How many months in emergency fund?

[pixiewings71]

Well I just recently found a job after having lost mine in June 2010. It took me 10 months to find a new position, keeping that in mind once we are able to beef up the emergency fund again (we used it while I was out of work, UI is just not enough) we will have a minimum of 12 months before we are finished.

 

[Halbleib1]

Some people are taking as long as two years to find a new job. My husband was out of work for 19 months before finally getting a temp. position. We had a 6 month emergency fund at that time but some financial experts such as Suze Orman are saying to have at least an 8 month emergency fund. Not knowing what is around the corner once the temp. contract is up we are currently saving up every penny we can. If you are not sure about your job(s) than I would be saving everything that you can and prepare for the worst case.

 

[Halbleib1]

None. We have a major equity credit line we could tap in an emergency, but that's it.

Not a good idea because if you did need to tap into it what would you do if you could not make the repayments on it? Your are putting yourself in danger of losing your home. Also what would you do if for whatever reason the bank decided not to loan you the money after all? These are important questions to consider and if at all possible I would be trying my best to have an alternative plan in place first and have this as your backup plan.

 

[meriface11]

we have 6 months and are consumer debt free. it would be nice to have more, but right now we are throwing extra income towards retirement and paying our mortgage off early instead of building more liquidity. both of our jobs are fairly stable, but we could live off my salary alone if DH lost his job, and i'd get 9 months of severance if i lost mine (i wrote the policy, so i know how much it is, and will know if it were going to change), so we could make for years with his salary and the severance without touching our emergency fund if i lost mine. we both have really good short and long term disability coverage.

 

[msmama]

May I ask - what do you consider your Emergency Fund?

A special account? Your entire "savings?"

I would say I have 4-6 months Emergency Fund that's completely liquid but I have more in investments that I could use (get the money within a business day or so), and a retirement account that I could tap into if absolutely necessary.

Also, those that say, "I currently have 6 but would like to have 12," then what? Then you spend it? Put it somewhere else?

Sorry, just trying to clarifiy the question a bit.

 

[MissDaisyofTexas]

Wow, everyone on this board really seems to have their act together!

We have about 4 months saved up. I'd like to get it closer to 6 months.

 

[Tinkerbellie16]

We have an emergency fund that would last 10 months if both DH and I were out of work. We will continue to contribute to it.

 

[annsteere]

Not a good idea because if you did need to tap into it what would you do if you could not make the repayments on it? Your are putting yourself in danger of losing your home. Also what would you do if for whatever reason the bank decided not to loan you the money after all? These are important questions to consider and if at all possible I would be trying my best to have an alternative plan in place first and have this as your backup plan.

I agree. Just stating the truth. The answers on this thread are pretty unusual---ALL of you have emergency funds.

Lots of us don't.

The good news is that it is a 10 year line with fixed interest and NO required payments. We could take the full amount next month and not pay a dime for the 8 plus years left on the agreement.

 

[ilovemk76]

May I ask - what do you consider your Emergency Fund?

A special account? Your entire "savings?"

I would say I have 4-6 months Emergency Fund that's completely liquid but I have more in investments that I could use (get the money within a business day or so), and a retirement account that I could tap into if absolutely necessary.

Also, those that say, "I currently have 6 but would like to have 12," then what? Then you spend it? Put it somewhere else?

Sorry, just trying to clarifiy the question a bit.

We have a money market that has money for immediate needs. In it there is enough that if we both lost our job at the same time we could live on it plus unemployment for about a year. We would be able to pay our health insurance that entire time and only marginally reduce our standard of living.

The rest of our money is earmarked for retirement. Some is in 401Ks and others in investments. We would tap them if we needed money with the other ran out.

We also have a line of credit on our home that we would use IF an emergency occurred. We have never taken any money from the line of credit.

We have no debt, not even a mortgage, but that is because we are older and have had many more earning years. A younger person will not have as much as we do but they have their age on their side. They can do manual labor, move easier (if in an apartment) and cheaper medical insurance and medical bills, like we had when we were young.

If you are older and have comsumer, debt, no or a small emergency fund and little in retirement you are in a huge hole that may not be possible to get out of.

 

[JaymeC]

Our actual emergency fund is at about 6 months. We don't see a need to take it any higher because 6 months either gives us time to get things together or to cash out some of our investments earning a higher interest rate. Off of those investments we could make it probably another year. After that we'd start tapping retirement which could last us another two years at least, but I'd really rather not do that. Right now I'm the only one working and dh is back in school and we're living off my (meager) income fine. I'm one of those underemployed recent college grads, so with any luck in the next year or two I'll find something better in which case we'll sock more away, but in retirement or to a house payment probably not to the emergency fund.

 

[DawnM]

I think you mean everyone on this particular thread.

My guess is that people without savings aren't responding.

We didn't use to have it together. We used to live very differently. We had decent incomes, but spent it on "things." We no longer do that. We try as much as possible to live below our means so that we can have more security in savings.

Dawn

Wow, everyone on this board really seems to have their act together!

We have about 4 months saved up. I'd like to get it closer to 6 months.

 

[2disneyboys]

I think you mean everyone on this particular thread.

My guess is that people without savings aren't responding.

We didn't use to have it together. We used to live very differently. We had decent incomes, but spent it on "things." We no longer do that. We try as much as possible to live below our means so that we can have more security in savings.

Dawn

I agree w/ DawnM's comment above. DH & I have always made a nice income for our age etc. While we never got into debt really over our heads we did have a few 1,000 in credit card debt, and our current mortgage (when the bank approved us for up to $300,000 in the late 90's, we only financed about $100,000. thank goodness!) In addition, until recently, we didn't really have a savings account. (although we both have been contirubting to our retirmenet accounts since our early early 20's.) With regards to our monthly money, our "thought" process was, once the bills for the month are paid, anything left is fun money, so we'd eat out, go here, go there..whatever... never really put into savings what we COULD have (it makes me sick to think of the money we have "wasted" over the years) Some months there was "lots" of fun money and other months (car breakdown, water heater go, etc,) there was not so much if any fun money.

Since Aug 2010, we have Changed how we think about and use our money. We have paid off ALL debt except our mortgage (once our emergency fund is funded to at least 9 months, we will start attacking the mortgage w/ extra money), we have added more to our savings from Aug 2010 - now, then we have the 5 years combined before this. With this said, yes we have reduced our eating out habits and oh, I'm bored, lets go to the movies etc, however, it's not like we have gone from living high on the hog to extreme frugal. We also have looked at our expenses to see what is truly needed and what is truly wanted and made some compromises so that we can spend the next few years putting our family in a better financial place. All of this was "common sense stuff" that "everyon" should know (and I knew it, just was in denial about it!) however, it took taking a clase in Aug 2010 to really open our eyes on what WE were doing to our future (or not doing depening on how you look at it!) that changed our lives and I"m just grateful that it was a class that changed it (where we can actually do something about it) not a job loss or other event that would have helped us realise what we were doing wrong, but too late to do anything about it!

Good Luck w/ your savings goals.

 

[Kathi OD]

Not having all the replies...

All I can tell you is that DH was recently unemployed for 2 years

At the time he lost his job, the only debt we had was our mortgage (wish that were still true, but will be in about 4 months). If we had only had 6 months in our emergency fund, we'd have been up the proverbial creek without a paddle. Fortunately, we had almost 18 months in that account, plus some other savings that we could pull from. Additionally, I have a pretty good paying job that's as secure as can get these days.

He's been back to work for about a year now and we are working toward having a full 3 years in our emergency fund. It might be a little overboard for most people, but believe me when I tell you that a 2 year unemployment scared the you-know-what out of us.

 

[ceecee]

I like to have a year in the emergency fund. In our area so many major companies closed and moved away that even a year isn't enough for a lot of people.

 

[marie1203]

Suze Orman recommends eight months. Right now we have 6 and that is all we are keeping. DH is in the military he can't lose his job and even if the time comes if he decides not to stay in with his skills and his training he can find a job very quick in fact we have gotten job offers even thought he still has another year and a half in his contract. we rather put money that is just going to be sitting there towards other investments.

 

[ilovemk76]

Not having all the replies...

All I can tell you is that DH was recently unemployed for 2 years

At the time he lost his job, the only debt we had was our mortgage (wish that were still true, but will be in about 4 months). If we had only had 6 months in our emergency fund, we'd have been up the proverbial creek without a paddle. Fortunately, we had almost 18 months in that account, plus some other savings that we could pull from. Additionally, I have a pretty good paying job that's as secure as can get these days.

He's been back to work for about a year now and we are working toward having a full 3 years in our emergency fund. It might be a little overboard for most people, but believe me when I tell you that a 2 year unemployment scared the you-know-what out of us.

What does the first line mean? Are you implying others are less than truthful? If that is what you are implying they am I to believe that you are less than truthful in your post?

 

[ameraumi]

Right now, we have none. We had to use ours because my SO lost his job, lots of home repairs all happened at once, and the birth of our DD. I hope to rebuild it but it will be slowly as his new job pays no where near what he was making.

 

[MEM]

We are aiming for 12 months but not there yet. I would never assume that any job is "stable". A friend of mine has been at the same University for 26 years and one might think that is "security". However, her boss is retiring and my friend doesn't know if her new boss is bringing someone with him to replace her as executive assistant. He has the right to.

 

[FINFAN]

our breathe easy goal is 18-24 months...and unfortunately it will take some time to get to it. College and inheriting an ailing parent tend to get in the way these days.

 

[bettymae1121]

Wow, everyone on this board really seems to have their act together! We have about 4 months saved up. I'd like to get it closer to 6 months.

Well, DH and I want 12 months, but we aren't anywhere near that yet. We're paying off debt and doing necessary repairs/updates to our home so it's slow going. But that's our goal! Even without a huge savings account, we don't feel too insecure, as our montnly expenses can be cut to the bare bones and we could live off of just one income if needed (things would be insanely tight, but we could do it!). In the long run we want the $$$ on hand though, one just never knows!