|
|
Post by magentapea on Jul 19, 2015 0:34:12 GMT
How big of an emergency fund is comfortable for you? Not in an "it's easy to save this much" way, but more in a "Whew! Thankfully I have enough money to cover that" way.
I know Dave Ramsey says to have $1,000 in an emergency fund, but it just doesn't feel like it would be enough. A couple of years ago I had to replace my washer and it was over $1000. And as we have seen, when it rains, it pours with emergencies. I want to have enough in there so that replacing a washing machine doesn't empty out the account. Does anyone have a bigger fund while still carrying debt?
|
|
|
|
Post by marzbar71 on Jul 19, 2015 0:53:22 GMT
I read DR a long time ago, but I kind of remember the $1000 is until you've paid down debt then you increase your Emergency fund to several months expenses. It seems counter-intuitive to sock away money for a "what-if?" when you are paying interest on debt.
I'm only carrying a 0% car payment and a 4.5% mortgage payment every month, no other debt. I currently have about a 4-6 month expenses Emergency Fund (that doubles as my "project" money as I want to improve or update things). If need be and I lost my job or something, I could go on an austerity plan and make that last probably 9-10 months.
|
|
|
|
Post by txdancermom on Jul 19, 2015 1:02:27 GMT
I would say a couple months worth of expenses at least, that could be used for major expenses if they come up.
|
|
Deleted
Posts: 0
May 3, 2024 12:40:36 GMT
|
Post by Deleted on Jul 19, 2015 1:11:04 GMT
Dave Ramsey says to have $1,000 in an emergency fund, but it just doesn't feel like it would be enough. A couple of years ago I had to replace my washer and it was over $1000. And as we have seen, when it rains, it pours with emergencies. I want to have enough in there so that replacing a washing machine doesn't empty out the account. Does anyone have a bigger fund while still carrying debt? We feel that because dh is the sole income earner, and works a straight commission position, we are better served to have a super beefy emergency fund, even when there's debt. He's been solid for 17 years but it's better to be prepared. We keep 6 months of expenses as an EF. When he travels outside the country, we max it out to 12 months. I also have a very narrow definition of "emergency ". I don't consider an appliance failure an emergency. I can make do with alternatives for a few weeks to a month if need be to prevent a purchase from being made under extreme pressure. |
|
Deleted
Posts: 0
May 3, 2024 12:40:36 GMT
|
Post by Deleted on Jul 19, 2015 1:13:50 GMT
We also believe in a pretty large emergency fund, but it only grew larger after we paid off the CC debt. But I don't think $1k is enough and would want more than that even if I had CC debt because the whole point is to stop using CCs and if you have to keep relying on them in emergencies, it's really hard to get them paid off!
|
|
|
|
Post by Basket1lady on Jul 19, 2015 1:20:34 GMT
I thought the standard was 9 months of living expenses? We don't have that much in savings, but have it in other investments where we can get our hands on if needed. The cost of living is high here and I'd hate to have that much money just sitting and not working for me.
|
|
|
|
Post by mrsscrapdiva on Jul 19, 2015 1:30:45 GMT
As a homeowner, $1000 would be pocket change, not nearly enough. I would say enough to cover mortgage, utilities, gas & groceries for at least a few months. My emergency would be if my dh got laid off (software engineering field) or if there was some sort of major medical emergency. We have been thru layoffs a couple of times and with savings and unemployment we were okay.
|
|
theshyone
Pearl Clutcher
Posts: 3,402 
|
Post by theshyone on Jul 19, 2015 1:37:32 GMT
6 months living expenses preferably 9 months of expenses. Truly need that much set aside.
My personal horror story of going from a double income family to a zero income family with my illness. I was hospitalized for four months. My husband didn't work for that four months plus the next two as he was looking after the kids and then me. Me Not being able to return to work has really stressed us financially.
An emergency fund really needs to be able to sustain you in worst case scenarios.
|
|
|
|
Post by moveablefeast on Jul 19, 2015 1:42:56 GMT
My goal is one year of lifestyle expenses - meaning enough to keep doing everything we spend money on today for one full year - in the bank at any given time.
I'm not there, but that's my goal.
|
|
|
|
Post by Woobster on Jul 19, 2015 1:48:54 GMT
We have just paid off everything except my car and our mortgage. We are focusing on building up at least a 6 month emergency fund.
|
|
|
|
Post by scrappyoutlaw on Jul 19, 2015 1:57:45 GMT
DH and I have a 3 month fund right now (it's been a tough year) and are currently on a freeze until we make it to a 6 month emergency fund, which should be done by September.
Sometime in late winter after doing some house projects we will do another freeze to get to a 9 month emergency fund. Rinse and repeat next summer for a 1 year emergency fund.
|
|
|
|
Post by Jennifer C on Jul 19, 2015 2:07:31 GMT
At this point, we have 24 months in our emergency fund. I also have $2000 in an emergency house fund, or I will once my dh gets paid once more.
I'm a SAHM with my dh being the only income. A few months ago we were facing a strike at the refinery he worked at and I was surprised the amount of people that weren't prepared. My whole family works refinery work and most of my dh's side also. I was raised getting prepared for strikes. My Mom just really stressed having a nest egg when teaching us about money.
Jennifer
ETA, I wanted to add that I was surprised because refinery work in my are is well paying. Most workers make 6 figures a year.
|
|
|
|
Post by melanell on Jul 19, 2015 2:36:49 GMT
$1000.00 can definitely get sucked up in a heartbeat. But I think Dave Ramsey, from what I can tell, is big on trying to give people goals that they can see themselves achieving no matter how hard things may be when they start on their journey with him. So, if you're starting with no savings and you're not making much and/or you are overspending and/or are deeply in debt, I can definitely see $1000.00 seeming like a real challenge and a real achievement once it is met. I like the idea of having at least a few months' worth of expenses available myself. Sometimes we're there, and sometimes, after things pop up, we're below where I want to be, and I start making the household announcements of "Hey, we need to stop with all the extras, people." or "For the next few weeks (or months) we are broke, guys. Broke! You hear me?"  I always find the easiest way to save money is to make everyone act like we just don't have any. We have had a few things to fix or replace on the car the last month, plus a few medical bills that were unexpected, and they have been spread out enough that until this last medical bill we hadn't been stuck hitting the saved money, but I think we will have to do so to pay this one bill, and then I'll be right back to replacing it. So I've already been issuing the warnings around here. |
|
|
|
Post by AN on Jul 19, 2015 2:57:32 GMT
6 months expenses is where we are comfortable, and then we have fairly substantial sinking funds for foreseeable expenses. We are out of debt though (after 10 years following DR).
I agree with you that $1000 is a very low baby emergency fund, and it does irritate me that he doesn't flex that number up at all with inflation or life circumstance. Although I see his point that that is more than a lot of people have anyway, and if you have too much you don't feel that fear that makes you gazelle intense.
I personally think it would be ok to have anywhere between $1000 - one month of expenses as a baby emergency fund. That is low enough that no one is going to sit back and feel at total ease, but higher than the 1k in situations where people may want or need more.
|
|
|
|
Post by Crack-a-lackin on Jul 19, 2015 3:53:21 GMT
Dave Ramsey advocates 3-6 months for an emergency fund. The $1K is only while you're paying down your debt. It's supposed to be a low amount so you feel panicked so you'll get out of debt sooner.
|
|
|
|
Post by mikklynn on Jul 19, 2015 11:31:13 GMT
I think 6-8 months of basic expenses is what should be in an emergency fund. marzbar71 When DH & I spend an unusual amount of money, we say we are going on an austerity program to replace the money. It mad me smile when you also used the word "austerity". We are doing it right now, as we are just finishing up a major remodel in our home. |
|
|
|
Post by susans sister on Jul 19, 2015 17:30:09 GMT
I have always thought that $10,000 is a good amount for an emergency fund. You can replace a furnace or a roof, buy a good used car or handle a medical emergency with the help of insurance.
|
|
|
|
Post by chaosisapony on Jul 19, 2015 17:36:59 GMT
I'm comfortable with 3 months living expenses in a savings account. I can manage that pretty easily. Ideally though I would like to extend that to 9 months since I live in an area where it is extraordinarily difficult to get more than a minimum wage job. I've worked hard to create and maintain a lifestyle that is comfortable without requiring a large income so my goal is to always be able to afford to live on minimum wage if necessary.
|
|
|
|
Post by anonrefugee on Jul 19, 2015 18:12:56 GMT
melanell I think your right about the $1K. It's a big number for some, but doable and covers "emergencies" that might otherwise go on a credit card. I get your broke comments too. I feel like we're bleeding money this summer. I've been telling boys we're broke and need to cut out some fluff but they're not picking it up. It's first time for both to have jobs and they think they're "rich". I was taught six months of income on hand per person- but that's hard to accept with regular interest rates so low. We're not at the point I could have two years worth sitting when it could be working a little.
|
|
freebird
Drama Llama
'cause I'm free as a bird now
Posts: 6,927
|
Post by freebird on Jul 19, 2015 18:19:11 GMT
If you're talking Dave Ramsey, there's a difference between an emergency fund, and a fully funded emergency fund.
Emergency fund is $1000 (and sometimes he's ok if you save a bit more). That's for if your dog gets hit by a car, you lose a crown or you're in a car accident and have to pay a deductible. I don't think he would think a new stove is an emergency when you can get by with a hot plate or microwave for a couple months, or buy a used one off of craigslist for $100.
Fully funded emergency fund is after you've paid off your debts (except your house). 3-6 months of living expenses. This is if someone goes into the hospital, if mom gives birth 2 months early, if your spouse passes away, etc.
|
|
|
|
Post by PNWMom on Jul 19, 2015 18:22:44 GMT
I think Suze Orman advocated an 8+ month emergency fund (8 months of all expenses). You can count money that you have put into a Roth IRA, since you can remove that without penalty. It would take a couple days to get actual access to it, so immediately accessible money is really important, too.
Between our Roths and money actually in a bank account, we probably have ~14-16 months available in a pinch. To pay the mortgage and bills and food and all of that. We are big into SmartyPig and have several accounts with them for a variety of potential expenses (eventual new car fund, eventual baby fund, money for Seahawks season tickets, etc. Anything that is a large dollar amount that we think we will need to pay in the future). We try as much as possible to anticipate things.
Of course, stuff comes up. Our dryer died in May and we bought a new washer/dryer set for $1700. But we used our credit wisely and got a 0% deal through Home Depot and will have them paid off well before that offer is up.
|
|
|
|
Post by anonrefugee on Jul 19, 2015 18:31:01 GMT
I think Suze Orman advocated an 8+ month emergency fund (8 months of all expenses). You can count money that you have put into a Roth IRA, since you can remove that without penalty. It would take a couple days to get actual access to it, so immediately accessible money is really important, too. Between our Roths and money actually in a bank account, we probably have ~14-16 months available in a pinch. To pay the mortgage and bills and food and all of that. We are big into SmartyPig and have several accounts with them for a variety of potential expenses (eventual new car fund, eventual baby fund, money for Seahawks season tickets, etc. Anything that is a large dollar amount that we think we will need to pay in the future). We try as much as possible to anticipate things. Of course, stuff comes up. Our dryer died in May and we bought a new washer/dryer set for $1700. But we used our credit wisely and got a 0% deal through Home Depot and will have them paid off well before that offer is up. What's smarty pig? And please, tell me about your washer |
|
|
|
Post by maryland on Jul 19, 2015 18:44:58 GMT
It doesn't seem like $1,000 is enough when cars repairs could cost well over that (just had major car repairs on both of our cars). Also, buying new appliances every 5 yrs. or so is also expensive (because they don't seem to last long anymore, even though we get Consumer Reports Best Buy. But it can be very hard to save up that much money. I say do the best you can to put some money away, but something is better than nothing.  |
|
Deleted
Posts: 0
May 3, 2024 12:40:36 GMT
|
Post by Deleted on Jul 19, 2015 21:07:58 GMT
If you don't have an emergency fund how on earth do you think you can retire?
Color me clueless - everyone should be putting money away that is never touched! Once you have six months emergency fund, your next goal should be seven months, next goal eight months.
|
|
melissa
Pearl Clutcher
Posts: 3,912
|
Post by melissa on Jul 19, 2015 21:15:31 GMT
A bare minimum of 6 months of living expenses should be the initial goal. Goal should be a year.
Talking normal daily expenses- food, house (mortgage, utilities, etc), gas, any car payments, etc.
|
|
|
|
Post by melly on Jul 19, 2015 21:25:09 GMT
I would be so happy to get even one month's expenses saved up! We have about $1000 right now, but it has taken a couple years to save that up. We are not in any debt, just have our mortgage. But even with never going out to eat, buying clothes, going out to movies, cable tv, vacations, etc... We are only able to save a tiny bit each month. It doesn't help that we keep having small emergencies- car breaking down, washing machine dying, things like that, that keep eating away the little savings that we do have. I would LOVE to be able to save more, I would worry a lot less if we had a financial cushion! |
|
|
|
Post by magentapea on Jul 19, 2015 21:41:19 GMT
If you don't have an emergency fund how on earth do you think you can retire? Because we have money invested in 401(k) and IRA, as well as in mutual funds. We are planning on using that when we retire. I don't consider those accounts to be part of our emergency fund because the cash is not easily accessible. |
|
|
|
Post by melanell on Jul 20, 2015 0:11:26 GMT
If you don't have an emergency fund how on earth do you think you can retire? Our retirement savings are totally separate from anything else. Our regular savings are for day to day issues that pop up that are beyond what we can absorb by simply spending less on something else that month. The only reason we refer to them as being emergency money is that we wouldn't dip into to it to pay for camp or a trip or something like that. We would save separately (and on top of our regular savings.) for things like camp, weekend trip, vacation, etc. |
|
Deleted
Posts: 0
May 3, 2024 12:40:36 GMT
|
Post by Deleted on Jul 20, 2015 2:50:20 GMT
Dave Ramesy's $1000 emergency fund is a step 1 "baby step"
Most people he works with are deeply in debt. Saveing $1000 is huge to them, but do-able. It sets them up to start thinking of having funds available to cover emergencies instead of relying on credit cards. For me, $1000 isn't a comfortable savings but I recognize Dave isn't saying it should be.. it is simply a baby step.
As you get deeper he advocates for other savings funds such as 15% of income going to retirement savings, a "full emergency" fund of 3-6 months living expenses if you lose your job, college funds, etc.
|
|
|
|
Post by PNWMom on Jul 20, 2015 3:09:27 GMT
What's smarty pig?
And please, tell me about your washer Smarty Pig is a website here that can help you with saving for a specific goal. Pick an amount you need saved, and choose a date you need it saved by. Smarty Pig will figure out how much per month you need to save to reach your goal. We use it for things like Seahawks season tickets--we know we will need a few $K at a certain part of the year. We have a smartyPig account for that and the money gets taken out of our bank account automatically (on the dates we choose ahead of time) and put into the smarty pig account. We get interest on that account (right now it is reeeeally low, but was up around 3% when we first started doing this years ago), and it is FDIC insured. We can take our money out any time and lose the interest, or keep it if we wait until the account is funded in full (for whatever amount/date we originally chose). They will also let you put the amount onto a retailer gift card (Amazon, Macys, Old Navy, etc), and get an extra % added in if we do that (we don't personally, but there are great deals there). Basically...we are terrible at saving if we have to actually put the money somewhere each month. But, if we have it taken out automatically by smartypig for our various funds, we are good with that. We have over $10K in different funds there right now, and don't take a big hit for planned large expenses--we have a vacation fund, etc there. A few years ago I had a cancer diagnosis and was basically told at one point that I had 2ish weeks to decide if I ever wanted to have kids, and come up with $10k to pay for fertility treatments upfront to freeze embryos before starting chemo. We had SmartyPig accounts for vacation, future kids and a car. We (mostly) cleaned them out and now have some embryos awaiting my oncologist's OK to go ahead. We would not have had that money saved if we had to actually put it in an account ourselves every month. So. As for the washer/dryer.....we went with LG stackables and love them! It has only been ~ 2 months, but I am quite impressed with the cleaning abilities and the efficiency and basically have nothing bad to say. Our dryer had died, but the washer was ~10 years old and we are planning to have a baby(ies) next year and have heard that is a washer/dryer killer so we replaced them both. |
|
I always find the easiest way to save money is to make everyone act like we just don't have any. 
