Emergency Fund amounts

[BigMoneyJim]

(Quoting myself)

Quote:

Originally Posted by BigMoneyJim My big semi-realistic fears during protracted unemployment are having to drain the IRAs and 401(k) while NAVs are down and taxes+penalties eat up nearly half the withdrawals. And also now losing the house.

My concept of an emergency fund is for loss of income since I'm still working and need to work, although I have a significant nest egg. Housing bills and COBRA health insurance payments are the two biggies. Most everything else can be reduced by action or credit.

I forgot to add that on two occasions when I felt like a loss of income was reasonably probable and imminent I moved $10k-$20k of my retirement funds into safer investment classes to protect against sudden loss of NAV coinciding with loss of income. In both cases I moved the money back into my target AA after the perceived danger passed.

[Sue J]

Quote:

Originally Posted by youbet But this thread is about "emergency funds," not predictable liabilities. Isn't the question about how you would handle a totally unexpected, significant and urgent expense?

While not a significant number, DH broke a tooth on Saturday. We have dental insurance but it only pays 25% of major restorative work after a $50 deductible. Certainly unexpected and while he's not in pain, it's urgent.

Our portion may be $400-$600 and the cash is readily accessible.

Not all emergencies are loss of income.

[obgyn65]

I am also very conservative and aim to keep one year of expenses on my BoA checking account.

Quote:

Originally Posted by Surewhitey We also have plenty in a couple rewards checking accounts getting 2.2 & 3.03% if we do 10 transactions monthly in each...can you tell we're conservative? Lots of cash.

[freebird5825]

FIREd with survivor pension and fixed annuity as income.

Emergency funds:
- savings accounts with 4 months bare bones expenses
- 8 months bare bones expenses in a NY TE money market fund with Vanguard
- ability to tap into 30 day TE dividends in VWALX to replenish savings accounts, or write a check if really necessary
- EE paper bonds maturing in 2013

[FUEGO]

Quote:

Originally Posted by Sue J While not a significant number, DH broke a tooth on Saturday. We have dental insurance but it only pays 25% of major restorative work after a $50 deductible. Certainly unexpected and while he's not in pain, it's urgent. Our portion may be $400-$600 and the cash is readily accessible. Not all emergencies are loss of income.

This is just a general comment, not directed at Sue J:

In my personal finances, I wouldn't classify this expense as an "emergency". I expect to incur expenses for these type events on a routine basis. Other examples are appliances or electronics failing requiring replacement, treatment of injuries of illnesses, replacement of items due to damage or loss, and non-routine car repairs. Any one of these items can be a few hundred dollars or more, and they happen throughout the course of the year.

I assume most FI people or those close to it don't really worry too much about paying for these comparatively minor expenses. I expect a few of these one time expenses each year and they are included in my budget as routine spending even though the expenses are lumpy.

[Bluemoon]

Since I live on my pensions & SS I'm not concerned about loss of income. I feel comfortable keeping about 9 months expenses in 2 savings acounts (1 pays 3%). In case of a need to come up with some large $ I always have my CD ladder & I Bonds to fall back on. My expenses for last year were almost exactly what I had planned them to be.

[HornedToad10]

Quote:

Originally Posted by FUEGO This is just a general comment, not directed at Sue J: In my personal finances, I wouldn't classify this expense as an "emergency". I expect to incur expenses for these type events on a routine basis. Other examples are appliances or electronics failing requiring replacement, treatment of injuries of illnesses, replacement of items due to damage or loss, and non-routine car repairs. Any one of these items can be a few hundred dollars or more, and they happen throughout the course of the year. I assume most FI people or those close to it don't really worry too much about paying for these comparatively minor expenses. I expect a few of these one time expenses each year and they are included in my budget as routine spending even though the expenses are lumpy.

I think it's mainly a matter of labeling. I have a checking account and savings account. I consider the savings account my emergency fund but it's really more of just a slush fund for cash. Savings go in each month, lumpy expenses, emergency's and vacation comes out of it and I generally just keep the amount in the savings account over 3 months of expenses.

[jannyf]

Speaking from experience, I lost my job in early '09 & DH and I were totally not prepared for it. Looking back, it took me 9 months to secure employment that was about $5k less than my old job. Since I'm still working, we have that cushion in the bank now, plus some since we are saving for a new house. However, since that financial fiasco in '09, we have paid off everything, including our current residence - a 1100 square foot condo.

I think you need to evaluate your situation, your job market, etc & make your plan from there.

[Sue J]

Quote:

Originally Posted by HornedToad10 I think it's mainly a matter of labeling. I have a checking account and savings account. I consider the savings account my emergency fund but it's really more of just a slush fund for cash. Savings go in each month, lumpy expenses, emergency's and vacation comes out of it and I generally just keep the amount in the savings account over 3 months of expenses.

That's pretty much what we do with monthly income and expenses, too. Anything above expected monthly expenses goes into the savings and it builds up until it's needed for.....whatever.

DH's tooth turned out to be only $395 for our portion. The dentist gave him a discount on a Cerec crown. The worst part of this "emergency" was that he couldn't chew for a few days and had to blend food into a slurry. If he had still been working this would have been awful and he would have been miserable. But he's retired so this turned into a fun experiment to see what he could put in the blender and not get grossed out.

[Kronk]

I figure all money in after-tax savings is emergency money. HSA and Roth money is desperate emergency. Selling the house is last-ditch survival. As it stands I'd probably have nearly 2 years before I hit the desperate stage.

Really not sure how much value an "emergency fund" has to me. Anything short of losing my job is really just an inconvenience. $20,000 for a new roof? Sets back FIRE, but I can get the cash to do it. Seems like most of the pre-retirees on this board would be in that type of situation. I see no need for a specific account earmarked for "emergencies".

[Sirka]

Quote:

Originally Posted by Bankerwithabrain In terms of emergency funds for someone looking at FIRE, I would say keeping a couple of months in higher liquidity instruments would be fine.

+1
... and Master card for everything else.

[iam21177]

Just under 14 months of living expenses at this point, removing the non-essentials.

[seabourne]

I have about 2-3 months between checking and savings accounts, and one ROTH account with about 2.5 months cash. I intend to get to about 9 months in savings account and invest the ROTH money, but it was a compromise between making sure that I fully funded my ROTH for the year and keeping emergency money available. If i need more than the 3 months outside, I can pull the ROTH cash and have 60 to still get money back in. Until I get a comfortable amount in the outside accounts, I'm not comfortable having it all invested in the ROTH due to liquidity concerns.

Looking at my net worth, if you ignore retirement accounts, I'm about skint - underwater on the mortgage, soft second worth about what the property is in total, and maybe 3 months living expenses.

Include the retirement, and I'm actually doing pretty well...

[youbet]

Enough to buy a case of whatever beer is on sale at Binny's Beverage Depot. By the time I drink that, everything should have worked itself out just fine....... So, say $13. Should be plenty.

[73ss454]

Everything I have is an emergency fund, no?

[youbet]

Quote:

Originally Posted by 73ss454 Everything I have is an emergency fund, no?

Absolutely! What's with these multiple ledger systems? Money is money. If you need to keep it in separately labeled buckets, you need to go back to work! Oh course a $20 bill in my wallet for the next case of beer is OK as long as momma don't know......

[Moscyn]

With 50% of portfolio tied up in LT investments, I guess I call the rest as emergency fund even though they might be tied up in stocks and funds. Having retired with little debt and no dependents and a relatively simple lifestyle, what would be an emergency? Sudden illness - well, that's covered well by insurance but I do note may have to fork out money and wait for claim later. Replacement of an expensive item? Can't think of any which will cause me to worry except if something happens to my home but I could rent a smaller place in an inexpensive neighbourhood - I can always adjust living standards while I wait for insurance claims. What other emergencies should I really be looking at? DH dying or taking ill - what an awful thought but he has good insurance coverage. Whilst I do have something put aside for emergency fund, what other emergency situations should I be thinking of? A little separate from this topic but come to think of it, I do not have sufficient cash at home in case all ATMs are shut down or banks are closed! Maybe I should be asking myself - do I have sufficient available and accessable cash and how much should be enough?

[Gumby]

Quote:

Originally Posted by Moscyn A little separate from this topic but come to think of it, I do not have sufficient cash at home in case all ATMs are shut down or banks are closed! Maybe I should be asking myself - do I have sufficient available and accessable cash and how much should be enough?

This is a lesson I learned during the great power outage of July 2003, when I was stuck in my office in NYC with no cash and no way to get any. Credit cards didn't work either. Since that time, we have always kept several hundred dollars in cash at home - mostly twenties, but some smaller stuff too (on the theory that no one will have change)

[brewer12345]

Quote:

Originally Posted by Gumby This is a lesson I learned during the great power outage of July 2003, when I was stuck in my office in NYC with no cash and no way to get any. Credit cards didn't work either. Since that time, we have always kept several hundred dollars in cash at home - mostly twenties, but some smaller stuff too (on the theory that no one will have change)

I recently decided to keep a chunk of cash around in a couple locations for similar contingencies. Probably will never need it, but the cost of doing so is very low.

[Texas Proud]

Quote:

Originally Posted by brewer12345 I recently decided to keep a chunk of cash around in a couple locations for similar contingencies. Probably will never need it, but the cost of doing so is very low.

I have not done it in awhile, but I used to have a $10 bill in my car.... just in case I needed to buy gas and had nothing... I guess not it would need to be a $20...