We don't segregate an "e-fund". Due to current low interest rates we decided not to work on building up a large pool of cash until we put our money to work in other ways. I'd say we usually have $10K of unallocated cash. First we:
-maxed out retirement (401k, 2 Roth's, SEP, HSA) -bought investment property -set up taxable investment accounts -increased charitable giving
I think we may start saving for a house DP but that will probably be a mix of cash and investments.
We do have separate savings for quarterly taxes, travel and DH's business that is in cash.
I have an immediate goal of 1 month, but a long-term goal of 6 months. We both have fairly stable jobs and are unlikely to lose our jobs without extended notice.
What is your goal? In months or emergencies, not dollar amounts. As a single parent I wanted to have enough to cover my kdis activities and things plus expenses, so my goal is 6 months E-fund, so far I'm at 3, but on track to fully fund it by August
Why did you pick that goal? (Un)stable job(s)? Arbitrary number? Your mom told you do? I picked that number because I was out of work 4 months last year, and i almost lost my mind worrying about money, so 6 months of expenses seems likes a good round number.
Do you ever stop contributing or just scale back? Assuming it's full funded and you haven't used any/need to replenish. In August once I hit my goal I plan to split that money and put half in my Roth (to fully fund it) and a quarter each in short term savings and investments
How do you define emergency? What would you use the money for? Right now since ALL of my savings are in the E-fund and emergency is anything that is absolutely necesary outside of my budget. For example my car was vandalized the other day and I had to buy new tires. That came out of the Efund. I'd like to eventually have enough money in short term savings to only use the efund for deductibles and job loss though.
We don't have one, and don't have any goal to have one. We have a lot of open credit that could be utilized, plus non registered retirement savings that could be liquidated if necessary.
Why: That sounds like a safe amount to have in the case of losing a job or having to replace something as far as cars or home repairs.
Stop contributing or scale back: Once we get there we'd probably divert additional savings into investments/retirement. We are nowhere near our goal now, our e-fund is about $2K (though more is in savings account but earmarked for property taxes). We are focusing on paying down some debt before continuing to build the efund further right now. Since we have no kids yet I feel comfortable with this for now.
Emergency: Having to replace a car, a large medical bill, or something happening to our home. Most of these things would be covered by insurance already though. Mostly it's important in case one of us loses a job, or is injured and can't work for a period of time. Basically anything that would disrupt our income.
Post by crazycakes on May 17, 2012 18:46:24 GMT -5
I would panic if we had less than 10k in liquid savings. That's about 6 mo of expenses for us. I can't remember if that advice was from suze orman or MM, but its a number in my head from somewhere.
Post by wallabyonwheels on May 17, 2012 19:07:45 GMT -5
Goal? 10k (which would cover us for about 4 months more bare bones) Why this #? It's a nice round number Do we ever stop contributing? Sometimes when we need to money for something else. What is an emergency? An unplanned necessary expense over $500. Anything under that we can normally cover with slush money.