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JLP’s QotD: How Big is Your Emergency Fund
By JLP | June 16, 2006
Today’s Question of the Day was suggested by my friend, Vlad:
We are all familiar with the standard rule of thumb that says that people should have 3 – 6 months worth of expenses set aside in an emergency fund. However, is that the reality of you, my readers? My wife and I are in the process of building our e-fund back up from our time away from home last year due to Rita.
Topics: Question of the Day | 25 Comments »
June 16th, 2006 at 11:15 am
I have ~$4,000 in an account labeled “Emergency Fund” plus ~$10,000 in Roth IRA contributions I can access without penalty if necessary. I also have about ~$4,000 in some other savings account I tend not to touch that can be accessed in the case of an emergency.
June 16th, 2006 at 11:23 am
Thanks for asking!
We have a something shy of 3 months in a pure savings account (ING Direct). We also have about 1.5 month’s worth in a brokerage account that we could liquidate without penalties.
After the wife stopped working last year, I’ve considered working on taking this up a couple of notches, but am not sure it makes sense to keep that much in tax-disadvantaged funds around. Or maybe I am just looking for excuses not to save more.
June 16th, 2006 at 11:34 am
I am still paying of credit card debt, so I have about a month’s worth of expenses in the emergency fund.
June 16th, 2006 at 11:43 am
I have 14 months in a money market account, which is probably a little much. But I’m a worrier to the extreme and a big emergency fund gives me peace of mind.
June 16th, 2006 at 12:24 pm
Great minds think alike! I also posted about emergency funds today.
I have about $10k with ING earmarked as an e-fund. Since my living expenses have increased, I don’t know if I should beef up that account to 6 months living expenses or focus on my other financial goals (Roth, college savings, car payoff, etc.). What do you think?
June 16th, 2006 at 12:26 pm
About $500 – I know, terrible, but a) there’s basically no way I could be fired, b) I don’t have a car to get broken down and c) I could easily downsize if my boyfriend (and his income) were not in the picture. So I figured it was better to devote money to debt, but I do have a $50 a month deposit to my fund.
June 16th, 2006 at 1:18 pm
Gee, I’m feeling kinda shy right now (which is unlike me!) Emergency fund is pretty healthy: balances in ING, savings bonds, brokerage/drips and cash value of insurance. (Save the lecture…) If push came to shove, could tap the boys’ 529 accounts, but I wouldn’t be very popular in 10 years, would I?
Without an income, and the resulting income/state potpourri of taxes, we could ride out at least 12 months without tapping the 529s or 401ks/IRAs. The cost of health insurance would be the big unknown…
June 16th, 2006 at 1:35 pm
Well, since we are still paying off debt, we only have about $1100 in an emergency fund. We used to have a little more but my husband changed jobs and we needed to use part of it while we were playing the paycheck-shuffle. We also have a paltry amount going in every week. It won’t add up to much but it makes me feel better that I’m not totally ignoring it when I divy up the money.
June 16th, 2006 at 2:13 pm
My emergency fund is comfortably sitting at $10,000.
June 16th, 2006 at 2:18 pm
With our move to California, we’re digging into ours a bit now, but we did have just shy of $30,000 saved in ING by May 28th,when we made our first withdrawal.
I felt very comfortable with $30,000 saved. I’ll want to get it right back up to that amount as soon as possible.
June 16th, 2006 at 2:39 pm
We keep about $2k in the e-fund as we dig ourselves out of debt. This is slightly under 1 mo. committed expenses.
June 16th, 2006 at 2:44 pm
We have about $30K in a reasonably high-yield (4.35%) savings account, and another $30K in non-penalized I-bonds currently earning about 6.8%. We keep a lot in our e-funds since we both work in fairly high-risk jobs – I work in a startup and my wife is self-employed with highly variable income.
June 16th, 2006 at 2:46 pm
I actually just started my e-fund today. I decided to do mine through a Roth IRA, since I can withdraw the monies I put in at any time. I figure I can knock 2 birds out with one stone doing it this way. Based on my living expenses, the $2,000 I put into the account could take care of mortgage and expenses for 2 months. I intend to max the Roth account by years end.
June 16th, 2006 at 2:46 pm
I have about $9,000 in savings, which is probably about 4-5 months worth of expenses. But that is all my savings, I don’t have it divvied up between savings and an emergency fund. I just put as much as I can in my ING account and try not to think about it.
June 16th, 2006 at 4:08 pm
If I could do nothing except pay monthly expenses, I could survive for just over two years – probably. However, if I were in such a shape that paying expenses was all I could do, I’d probably have more expenses (i.e. being disabled, ill, or otherwise out of service).
June 16th, 2006 at 5:26 pm
A number of you mention ROTH IRA’s as being your efund which is ok but once that money is withdrawn it can never be put back and all potential tax free earnings are gone.
My efund, a brokerage account, would provide me 20 months assuming I didn’t lose my job and my roommates at the same time, otherwise I’d be looking at 10 months before I had to consider HELOC.
June 16th, 2006 at 6:04 pm
Efund was just started a few weeks ago. There is currently almost $400 with a goal of around $15,000. Anything in excess is 6 months worth of fixed expenses in an efund would make me more comfortable.
June 16th, 2006 at 10:44 pm
Well, since we are still paying off debt (about 20K to go), we only have the $1000 baby step 1 emergency fund. We have managed to get rid of almost 30K in debt since Jan 2006 so we will get rid of this 20K fast and start funding the emergency fund next, with a goal of 20K in there.
Thanks for asking and bringing the need for an emergency fund to everyone’s attention, especially during hurricane season.
June 16th, 2006 at 11:25 pm
Hmm, good question…
I don’t have a fund marked as “emergency funds” per se. We’ve got 5 months in savings and another 3 in T-Bills. I’m moving most of the savings into a set of laddered T-Bills. Every week, one month’s worth of expenses comes due and is reinvested. The rest (about 4 month’s worth of expenses) is in a brokerage account currently fighting to get back to even…
June 17th, 2006 at 12:55 pm
Enough to last 4-5 months.
June 17th, 2006 at 8:28 pm
I do not have much of a savings right now, only $100. I am 21 and live at home and going to college while paying off my car. In two weeks my car will be paid off and I will then start funding my Roth IRA for 2006 and creating a larger emergency fund.
June 18th, 2006 at 8:58 pm
I have 6 months of bills/payments saved up. I figured worst comes to worst, can leave off ramen for a few weeks since I’m a single guy.
June 19th, 2006 at 5:37 am
I am feeling very shy because from the last 2 years i didn’t save anything.
regards:) lizzie
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June 20th, 2006 at 12:15 pm
currently i have $7500 in ing. if i had to use it for other purposes, i would feel comfortable with at least a $5000 balance. hopefully i can quadruple this (will take a long while) and then look for a house one day…
June 20th, 2006 at 6:15 pm
Foobarista, you may want to check the current yield on your I-bonds at treasurydirect.gov Ours were at 6.8%, but after the last adjustment are slightly over 2%…Unfortunately, we’re still in our 1st year…so no redemption yet!