Actual E-fund

[flygirl]

I know this board is an anomaly but in talking to some people I think they are pretty loose about the E-fund they actually have.  Some people count money allocated for other things.  I want to know money you have set aside strictly for an emergency fund.  Not including future car, planned house updates, non retirement.  Presumably cash that’s easily accessible.

How many months of e-fund do you have?

ETA-assume this is for all income in your household.  

[mccallister84]

Six months for us but I SAH.

[just]

I voted 6-11 but I don't count based on household income, I count on household expenditure.
ETA: It would be closer to 3 if I used income.

[flygirl]

Nov 9, 2021 10:06:00 GMT -5 just said:

I voted 6-11 but I don't count based on household income, I count on household expenditure.
ETA: It would be closer to 3 if I used income.

This makes sense-I just don’t want the “I have 3 months of my income because it’s unlikely we’ll both lose our jobs at the same time”

[mccallister84]

Nov 9, 2021 10:13:39 GMT -5 flygirl said:

Nov 9, 2021 10:06:00 GMT -5 just said:

I voted 6-11 but I don't count based on household income, I count on household expenditure.
ETA: It would be closer to 3 if I used income.

This makes sense-I just don’t want the “I have 3 months of my income because it’s unlikely we’ll both lose our jobs at the same time”

Huh? I mean if people feel comfortable with 3 months and their job security why does it matter to you? If I still worked we would probably only have 3 months because I was tenured teacher. It was EXTREMELY unlikely I would ever be without my salary.

[dr.girlfriend]

Mine is higher than I'd like because I keep letting checking build up rather than working out our new investment/retirement strategy.

[melmo1122]

I have 12+ Because I’m single in a HCOL. I can’t/wouldn’t want to rely on my parents for help if I lost my job.

[AdaraMarie]

Mine is around 6-7 months but I don't strictly segregate it the way you say. At some point two months of that will come out for new ac and furnace but if I wait until it breaks does that qualify as an emergency?
I also am counting my budget rather than income, which includes savings. If I really lost my job I could probably stretch it longer by cutting back
The only reason I have this healthy efund is because I have been WFH since March 2020 and haven't paid for any daycare in the last 20 months (kids are old enough to make this work). So a mixed blessing to be sure.

[Cappy]

Ours is currently about 4 months of expenses (not income) and it was at 6 months but I tapped some for a house project when our ACTC got put on hold from having amended. I'll replenish most of that when I get those funds back at tax filing time. 6 months simultaneously feels like too much and not enough TBH.

[flygirl]

I was talking recently to a financial advisor and I was surprised how many people count all savings even if it was allocated for something (specifically a vacation in one case), stocks or 1 job loss to get to their e-fund amount. It led to some people raiding retirement accounts when the market was down.
Even for myself, I have a cash efund which needs some additional funds but then I have ladder CDs in the amount of my mortgage/taxes. Does anyone else do anything out of the norm? Given that my job is still not the most stable even though I didn’t get laid off in 2020, I’m looking to do better in this area.

[Pilsy]

We keep more in cash (checking and savings accounts) than I'd like; my H is always trying to time the market, so he is often reluctant to move money in. We also keep saying we're going to update our finished basement, so we'll purposely keep that money handy, and then we repeatedly put it off. Sigh.

I chose 12+.

[steamboat185]

Ours moves around from 6-11 months it gets larger before we make a stock purchase. At this point we have it sort of combined into an emergency fund/slush fund as that works better for us and we never let it drop below 3 months cash.

[melmel48]

1.5 so I voted 1. I am single, with the highest salary I have ever had... and it is still a struggle sometimes.

[Susie]

A little over 6 months of household net income.

[lilypad1126]

I said 6-11 months. There are expenditures I'd cut back on immediately if I lost my job, so the amount I have saved would easily cover that time period. But I'm also not above dipping into my e-fund to fund a vacation because i know we have investments we could pull from if we had to.

[twinmomma]

Nov 9, 2021 11:30:26 GMT -5 melmel48 said:

1.5 so I voted 1. I am single, with the highest salary I have ever had... and it is still a struggle sometimes.

Solidarity. Single mom who pays all the bills over here. I have about 2 months in a regular savings account and it took me a really long time to get there. 

[aspentosh]

6-11. Single income three person household.

But honestly, it could be much higher if I was "allowed" to count our other savings for future purchases. We had $20k+ saved for a bathroom renovation when my H lost his job last year. We didn't take on the renovation until he was months into a new job, so realistically that $20k could have been counted towards our e-fund if necessary. But because we are single income, we always have AT LEAST 6 months of expenses saved that won't be touched unless absolutely necessary.

[brooke77]

We have 6 months savings in the e-fund. This would be if we both lost our jobs and didn’t have unemployment benefits. In the past, I have had 3 months in the e-fund. Our childcare expenses were double and my SLs were basically another mortgage payment. So now the same amount of cash goes twice as far.

[ohgillian]

Nov 9, 2021 10:13:39 GMT -5 flygirl said:

Nov 9, 2021 10:06:00 GMT -5 just said:

I voted 6-11 but I don't count based on household income, I count on household expenditure.
ETA: It would be closer to 3 if I used income.

This makes sense-I just don’t want the “I have 3 months of my income because it’s unlikely we’ll both lose our jobs at the same time”

I don't know what you mean by this. You don't want that approach for yourself, or you don't want people to reply if that's their approach?

[wildrice]

We have about 20-25k in savings at any given time. I don't know how this answers your question. That's like 3-4 months of total income loss for both of us I guess? More like 4-5 months worth of expenses, perhaps more than that if we were really cutting back on extras in an emergency. We have a lot of fluff in our budget and some of our income is budgeted to be saved each month.

We don't have any of that currently earmarked for other stuff, but that doesn't mean I'm set on leaving it there only for true emergencies. We have used savings money for things like travel and repairs. I honestly am just fairly loose with our budget at this point. You don't want to hear this, but there is little chance of us both losing our jobs at the same time and having total income loss, so I don't see the point in keeping a strict "cannot touch unless you have no income" efund - we will likely never use it.

[niq]

It's 6 months of barebones expenses -- no daycare, way less fun stuff, etc. But our spending bounces around, we dip into it and replenish from low spending months, bonuses, or sales of RSU grants. Big purchases -- car/home reno-level stuff -- come out of bonuses/RSUs rather than the "e-fund"

If I use our current expenses it's 3.5 months.

[supertrooper1]

I only have about 1 month right now. Normally I have 6 months, but I'm going through a long drawn out divorce that is sucking my money away.

[purplepenguin7]

I am not your typical MM poster and am way less financially well off than most here. We have 2 months of expenses saved in cash. maybe closer to 3-4 if we cut non-essentials (ETA: also forgot about daycare definitely around 4). I used to not worry about our actual cash savings too much because we had a lot of non-retirement assets we could tap into in a true emergency....BUT this stupid housing market meant we had to pull some money from investments to add to our dp fund to get to 20%. I definitely want to build our cash reserves up significantly since we'll be buying a much larger/more expensive house in a few weeks.

[flygirl]

wildrice, ohgillian, I was mostly looking for how long your efund would last if there was no income in the household. With the craziness of Covid and some things the financial advisor said about clients job lose, it definitely has me thinking I need to think about this more.

[wildrice]

Nov 9, 2021 15:43:34 GMT -5 flygirl said:

wildrice , ohgillian , I was mostly looking for how long your efund would last if there was no income in the household. With the craziness of Covid and some things the financial advisor said about clients job lose, it definitely has me thinking I need to think about this more.

Eh, it's not a bad idea but depending on your total financial picture, IDK if I agree with that either. 

My H and I work in different industries, and we both were able to work from home during the pandemic and kept our jobs. It's possible the next national emergency won't have us so lucky, but even had we both lost our jobs during COVID, we would have gotten unemployment and the additional UE payments. It wouldn't have been enough to sustain us without savings, but I don't know that it would have been necessary for us to have a full 6 months of total income loss level efund, either, unless we were both STILL employed at this point.

The only scenario I can imagine where we would truly need to live off our savings and nothing else long term is if we got in some kind of terrible accident where we both survived but both were unable to work. Or perhaps if only one of us did and the other had to quit working to care for the injured person. This is not impossible - I have a friend whose sister just had this happen and she's looking at a good 6-12 months before she can work again, if ever. But it's highly unlikely and honestly, at this point my parents are retired and available and would likely help in some way so even then I don't think we'd hit 100% disaster level.

None of this may be relevant to you, but it's the kind of stuff I think through. Would even very worst case scenario leave us penniless? Probably not. If we could easily save up 6 months of income, perhaps I would, but right now that would mean sacrificing too many other things (including getting caught up on retirement) to a point where the cost is probably not worth the actual benefit. 

[plutosmoon]

I've never had a specific pot of money as an efund, I've never really made enough money to have much savings at all until very recently. When I did manage to save my exh would spend it. Exh couldn't hold a job and was unemployed more than employed. We had a period where we were both unemployed with no savings and a toddler, I was the only one with unemployment benefits. It sucked, I used credit cards.

I'm currently sitting on a giant pile of cash (for me), almost a year salary, after selling my house and waiting to rebuy. I've gotten recent raises and with no spendy exh can finally save. My current employer has rarely laid off (possibly never), people get fired on occasion, but laid off for economic reasons is pretty much unheard of. Outside of what I have for my downpayment I have a month or two of expenses. As a single parent, I'd prefer more, but Amex will happily come to my rescue again if needed.

[dr.girlfriend]

plutosmoon,

Not quoting in case you want to poof the details later but congratulations on making your ex your ex and achieving financial security on your own!

If you're not doing a Roth that may be a good place to stash some of your extra funds -- it grows tax free, you may get to a point where you're not eligible to contribute any more in the future, and you can put it in pretty safe investments within the Roth if you don't want to take risks. When I was a poor grad student I started a Roth and event hough I didn't have much to spare I felt okay doing it knowing in a pinch I could withdraw the contributions without penalty. That was during the recession and it has grown tax-free very well. In the future you could use it for your daughter's education but you're not tied to that like you would be with a 529 (which is also good, but maybe as a second priority).

[plutosmoon]

dr.girlfriend , Thanks! That is great advice!

I do have a roth that I used to fund regularly, I actually started it way back in in my early 20s when I qualified for the 50% saver credit, but I fell off funding. It is a good option to park funds knowing the contribution can be withdrawn. I tell other people that too, but can't seem to fund it myself, even when I have the money! Probably just the psychological aversion to withdrawing retirement account funds once they are marked as retirement. I've always had roth for college dreams for DD. She'll have a crazy generous tuition benefit to work with, so college funding isn't a top priority, although we do have a 529.

[quesyrah]

We never had a proper e fund. It was always just a couple thousand in savings (usually around $2,000-$3,000).

Then the pandemic hit and my
Husband’s place of work was shut down from March 2020- April 2021. He was furloughed and it was a really hard year.

We are now making good progress on a proper e fund! We had never needed any major money to make it though an emergency so it all felt fine until we had no income. He did get unemployment and we were able to defer our mortgage (they’ll tack the missing payments on to the end) so we did okay. But it taught us that next time, we won’t be because we probably wouldn’t get the same financial help.

We also still have several sinking funds.

[heygrey]

We have 6 months of expenses in an account that is specifically marked as our emergency fund and we've never actually taken money out of it. We also have other savings accounts for vacations, vehicles, home improvements, etc. that we would probably use up first before touching the efund. So definitely 6 months, but could go 12+.