I love my Emergency Fund, and I'm a firm believer that everybody, whether they're into personal finance or not, should have some sort of EF to fall back on.
We are all adults, and we have to rely on ourselves when things get tough, or when unexpected emergencies come up. We can't rely on our family for money, or our friends, or even the government to bail us out of a hard situation. It's kind of a harsh reality, but the only person you should truly rely on is yourself. At least in my opinion, anyway.
Most of you were with me when I was unemployed during the holiday season, and without my fully funded Emergency Fund, I wouldn't have been able to pay for rent, groceries, my cell phone, or travel costs to go to job interviews. I was supposed to get EI while I was unemployed, and I filed my paperwork on November 19, 2007. I didn't get paid out for my EI until February 11th, 2008 ... and by then, I had already found a full-time job. Without my EF in place, I would have had to live off of my line of credit, or my credit cards! But what if I was still trying to get out of debt, and I didn't have any room on my LOC or credit cards? Just the thought of that really scares me.
My Emergency Fund goal is currently at $3k (I'm sitting at 57.5% achieved), but once I hit that goal, I'll move it up to $5k ... with no set eventual target. Ideally, I'd like to just keep on saving and saving, but who knows what will happen down the road. I would feel very comfortable with $10-15k saved.
- So readers, do you have an eventual EF target?
- How much do you have right now?
- Do you think there comes a point where you can have too much in an Emergency Fund?
- Do you use a Line of Credit or a credit card as your EF? Why?
Good question! I think I would like to make sure I have about $5000 in my EF, right now it is sitting at $7000, and I am still putting money into it still to build up to make large lump sum bi-annual payments to my parents. They helped me out with a downpayment loan for my condo and I want them paid back ASAP. And while I could use more money out of my EF to pay them off sooner, I don't think I want the balance to drop below $5000. It's a number I am comfortable with. I guess it's a matter of each person's comfort level.
I have about $2500 (and saving) in my "not invested, hoping not to spend" account ... it hasn't been marked specificaly as emergency funds, but that's what I'm considering it until can figure out some investing/purchasing potential for it. (Purchasing like a home deposit, relationship-upgrade-through-jewelry etc.)
As a couple, my GF & I have a savings fund that could be seen as an emergency fund (~$1500+ today, $384 added monthly), except that we're really using it as a vacation saving fund, plus saving along the way for yearly expenses like apartment insurance.
So -- we have some cash stashed, but none of it's specifically hands-off.
I haven't envisioned a place to stuff that kind of money that's arm's-length enough to not be tempting, invested and earning enough to justify having all that money separated, but liquid enough that I could get at it if I needed to.
Right now I have $8,700 and my goal is to have at least $10,000. Some of it is sitting in 1 year CDs (I have a $500 one maturing each and every month) and then the rest as cash.
I don't think there are any of us who can be 100% sure that we'll never have emergencies. Anything can happen, including natural disasters, where we'll need cash fast.
I don't think there can ever be too much money in savings, but I will be saving for other things once my EF reaches $10,000...
Right now I have just over $3,000, but by the end of the year my goal is to have $5,000. I hope to always maintain at least $5,000 from there on out.
Ideally though, I'd have $10,000 to $15,000 in there (hopefully by the end of 2009!), at which point I'll quit contributing and start funnelling money into other investments.
I think a good goal to have is $10K or 3 months of expenses, whichever is larger.
Outside of my retirement accounts, I have 27K brokerage and 5K savings. None is really marked as EF. I can live off of 1,100/month. But EF would come from savings before brokerage.
My EF goal is $50 a pay period. I've got a little under $700 set aside for these purposes.
Yeah, it's not a big, shiny round number, but 1) I'm trying real hard to pay down my debts first, everything else second, and 2) It's enough to get into a habit but not enough to make me start going, "Baby wants to go to ComiCon San Diego on the Platinum Package and early bird registration runs out soon, that's an emergency", and 3) having done the Unemployed Dance myself last year, I know all the little bits of money I have in different savings pots (car, travel, et cetera) is actually a part of my EF, because if something comes down again, all money is rent money.
On that soi-distant day it gets over $10k, I think I'll reevaluate.
At the moment, I have $2K that is designated as my official emergency fund. This would cover approximately 1 month of expenses. I am saving $100/month to "extra" emergency savings, which are more for unexpected costs than for true emergencies.
I have more savings that are earmarked for a down payment, Christmas, car insurance, and future vacations. In a pinch, those could be used for an emergency. These total about $2K, and are increasing by about $500-$1000/month.
I also have a combined credit limit of over $30K in credit cards and lines of credit...I don't intend to use those for emergencies, but I could see using them in a catastrophe. Actually, I put most of my expenses on a credit card, so I guess it's like a 1-month buffer fund? I pay it off each month, though.
Overall, I'm focussed on saving for a down payment at the moment, but my "down payment" savings could really become emergency savings if I needed them to. I can see a downside to having excessive amounts of cash, since the return on most good savings accounts is barely inflation, and I don't have a ton of fixed monthly expenses that I would have to cover if I lost my job.
I have $18,000 which is about 6 months expenses for my household. I think this may be too much, to be honest, given that we have credit cards and that the likelihood of both of us being out of a job at the same time is quite slim. But as immigrants our emergencies may involve a lot of sudden international travel. And I do like knowing I can quit my job any time I want. So it's staying at $18k for now.
Hi there! Have been following your blog for some time but it's the first time I leave comment here.
My emergency fund is wroth $3,000. I might push up my goal for a bit later in the year (to $5,000?). I'm reading a tax guide that suggests that one should have a balance equal of 6 months worth of salary in the emergency fund. That might be a bit too much...
My EF is $7000. I am diligent about saving 10% of my income to put into this fund, so I always have some going into it. I can make that much money last a good bit barring a catastrophe. My goal is to have $8000 by July when I stop working and move to a brand new state. I will def need it then.
I have an efund with about 10k in it, with 15k being my target. For me, I am comfortable with roughly 10x my rent/mortgage. When I had 600 rent, I felt fine with 6k saved. Really, I'd feel okay breaking my 15k efund down to 10k if I wanted the cash for other things.
I think you can have too much, especially if you are missing out on retirement investment opportunities. But if you are maxing out a 401k + Roth, cash savings should be high before you venture into outside investments. That is my philosphy!
I currently have ~$3500 stashed for emergencies, but I have an additional ~$2000 I could draw from if necessary (that's specifically being saved for things like vacation and some extremely far off home purchase).
I'm working on building up to $5k but am in no rush - I'm in a PhD program where I'm guaranteed funding for 3 more years, so potential job loss isn't as issue. If for some reason I left the program, I could easily manage to limit my spending to <$1000/month and be just fine, if necessary.
I'd mostly just like to have $5k to draw from at that point when looking for a job. I contribute $125/month.
So first of all, after reading so many things online and in magazines about how people don't have ER funds, I'm very impressed to read all these comments!
That said, I've got a goal of $8K to my ER fund. I currently auto-deposit $200 each pay period and try to drop extras when I can--my whole tax refund for example. I'm at just over 50% currently.
There's never more than $1,000 in our emergency account. Anything over that amount goes into our savings, which is a separate account.
i like 10k in there...a nice even number that makes me feel warm inside. haha
Right now, a little over $500 and $10/wk goes into the account (ING) automatically.
It would be higher, but in the past 3 months we've spent $700 on a brake job and $1,800 repairing the roof on our home in the Interior following a nasty windstorm.
I currently have $1200 in mine with a short term goal of getting that to $2000 while I'm still paying off my debt. Once that's cleared, I'm aiming for a $15,000 EF, as I'm single and need to ensure I have enough cushion.
I think you can have too much in an EF, as much more than that would mean I was sacrificing retirement or medium term investing opportunities.
If you want a true emergency fund and all the economist are right about future gold prices you should go to the bank and by gold with your emergency fund.
If you bought gold awhile back for 300 oz you would be up almost 300%
I've put aside $500 in the EF while I pay down my debts. But once they're gone, I think I could rest easy with $5,000 close at hand.
I kind of have a stepping stone approach to my e-fund (which I must admit, is currently down in balance a little).
At the moment my goal is to get it back up to 1k while I finish paying off my debts ($5600 to go - due to pay off by July).
Then, by the end of the year, I hope to have $5K in the EF.
Over the next few years we are going to be saving for a house downpayment. However, we also aim to save an extra 5K a year into our e-fund until we hit 35K. That will be a true 6-month EF for us well into the future. I don't view it as wasteful to keep this as cash because almost the only feature we would seek out in a mortgage loan would be an off-set account. This way, we would use our home savings as a deposit and use our EF to `offset' our mortgage interest. So it's like having an extra big home deposit.
My goal for this year is to have $5,000 in my E fund, however ultimately I would like $10-$15.
I definitely think you can have too much, if it means you aren't fully funding your retirement accounts.
I have a goal of $1000 in my emergency fund. I have other savings set aside for specific things like activities, gifts, having another baby, etc. I also have a general savings fund, so EF is really for emergencies only.
My goal for the end of the year is $10K in my Freedom Fund, which is currently at $7,750. I call it a Freedom Fund and not an Emergency Fund because I'm willing to spend it on things like an important job change or a move for graduate school--stuff that's a little beyond the conventional definition of "emergency."
After hitting the $10K mark, I may want to bump it up a bit to $12K. After that, though, I'll be focusing on retirement savings (and bumping up my travel savings, too!).
My goal is to have $3000 in my EF, current balance is $0, it was up to $450 but we had unexpected van repairs so i withdrew it last week...
Did it ever feel good to not put the repairs on my credit card though! Awesome!
I currently save $200 into RRSPs, $300 into a mexico fund (this trip will be paid off in sept, then will roll this into the EF), $200 into EF and anything extra goes into a family savings for misc. extras for the kids, sport registrations, trip to valley fair on summer break, etc
Having an emergency fund makes it easier to sleep at night. I currently have 11k in a high interest bank account and 4k in blue chip stocks. My plan is to transfer 5k of the fund into the tax free savings account when they come into effect next year.