How much is enough for Emergency fund?

[ocgamer]

I noticed your taking a disney vacation. In the past I have been planning a vacation by buying plane tickets. Sometimes I get a decent deal with hotel+car but wanted to try to get a better package deal. However im not into time share properties one bit. Any ideas possibly renting a house?

 

[ocgamer]

We are a two income family, and both DH and I have been in our jobs over 20 years. I work in supervision in county government and DH as an operating engineer for a coal plant. We both have fairly secure jobs, are subject to seniority rules when it comes to lay-offs and we do not need both our incomes to survive. For our situation, having 6 months worth of expenses works for us.

I feel very strongly about having an emergency savings account. Just this week our furnace died , so we dipped into our account to the tune of $5000+. Having cash available can help you in other ways in situations like ours. The company we used to replace our furnace gave us a 2% discount for cash. We will now work over the next few months to rebuild our account balance to the pre-furnace crash level.

Our family does the same thing except we dont keep our money in cash or quick T-notes. We use a brokerage account getting money market rates and move money in and out of stocks typically earning 30% a year. We leave some in cash for quick emergencies like what your talking about the furnace etc but ours was our roof which needed new shingles. We have been doing this for about 20 years now and typically we earn enough in interest to take a free trip to europe and buy some toys for ourselves. I know its a desire to leave everything in cash but really its earning nothing in treasury notes and bank money markets are even worse. Even in a down market its never down more than 10% at any given time. If you had stocks during the recession it was down 50% but only if you sold the stocks if you held you lost nothing and gained about 20% at the end. If you had to go the cash only checking account then I would put enough away that you need till you get another job. No use squirelling away thousands in a cash account if you only expect to be out of work for a couple of months. Now if your line of work isnt in high demand then save most of your income I personally wouldnt spend any money on items I didnt really need because to live like your not going to be laid off isnt really planning for the future. Im european so we tend to be very frugel with our money saving generally 50% a month. We use the stocks to buy ourselves things we dont need if the market isnt paying out 30% then we cut back a little on toys. When it pays over 30% we save the extra for double emergency fund such as our roof. Takes some getting used to and you cannot watch the stock market daily its not for people who panic easy as you will lose all your money if you sell at the first sign of trouble.

 

[MG3G]

We are just working on getting our savings started. My Dh works in a very high demand stable industry and we are in Canada so there would be no health insurance to pay if he lost his job. He would also get EI after 2 weeks of being off work if he was laid off. We are planning to start our savings with around $2000 which will be used to cover things like emergency bills (car repairs (although our cars are newer) vet bills etc.) Then ideally we want to work towards a little higher in savings. My wages are extra money which we could live without, so we don't worry as much about covering them.

 

[barkley]

one important element to an emergency fund-always have enough to cover both your homeowner's and auto insurance deductables. it's also advisable to have the amount equivilent to any deductable that needs to be met in a calendar year for each family member's health insurance.

 

[dvcgirl]

It's important to be prepared, but don't stop living because of the "what ifs".

For us, we wouldn't be able to enjoy vacations and life in general if we didn't have our "what ifs" covered.

For us that means having a year's worth of monthly expenses in our emergency fund. Keep in mind, that this is just *expenses*, and our monthly expenses are very low as we have no debt at all. Still, we beefed up that amount from six months to a year after a brief period of unemployment for my DH in 2003.

We also have a smaller emergency fund of $5,000. We've learned over the years that there are plenty of smaller unexpected expenses that pop up that are minor emergencies, but a little too expensive to pull out of our monthly spending money. This is an unexpected repair to the home, car....that kind of thing. For example in April we had a minor roof repair ($450), an AC repair maintenance bill ($475) and a large car repair bill ($600). We were able to cover the roof repair out of monthly spending and then tapped the smaller EF for the other two. Now we'll take a few months and pay that amount back to our baby EF.