When do you need a emergency fund?

[Jluke]

I prefer to consider retirement accounts to be off limits for anything but retirement and life-threatening emergencies after other monies have been exhausted.

Agreed - I quickly put that list together and tried to organize it in a pecking order; that's why I put Roth at the very bottom. Notice I didn't put 401k at all.

[FLA]

Since Roth contributions can be withdrawn at any time for any reason without penalty, some people do consider that their EF. I think it was Suze Orman who would sometimes recommend this method. I think as long as you have sufficient retirement savings elsewhere (like a 401k), this is okay, but I prefer to consider retirement accounts to be off limits for anything but retirement and life-threatening emergencies after other monies have been exhausted.

I never used it but it's comforting knowing it's there. Now I have a proper EF. Once I got sick, I realized pretty quick why people have EFs, now I'm a convert.

[scfr]

You wouldn't need a separate account that is specifically designated as your emergency fund if you are someone who is able to keep funds co-mingled while tracking the multiple purposes for those funds, and if the cash/other liquid assets portion of your portfolio are sufficient to easily cover emergencies.

[disneysteve]

You wouldn't need a separate account that is specifically designated as your emergency fund if you are someone who is able to keep funds co-mingled while tracking the multiple purposes for those funds, and if the cash/other liquid assets portion of your portfolio are sufficient to easily cover emergencies.

True. I think it is just a matter of semantics at that point. You have an EF. You just don't call it that. That's how we are.

[LivingAlmostLarge]

A cash EF could also just be slush in a checking account. At least for us it's the regular overrun. Other stuff is invested and we would cash it out in a heartbeat. But in general we do keep probably a $5-10k cash buffer in checking account for conveneince.

[snafu]

I suspect james.h's mom has other income streams like SS, investment income or similar.
For those who are aware of the need to manage their income and expenses, an EF is likely defined by how you see it being used. In our case, we decided it was transitional money to pay 3 months of our most basic expenses if we suffered a loss of employment. We figured 3 months was sufficient in our specific circumstances to adjust financial commitments since medical is a one payer system, no mortgage, no vehicle payments.

Our liquid funds do double duty meeting other goals like eliminating chequing account fees by maintaining a $1 K balance, 1% house value for maintenance, update, upgrade, vehicle maintenance contributions + replacement sums, vacation/travel, and a saving linked to chequing to facilitate sweeping small left over sums until sufficient to move to investment stream, have potential to convert to Emergency Funding.

I really try to cash flow large, unanticipated costs/expenses by slashing spending where ever I can. If pushed, I'd opt for a 0% CC

[sv2007]

I was talking about this with my mom last night. She has a ton of stocks and bonds set up for her retirement as well as a healthy amount of cash. She also doesn't have an account thats a specific "emergency fund". He reasoning is that her cash situation is very healthy and she has enough in stocks to cover any emergency that could come up.

Do here is my question to you guys: obviously if you are a multi-millionaire you don't need an emergency fund, but when else would you not need one?

Well, I can tell you that even a multi-millionaire still needs an emergency fund if there's no cash in the accounts (i.e. everything is fully invested). It is just good financial planning as you don't want to always go into margin and may have to liquidate at a bad time (or just that management/thought of needed to cover is just not worth the trouble).

We keep usually have about 20% of our normal brokerage accounts' values in cash. That's been enough for pretty eveything (FOREX trading AC replacement, car replacement, buying small houses, whatever). When we need more money without much notice, we'd go into margin (which have surprisingly low rates).