

I try calculate my "EF needs". with a little bit of padding.

For example, are you really calling to cancel all cable/internet bundle the day of the emergency? Most people won't, so I just build it into the number.

Or "no eating out" at all. Sounds right in theory, however, depending on the emergency, might not be realistic. Sure, if you lost your job you may not eat out. But what if the emergency is medical or of another sort? From experience I know that after you have a draining day at the hospital, looking at grocery circular or cooking might be far from your priorities. You will not care about those things, and eat out just because the place is there or on the way, not for any kind of entertainment purposes.

Good points Nika. I could go 4.6 months and not change a thing. Or 9 months if I cut back. So the real EF is probably somewhere around 6 months.

[MKKShah]

Very good point by Nika.

Know your bare bones basic needs / COL is a good thing. But you have to be realistic about whether or not you can actually live like that, and if not, pad your expenses a bit and plan accordingly.