Why We Only Have $10K in Our Emergency Fund
10th May 2008
This is part of the Wealth, Money, Life Network’s Emergency Fund series.
$10K is not six months of income, or six months of our current expenses. $10K is my “frugal-person’s” emergency fund. I have calculated out how much it would take for me if something catastrophic happened and we cut back on all extras (internet, house phone, extra mortgage payment, frivolous groceries). I’m talking the deductible on the homeowners’ insurance plus the deductible on the car insurance, plus DH not working, plus, well, you get the picture. Luckily, I’m a government worker, so I have good backup for disability or health coverage.
What special details govern how you have your Emergency Fund set up? Do you have one? Are you growing one? What are your goals for your emergency fund?
May 10th, 2008 at 2:00 am
[…] Ahh, the Emergency Fund… Unless you’ve tied it up in the stock market, decided that credit is enough, or you’re focused on building one as best you can, you have one now that is more than likely a really nice and really boring pile of cash laying around. Even if you’re only saving for the bare necessities it’s got to be sitting somewhere. […]
May 10th, 2008 at 8:24 am
I don’t have one and dont’ feel the need for one. Read why here:
http://themoneygardener.blogspot.com/2007/10/defying-cash-emergency-funds.html
May 10th, 2008 at 8:50 pm
I’m working on getting my EF to a decent size. However, I’m going to graduate school in August, so my income will be destroyed! I’m also moving about 1300 miles away…still working out how I’m going to afford the move!
May 12th, 2008 at 7:07 am
My family and I have 2 months of expenses sitting in a savings account that earns basically nothing. After the 2 months, we have 5, 90 day CDs that we keep rolling over that expire every couple of months. The net total of the 5, 90 day CDs would cover about 8 months of expenses. Last year, we made about $2k in interest from the CDs but this year will be about 2/3 of that because of the drop in interest rates.
passivefamilyincome
May 12th, 2008 at 9:12 pm
I have 4 months set aside - 6 if I take my wifes credit card.
Best Wishes,
D4L
May 12th, 2008 at 10:43 pm
We have an EF & have $25k in it. We recently pulled it out of Capital One cause they dropped from 5% to 3% interest rate & found a local bank that is giving us 6% APY! Sweet!
We have been following the Dave Ramsey plan for the last year or so. We are a family of 6 living on 35k/year. Anyone can do it if they are willing LIVE WITHIN THEIR MEANS.
May 12th, 2008 at 10:53 pm
[…] Dollar Frugal has only $10k in their emergency fund! […]
May 13th, 2008 at 5:45 pm
I have a little over six months expenses in a set of rolling CDs. Not great rates, but I’m also not tempted to dig into them. I have an ING account with about $5000 - the “I was hospitalized when I wrecked my car driving through the tornado that totaled my house” deductibles account.
Then I have the escrow “freedom” funds for property taxes, vet bills, car repair/replace, house repair/project….. Those would be tapped in a crunch (except the tax one).
Next line of defense is the investments - stocks, I Bonds, the principle of my Roth.
After that we are into real estate and finally retirement - and by that point, I would be close to taking it out legally.
I figure I have about 5 years worth of “go to hell” funds. That’s a good feeling - it certainly makes it easier to cope with the days when the boss finds my last nerve and camps out on it. Knowing that you could just walk away is a guilty pleasure LOL.