Do you have an Emergency Fund?

[megumic]

I'm wondering how many people have emergency funds and, if yes, how many months of expenses you've got socked away.

Most financial planners and advisors will say to have 6 to 8 months of expenses tucked away in the event someone loses a job or there is an unexpected life event, tragedy, etc. While we've got the cash socked away, we're wondering if it's just burning a hole in our bank account and if it should go toward student loan debt. (Groan, I know, I can't stop worrying about it and I know you've all heard me complain about it before!!!)

What do you have stashed away? What's your strategy when it comes to an emergency fund?

 

[princesss]

I've got about 3 months saved up. I thought I had a little more than that, so obviously I need to get back on the savings wagon. But it's enough for me to be comfortable taking a big vacation, lol! (To be fair, though, I probably wouldn't take a trip this expensive if it weren't a time sensitive one - the Rugby World Cup is only happening in NZ this year, so I have to go now in order to see my favourite team at home in the RWC. Otherwise I probably would have just popped over to Prague for a week instead of 2.5-ish weeks in NZ.)

 

[GamerGirl]

Right now I have enough for at least a year of expenses - although I'm getting ready to move / buy all new furniture so a good chunk of that will be eaten up in the next couple of months. Moving plus the new expenses of living on my own would probably drop me to the 6 -8 month range.

 

[rosetta]

I have a year's salary tucked away.

This will be decimated when we buy our house in the next six months!

 

[ForteKitty]

My emergency fund will last me about 3 years living comfortably, or 5 years living a bit more frugal. Would have a lot more of i didn't get into gems!!

I also have Apple stock that's saved for a real big emergency... bought when they were $26/share, before they split. Not touching that unless i absolutely need it and the emergency fund is depleted.

 

[lizzyann]

We have the recommended 8 months saved. For us, we feel it is really important that we do not drop below that because I am a SAHM.

 

[mayerling]

We have enough money in the bank for about 6 months of expenses, but I wouldn't call it an emergency fund. An emergency fund to me implies that it's money saved away only to be used in case of emergency, whereas the money we have is there for anything we might need or want.

 

[Autumnovember]

I have zero, zip, ZILCH.

FI has a years worth of salary put away living the lifestyle he does now. If he had to live off it for 5, he could.

 

[stephbolt]

We've got a month or two saved. We had more before we bought our house last fall. I think the amount in your emergency fund should be directly related to the amount of job security you have. My husband has a very high level of job security, so we are focusing our extra money toward paying off debt and improving our home instead of putting it all into an emergency fund. We still transfer money into our emergency fund weekly though, but not as much as we could if we made it our first priority.

 

[Dancing Fire]

I'm wondering how many people have emergency funds and, if yes, how many months of expenses you've got socked away.

Most financial planners and advisors will say to have 6 to 8 months of expenses tucked away in the event someone loses a job or there is an unexpected life event, tragedy, etc. While we've got the cash socked away, we're wondering if it's just burning a hole in our bank account and if it should go toward student loan debt. (Groan, I know, I can't stop worrying about it and I know you've all heard me complain about it before!!!)

What do you have stashed away? What's your strategy when it comes to an emergency fund?

diamonds!,and keep it away from the wife..

 

[Dancing Fire]

My emergency fund will last me about 3 years living comfortably, or 5 years living a bit more frugal. Would have a lot more of i didn't get into gems!!

I also have Apple stock that's saved for a real big emergency... bought when they were $26/share, before they split. Not touching that unless i absolutely need it and the emergency fund is depleted.

..FK...will you marry me?..

 

[NewEnglandLady]

I've had an emergency fund since I was 16, even while paying off college debt and living on rice and beans.

When I was younger (in college) it was smaller. Just enough to pay for any emergency car repairs or maybe a laptop if mine crashed. Now our bare minimum in the emergency fund is 6 months' worth of expenses. We used to keep it in a separate account, but since buying the house we've sort of kept it all in one account and anything on top of our "minimum" amount is savings.

We had a very expensive expense creep up while buying our house, so I was really glad that we had the house savings completely separate from the emergency fund. I had a minor freak out about going through so much money at once, but if we didn't have them both, it would have been a much worse situation.

I think that so long as you and your DH are both comfortable with the amount in the emergency fund, then it should be a little flexible. I know you're paying down some sizeable school debt and also want to save for a house, so financially you're pulled in several directions. For you, maybe something like three months or five months is better until you get the debt down?

 

[Dreamer_D]

We do not have an emergency fund at present.

We have a modest amount of debt left from my schooling years and that we accrued when we bought our house (moving accross country and setting up our house was very pricey). The interest rate on that debt is much higher than we would earn in most easily accessible savings accounts. So we are putting all our extra money each month towards the debt.

For emergencies, we have access to about 3 months worth of expenses in unusued credit. We also both have disability insurance through our jobs, adequate life insurance policies, and our country has employment insurance to cover us in the event of a job loss. For us, these things mean we feel safe not presently having savings. We are young and employed in very stable jobs, so playing the odds, our risk is low. We do have retirement savings through our jobs, though.

When our higher-interest debt is paid off, we will begin saving an emergency fund.

 

[partgypsy]

We have about 2.5 months of an emergency fund.
This is something my husband and I disagree about. My job is actually fairly stable, his is as well plus he can pick up additional hours if need be. My rationale I would like to have more is simply because we have dependents, and something could happen (car accident, etc) that could put us both out of action.
His rationale is that we have already experienced job losses (on my part), multiple medical catstrophes, and emergency expenses since we've been together and gotten through them without having a more than a minimal emergency fund.
It is true we can be very resourceful with our money if need be. At this time I wouldn't mind another month in there for cushion, but if I had additional money beyond that I would put it towards other things (retirement, college savings, vacation fund).

 

[April20]

Liquid, we have about a year's worth of living expenses. I have an additional six-eight months tied up in investments.

 

[aviastar]

I have about 3 months saved up, but it's more of a 'planned large purchase' account than emergency fund. I knew I would need to travel for a wedding this year so I started socking away cash every week to cover that cost and the rest in there right now will probably go to cover new tires and getting my car generally worked on and up to date.

However, said car will be totally paid off in July (YEA!) so I will have extra cash each month to go back into the savings account. Plus, I have about a month's worth of food storage, water, gas so in a real emergency (financial or physical) I wouldn't starve.

A a single girl working a couple of jobs- all small businesses- I feel pretty happy I am able to save as much as I do, and feel it's pretty important to continue. My boyfriend has different feelings and wants to reinvest any extras in the family business, so we have agreed when the time comes to merge our finances that we will set a 'savings threshhold' and save up to that point and then re-invest everything beyond that.

Good question!

 

[rubybeth]

Right now we have about 5 mos. worth, without any frills, just would cover the bills and food. I'd like to get it up to 6-8 mos. worth since our jobs are subject to elimination based on budget cuts. We are putting extra money each month toward student loan debt, the only debt we have. I hate our debt with the passion of a thousand burning suns and want it to be gone before we buy a house, if we ever do buy a house. I think it might be tough to go back into debt after paying it all off--part of me wants to just save and pay cash for a fixer-upper.

Someone gave me this link about student loans--very interesting: http://i.imgur.com/vJm22.jpg

 

[Bella_mezzo]

We are pretty much at our all-time low in savings right now

In the past two years we've bought our co-op, invested in paying a chunk of my MBA tuition directly, are in the process of adopting internationally, and DH has been laid-off for 9 months and is about to go back to school and be a stay at home dad for the next year

We currently have just 1 month in liquid assets (savings account) which will be used this summer for part of my maternity leave--though we're trying to build it up so we still have the one month in savings after that b/c it freaks us out to have no cash buffer.

We have access to an additional 2-3 months of living expenses in credit at a fairly low interest rate.

We also have significant student loan burdens and some retirement savings and investments (the liabilities and assets pretty much equal each other right now but we do have cash flow flexibility with selling investments/deferring student loans, etc. and we do have equity in our co-op (though the actual amount would be subject to the vagaries of appraisers in the current market )...

it's not ideal, but all told not nearly as bad as it could be. In the next 2-3 years we should be in a much better place. I would feel more comfortable with 3 solid months of living expenses in liquid savings, 3+ months as available credit, and having paid a chunk of our student loans with a firm plan to pay the rest (not just the monthly payments)!

Personally, 12 months of savings is overly cautious for me (though I wouldn't turn it away if someone wanted to give it to me ) but my job/field is also pretty secure and we are both relatively young and healthy. If my field were more volatile or we were older/in poor health then I might think 12 months was more important.

 

[NewEnglandLady]

Right now we have about 5 mos. worth, without any frills, just would cover the bills and food. I'd like to get it up to 6-8 mos. worth since our jobs are subject to elimination based on budget cuts. We are putting extra money each month toward student loan debt, the only debt we have. I hate our debt with the passion of a thousand burning suns and want it to be gone before we buy a house, if we ever do buy a house. I think it might be tough to go back into debt after paying it all off--part of me wants to just save and pay cash for a fixer-upper.

Someone gave me this link about student loans--very interesting: http://i.imgur.com/vJm22.jpg

Not trying to threadjack, but this was exactly how I felt. Our only debt was my student loans and when they were gone, it was liberating! I really wanted to pay cash for a house, but we were stupid and lost our hat in the stock market. We still put down more than 20%, but debt is debt and it was really hard to shift from being completely debt free to having debt again. Recently our retirement funds exceeded our mortgage amount and having more assets than debt made me feel slightly better, but it's not the same as being 100% debt free. Hopefully we'll get back soon!

 

[kittybean]

We have a little more than 6 months' worth of expenses tucked away now. By the end of the year, we're hoping to have a year's worth.

 

[kama_s]

We have always had a separate fund for investments and another for savings. The investments used to be in the stock market, but was mostly directed into the down payment of our new house. We have another account for savings with around 1.5 years worth of expenses (although that is calculated at our current high-cost of living, if we were to lose our job, we could make this work for well over 2 years at the minimum). That said, we are thinking of moving some of that money back into investments, and only leave about a year's worth of savings in the untouched savings account.

 

[GingerP]

Yes. We have 9-10 months worth in emergency funds, which is sitting in a 2-year CD. (I wish it was high-yielding, but I'm not sure those exist anymore.) We are trying to figure out the best way to invest it while maintaining its liquidity; however, we are pretty risk-averse and don't know much about investing. On top of the emergency fund we have about the equivalent in savings.

We are facing a similar quandary about what to do with the savings, as we could pay off additional principal and lower our mortgage. On the other hand, if we were to start a family in a couple years, it's possible that I would stop working for a bit. That means we would lose more than a third of our income, and the cash savings would be incredibly helpful. To complicate matters, we don't know if we will be having children, so all of this planning could be for naught (but that's a whole other issue).

If you feel your jobs are stable, maybe you can rotate money in and out of your emergency fund and apply that money as additional principal to your school loans. For example, if you make $1500/week and spend $1000/week, you would have an extra $500/week of disposable income, or $2000+/month. You could take that $2000+/month from your emergency fund and apply that as additional principal to your school loans. Once you accumulate that extra $2000+/month from your paychecks (or more frequent deposits of $500/week) you can put that money back into your emergency fund. These days you can do this easily by using direct deposit. If at any time you feel stretched or you feel your job situation is no longer stable, you can stop the extra payments a month early and allow your emergency fund to replenish to its original amount. Hope that makes sense. I'm now considering this myself.

 

[megumic]

Interesting to read everyone's thoughts. Seems many people believe in the e-fund...anyone against it?

It kind of feels like we're burning a hole with it since it sits and it could pay off half of one of my student loans. At the same token, having it liquid and paying the interest on the loan is probably worth the security if an emergency did come up. Like others mentioned as per their situation, we don't have kids, we're young, and have secure jobs. Those factors matter, but how much?

 

[Bella_mezzo]

for me a lot would depend on the amount of money and the interest rate.

 

[purselover]

Right now not really because DH just finished law school and I just started grad school so we haven't been working. In the next few weeks though we will be getting a decent amount of money from DH's employer that will become our emergency fund (it'll cover about 3 months of expenses at our current spending rate.) Obviously we hope to build that fund when DH starts work in Sept.

 

[diamondringlover]

I have a half a month, does that count? just too many other expenses right now to save money.

 

[iheartscience]

Interesting to read everyone's thoughts. Seems many people believe in the e-fund...anyone against it?

It kind of feels like we're burning a hole with it since it sits and it could pay off half of one of my student loans. At the same token, having it liquid and paying the interest on the loan is probably worth the security if an emergency did come up. Like others mentioned as per their situation, we don't have kids, we're young, and have secure jobs. Those factors matter, but how much?

I'm not against emergency funds, but I don't think it makes sense to keep 6-8 months worth of living expenses in savings if you have debt. If I were in your shoes I'd probably pay off half the loan with the savings and keep maybe 2 months worth of living expenses. (Of course this all depends on whether or not you have a secure job.)

As for us, we have probably 2-3 months worth of living expenses in savings right now. We just moved and were paying our mortgage and rent for three months, plus double utility bills, so that helped lower the amount! We do have stocks that we could sell if necessary. However, my husband's job is very secure and when I start my job (just accepted an offer today!) it will be very secure, too.

Plus honestly, if we were really broke, I know my parents would help us out. I don't get any money from them and haven't for years, but if there was an emergency I know I've got the bank of Mom and Dad as a back up.

 

[Haven]

Interesting to read everyone's thoughts. Seems many people believe in the e-fund...anyone against it?

It kind of feels like we're burning a hole with it since it sits and it could pay off half of one of my student loans. At the same token, having it liquid and paying the interest on the loan is probably worth the security if an emergency did come up. Like others mentioned as per their situation, we don't have kids, we're young, and have secure jobs. Those factors matter, but how much?

I'm not against emergency funds, but I don't think it makes sense to keep 6-8 months worth of living expenses in savings if you have debt. If I were in your shoes I'd probably pay off half the loan with the savings and keep maybe 2 months worth of living expenses. (Of course this all depends on whether or not you have a secure job.)

As for us, we have probably 2-3 months worth of living expenses in savings right now. We just moved and were paying our mortgage and rent for three months, plus double utility bills, so that helped lower the amount! We do have stocks that we could sell if necessary. However, my husband's job is very secure and when I start my job (just accepted an offer today!) it will be very secure, too.

Plus honestly, if we were really broke, I know my parents would help us out. I don't get any money from them and haven't for years, but if there was an emergency I know I've got the bank of Mom and Dad as a back up.

I agree with Thing--I would pay off some loans if I were in your shoes. I'd probably save up a small fun of a few thousand dollars and then put the rest toward loans. I'm really uncomfortable carrying debt of any kind though, so I know some people have good reasons for NOT paying off all their debt right away.

We have an emergency fund of about six months, maybe a bit more. We put down a lot of money on our house so that dried up our funds for a bit, but we've slowly built them back up.

 

[elrohwen]

Currently, every cent we make goes towards our house downpayment. Once we get the house, we'll still owe my mom a bit for closing and first year of taxes, so the money we make will go towards paying her back quickly, plus buying necessary lawn equipment, etc.

I'm honestly feeling extremely uncomfortable with giving up all of our savings for a house! We still have a decent amount left over each month, and I know if we had an emergency my mom would waive her monthly payment, but I really don't feel comfortable giving up my emergency fund.

Once we get the house, I plan to save up at least 3, but hopefully more like 6-8 months of savings.

 

[packrat]

Not one cent. We tried. Over and over. I had a nice savings built up before we got married. Crap happens and I think Murphy spent a good couple years knocking on our door every time we got ahead the slightest bit. After a while it was like..feck it.