Comments on: Getting Real About Your Emergency Fund – How Much is TOO Much? http://www.darwinsfinance.com/emergency-fund-amount/ Financial Evolution: Education, Adaptation, Achievement Mon, 06 Feb 2012 15:43:23 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Travishttp://www.darwinsfinance.com/emergency-fund-amount/#comment-8023 Travis Wed, 26 Jan 2011 16:41:03 +0000 http://www.darwinsfinance.com/?p=2014#comment-8023 I think you have to go with your gut on how long you want your emergency fund to last. Some people like 6 months others a year - I personally prefer a years worth. A. 6 months to find a job and B. possible moving expenses. For me emergency fund means cash. If I want to try to earn extra money save another chunk for discretionary money. Why risk trying to make only 3 to 4% more - is that really going to help you? The time you get laid off is the time your "cool investment" will start to go down. I think you have to go with your gut on how long you want your emergency fund to last. Some people like 6 months others a year – I personally prefer a years worth. A. 6 months to find a job and B. possible moving expenses. For me emergency fund means cash. If I want to try to earn extra money save another chunk for discretionary money. Why risk trying to make only 3 to 4% more – is that really going to help you? The time you get laid off is the time your “cool investment” will start to go down.

]]> By: Tuckerhttp://www.darwinsfinance.com/emergency-fund-amount/#comment-7977 Tucker Sat, 22 Jan 2011 12:17:20 +0000 http://www.darwinsfinance.com/?p=2014#comment-7977 I think most people forget about credit cards... I would think, or at least hope, that a majority of people who make good money also pay off their credit balance monthly. An emergency credit card with say a $5k or even $10k limit is an excellent short term cushion. Yes, there is an abnormally high interest rate associated with it, and yes, it is absolutley no substitute for a cash account, but an excellent strategy when used in conjunction with a cash account. Additionally, a Roth IRA allows people to remove their invested principle penalty free... It was designed for people to use it as a savings/emergency account while starting on a retirement vehicle simultaneously. I think most people forget about credit cards… I would think, or at least hope, that a majority of people who make good money also pay off their credit balance monthly. An emergency credit card with say a $5k or even $10k limit is an excellent short term cushion. Yes, there is an abnormally high interest rate associated with it, and yes, it is absolutley no substitute for a cash account, but an excellent strategy when used in conjunction with a cash account.
Additionally, a Roth IRA allows people to remove their invested principle penalty free… It was designed for people to use it as a savings/emergency account while starting on a retirement vehicle simultaneously.

]]> By: Anniehttp://www.darwinsfinance.com/emergency-fund-amount/#comment-6397 Annie Fri, 16 Jul 2010 02:35:36 +0000 http://www.darwinsfinance.com/?p=2014#comment-6397 Great post. When I do my monthly budget, I take all the necessary expenses, and compile those into one number that I track each month, showing me my actual "monthly expenses" that I would spend if I was unemployed. For instance, that number doesn't include child care, clothing, entertainment, restaurants, dry cleaning or gifts money. Those are luxuries to which we say goodbye in circumstances of crises. Great post. When I do my monthly budget, I take all the necessary expenses, and compile those into one number that I track each month, showing me my actual “monthly expenses” that I would spend if I was unemployed. For instance, that number doesn’t include child care, clothing, entertainment, restaurants, dry cleaning or gifts money. Those are luxuries to which we say goodbye in circumstances of crises.

]]> By: Aury (Thunderdrake)http://www.darwinsfinance.com/emergency-fund-amount/#comment-5972 Aury (Thunderdrake) Tue, 25 May 2010 02:55:04 +0000 http://www.darwinsfinance.com/?p=2014#comment-5972 The most important aspect of an emergency fund I think is having something that's extremely liquid. I don't save in a liquid fund, because emergencies only pressure me to find more financially intelligent strategems; to work my money brains, so to speak. Furthermore, I invest pretty heavily into gold and silver, both which are one of the most liquid assets I can think of. Completely leaving the bull market out of the equation, all I would need to do is show up to one of the many dealers I'm around (I live in a metro) and sell it. It'll be about 5-10% below the spot price, but worth it if I really needed to in an emergency circumstance. I could do something quite similar with certain stocks as well. So my assets are congruent with my emergency funds. The most important aspect of an emergency fund I think is having something that’s extremely liquid.

I don’t save in a liquid fund, because emergencies only pressure me to find more financially intelligent strategems; to work my money brains, so to speak.

Furthermore, I invest pretty heavily into gold and silver, both which are one of the most liquid assets I can think of. Completely leaving the bull market out of the equation, all I would need to do is show up to one of the many dealers I’m around (I live in a metro) and sell it. It’ll be about 5-10% below the spot price, but worth it if I really needed to in an emergency circumstance. I could do something quite similar with certain stocks as well. So my assets are congruent with my emergency funds.

]]> By: Victorinohttp://www.darwinsfinance.com/emergency-fund-amount/#comment-5064 Victorino Mon, 29 Mar 2010 18:39:13 +0000 http://www.darwinsfinance.com/?p=2014#comment-5064 For me, it's not the revenue or the income that I can't in estimating emergency fund. When it comes to emergency cash - we should think of money getting out and not getting in. In other words, we think of expenses. Hence, set emergency fund at amount I will need to spend (regular and irregular expenses). For me, it’s not the revenue or the income that I can’t in estimating emergency fund. When it comes to emergency cash – we should think of money getting out and not getting in. In other words, we think of expenses. Hence, set emergency fund at amount I will need to spend (regular and irregular expenses).

]]> By: Friday Finance Followers – I’m Debt Free (sort of) Edition | Suburban Dollarhttp://www.darwinsfinance.com/emergency-fund-amount/#comment-4898 Friday Finance Followers – I’m Debt Free (sort of) Edition | Suburban Dollar Fri, 19 Mar 2010 11:58:12 +0000 http://www.darwinsfinance.com/?p=2014#comment-4898 [...] presents a contrarian view on Emergency Funds. I am on the fence about the “6 month” rule. I agree with this article in assuming you [...] [...] presents a contrarian view on Emergency Funds. I am on the fence about the “6 month” rule. I agree with this article in assuming you [...]

]]> By: Budgeting in the Fun Stuffhttp://www.darwinsfinance.com/emergency-fund-amount/#comment-4882 Budgeting in the Fun Stuff Wed, 17 Mar 2010 19:48:32 +0000 http://www.darwinsfinance.com/?p=2014#comment-4882 This made me think a bit. I feel like risk diversification is comforting. We have a 401k and a Roth IRA invested in target date mutual funds, a Scottrade account invested in individual high dividend stocks, our smaller accounts (taxes, vacation, home and auto, etc) are with ING (1.1%), and our emergency fund is with Smarty Pig (2.01%). Even though I see your point that leaving $30,000 laying around making less than 2% on average is wasteful, it does make me feel better to have that easily accessible. This made me think a bit.

I feel like risk diversification is comforting. We have a 401k and a Roth IRA invested in target date mutual funds, a Scottrade account invested in individual high dividend stocks, our smaller accounts (taxes, vacation, home and auto, etc) are with ING (1.1%), and our emergency fund is with Smarty Pig (2.01%).

Even though I see your point that leaving $30,000 laying around making less than 2% on average is wasteful, it does make me feel better to have that easily accessible.

]]> By: tomhttp://www.darwinsfinance.com/emergency-fund-amount/#comment-4881 tom Wed, 17 Mar 2010 15:05:13 +0000 http://www.darwinsfinance.com/?p=2014#comment-4881 caution - most 401k loans are required to be paid back when laid off or leaving an employer. Could subject you to a big hit with 10% penalty and taxes. caution – most 401k loans are required to be paid back when laid off or leaving an employer. Could subject you to a big hit with 10% penalty and taxes.

]]> By: Kiberhttp://www.darwinsfinance.com/emergency-fund-amount/#comment-4869 Kiber Tue, 16 Mar 2010 17:31:56 +0000 http://www.darwinsfinance.com/?p=2014#comment-4869 I think the key here is saving enough based on what kind of field you are looking for a job in. I think the key here is saving enough based on what kind of field you are looking for a job in.

]]> By: Wizard Pranghttp://www.darwinsfinance.com/emergency-fund-amount/#comment-4867 Wizard Prang Tue, 16 Mar 2010 14:01:37 +0000 http://www.darwinsfinance.com/?p=2014#comment-4867 The emergency fund is based on how much you need to _survive_, not a replacement for your salary. If that example rep needs $3000 per month for basic living expenses, then the six-month emergency fund is $18,000 If you are spending everything you make, you have bigger things to worry about, and it is time to make some hard choices. The emergency fund is based on how much you need to _survive_, not a replacement for your salary. If that example rep needs $3000 per month for basic living expenses, then the six-month emergency fund is $18,000

If you are spending everything you make, you have bigger things to worry about, and it is time to make some hard choices.

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