3 or 6 month emergency fund? Also, how long did it take you to complete?


#41

Your comment makes me smile. I just wrote a post a couple weeks ago in honor of my dearly departed Corolla. 11 years, over 300,000 Miles and only $1300 on repairs. It’d still be running today had I not written it off. Best car I ever owned!


#42

That’s incredible!


#43

@sethdrebitko @ApathyEnds @keepthrifty

Anyone can get a similar account with GLCU, LMCU or CCU. Pretty sure they all have some association you can give a token donation to in order to be elgiible. Not 4%, but 3%. Well CCU will give you 4.59% if you put $1k of credit card spend on one of their cards.

https://www.lmcu.org/banking/checking/checking_max.aspx

https://www.myconsumers.org/personal/checking/free-rewards-checking.html


#44

They mature at all different times - I have quite a few earning 4% interest and others earning about 3%. At this point they’re all purchased over 5 years ago so I wouldn’t incur any penalties for cashing them in.


#45

As stated by another on here, it depends on your career, IMO. Because mine is volatile, Im shooting for a year’s worth. I have about 10 mo’s now. And… its taken about 4 years to get there (have already achieved then had to use etc) We’ve already had some ups n downs in that dept, job losses, extended down time etc. But at least we’ve got it and thats the key. Start it, keep it growing and hope you don’t have to use it.


#46

Great option! And you can use my Square card method!! :slight_smile: Balances up to 10k get the 3% (anything over gets standard rates) but that’s a great place to park an emergency fund…I’ll look into this one I max out my others.

In the meantime, any of you single dudes (or ladies) find yourself a SWA flight attendant or pilot to marry…free travel and great bank interest rates! :unicorn:


#47

@MissMazuma

Where are your fun frugal flight attendant friends based out of?

Can you feel my arm not being twisted? :wink:


#48

How much do you aim to keep? 3months? 6 months? More or less?
I aim to keep a maximum of 2 months worth of savings in my savings account. I think more is a waste of liquidity. Any real financial set back will probably not be more than 2 months of savings. In the unfortunate situation that 2 months will not be enough it is always possible to sell some stocks as a last resort.
Why did you choose that amount?
As mentioned above, i think most set backs can be covered with just 2 months.
How long did it take you to get the amount into savings?
When i had seen the light and started saving for FI, I reached a savings rate of >50% in just two months, so it actually took me three months to save the emergency fund.


#49

Unpopular opinion: I don’t have an emergency fund and I don’t see the need for one. Admittedly, my situation is fairly unique: Very stable job, dual income, no kids, don’t own a home, a savings rate high enough that I could cash flow any emergency I could think of being affected by just by redirecting savings for a short time, etc.

To me, the opportunity cost of leaving that much money earning basically nothing isn’t worth it. If I’m ever in a situation where I have no job and desperately need the money, I will have no qualms about pulling out the money that’s currently 'earmarked for retirement and using it to fund whatever I need it to (I’m in Canada, no penalties for withdrawing from retirement accounts early, only need to pay the taxes on the withdrawal, if any).


#50

For me it depends; I was targeting 6 months, but then I realized that it was a large % of my overall cash net worth… (more than 5% is large to me)… so, I reduced it to 3 months while wealth building… as the wealth gets larger, my emergency fund gets larger…

Since then my wealth or cash net has grown, so 2% in cash covers 3 months of expenses. some say the emergency fund should be the first priority, I just grow it as the cash grows…


#51

We have 3 months fully funded (will cover every expense, including frivolous ones), and a further 3 months at just the bare basics. I’m not sure exactly how long it took us, because I only began budgeting again at the beginning of this year (and before we began budgeting again we were spendy), but I would estimate it took about 2 years for us to save that amount.


#52

I think the volatility of your career is the deciding factor. If you’ve had your job for quite some time and your industry isn’t prone to shake-ups, three months should be sufficient for peace of mind. To the contrary, if you’re in sales or a position heavily influenced by market fluctuations, I’d say six months. Someone previously referred to the emergency fund as insurance. I think that’s a great way to look at it!


#53

Great points! For me, my emergency fund gives me peace of mind. My e-fund is 6 months of expenses in an online bank earning about 1% interest. To me, my e-fund must cover:

  1. 3 months unemployment (including $800/month in COBRA)
  2. My entire healthcare deductible ($1500)
  3. Replacing my car’s engine ($6k? not sure)

happening at the same time.


#54

I’m still in the pay off debt like crazy stage. I’m pretty risk averse (and really like the idea of being able to have an f-it fund) so I’ll probably want to get to 6 months. I also think that I’ll have mini-savings funds specifically for things that need replaced every now and again, like a car, rather than deplete my emergency funds over and over. I’m still working on my definition of an emergency. I would love to know what other people define emergency as.


#55

We have $1000 in our EF. It’s the deductible for our car/house insurance. We definitely need way more as I am the main income earner in my household and I work contract jobs and a PT job. However, we are paying off debt and have about $4k in credit card debt left right now. It took us about 10 years to save because we would always spend it on something frivolous which is ridiculous, I know. Our bare bones budget if we give up eating, gas, or anything extra, is $4300 for just bills. My husband has a job that brings in money, but he’s always expanding so it contributes very little to our household. If I lost my job he could stop expanding his business and contribute probably $1k per month and we receive $825 in rental income a month for a second house we own. As I type this, it sounds worse and worse. :confused:


#56

I’m still paying off debt like crazy myself, hoping to be clear of it by the end of 2017! I’m probably on the low end of the spectrum, but I try to keep ~$5000 in my checking account at all times. That’s enough to cover any bigger expenses that come up, plus normal life (rent, plane tickets, etc.) I’m not worried about losing my (federal) job, but if there’s a shutdown I may not get paid for a month or so. No kids though, so I can survive on rent and ramen if that happens!


#57

While I do follow personal finance advice I read from fellow bloggers (who have clearly been doing this long before I even knew what personal finance is…), I think everyone’s needs are different.

We aimed for “the most we can save”. We actually keep topping off our savings whenever we have the chance. We’be been broke in the past and that hit me hard, so I have this “problem” where I’m always afraid we’re going to end up broke again.


#58

My thoughts on this are still evolving. However, at this stage of my life my husband and I always make sure to keep at least 1-2 months worth of expenses in our main savings account. Beyond that we have 3 months in a taxable account and an additional 1-2 months in our HSA (which are treating like a retirement account). Since we are in the wealth building stage with salaried jobs, I don’t worry about consistently having 3-6 months on hand. However, we don’t have children and once we transition away from our full time jobs I would imagine we would want at least 6 months of savings readily available.

Since I was a student for most of my 20s, we didn’t start seriously trying to save until about four years ago. And even then I think it probably took us 2 years to fully max out our tax advantaged retirement accounts. That was our primary goal and then we moved on to the taxable account and most recently our first rental property (which drained a significant portion of our savings, though we always keep the 1-2 months on reserve).


#59

[quote=“MissMazuma, post:30, topic:224”]
my savings account has a 4% interest rate
[/quote] — nice! Where do you bank? I thought I was killing it with a 1% return! Ha!
Hey- I may have to look into a Mexico find myself, I like that idea.


#60

Can’t remember if I already replied to this topic lol.

My primary goal is to have 1 year of mortgage payments saved (~$14,000). Half is kept in my PNC money market account, and the other half in an Ally savings account. It is good to cover a year of mortgage payments if I lose my job or can’t work and can’t find something quickly. I’m not too concerned about other expenses - they are minor and I’m sure I could always get a part time minimum wage job to cover them while looking for full time work. This can also be used for other emergencies that come up - home repair, car repair, etc etc and then rebuilt. I think originally it took me a little over a year to save this much. I’m current rebuilding after loaning my mom some money and several home repairs.

My secondary goal is to have 100% of expenses for my current lifestyle saved (~$40,000). This money is dual purpose - it is my “FU” fund and my “oh s&$% I got laid off fund”. It is kept in my Betterment account as a separate goal in a 20/80 stock/bond split. I’m taking my time building this one, currently depositing $150/month + whatever extra money I come into (focusing on maxing out Roth and other retirement accounts over this); balance is about $17k.