Emergency fund changes due to economy?

[ProspectiveBum]

We have 12 months of basic expenses in a high-yield savings account. Unless the absolute worst case scenario happened (DW and I both lost our jobs, and neither of us received unemployment insurance) those funds would actually cover us for quite a bit longer than that. We do have ~$40k available on our credit cards, but that would be a last resort.

As the markets have gone down, I've stopped putting any money into the EF, and have been putting money into a taxable MF account. My early returns are less than stellar , but I'll continue DCAing into that account unless one of us loses our job.

[Urchina]

Thanks for the posts, everyone. I find this interesting, something akin to walking in the neighborhood at dusk before people have closed their blinds -- you get to see a glimpse of a lot of different living rooms. In this case, EFs.

To answer the question, what is an EF, for me it's money you can use to keep from getting in debt when your normal income stream dries up. It's designed to buy you time to re-establish an income stream. The more streams you have and/or the more secure they are, the smaller your EF needs to be.

Our EF is currently in a savings account (used to be high-yield but...). Once we have 6 months' saved we'll start a CD ladder, with a goal of moving towards a 12-month CD ladder. We also have Roths and a taxable MF if we really, really need it.

[lhamo]

Our EF is also our house fund -- we intend to pay cash for a pretty decent apartment here in Beijing as soon as our residency status allows us to do so (restrictions on how long you have to have official residency here before you can pruchase real estate), so we have a significant amount in high-interest (?) liquid accounts. About 15 years of our current living expenses, which we could cut considerably if needed.

DH is 50, so he could start drawing SS and tapping retirement funds before our liquid savings ran out.

Funnily enough, I still feel nervous about our financial situation. I have a serious case of bag lady syndrome, I think.

Hopefully the property market in Beijing will continue to drop, and we'll be able to buy a nice place with less than what we have saved. Then our living costs will drop considerably.

lhamo

[saluki9]

I take a similar approach to Brewer. We keep 4 months of expenses in CDs, 4 months in a High Yield savings account, and 4 months or so in the Vanguard Short term Corporate. Add onto that the HELOC and Margin loan.

[virginia]

My emergency fund has decreased. My job is really secure so I took about half of my emergency savings and bought some of the blue light specials on Wall Street this week
My attitude about having cash has changed though over the past year. When the market was doing well, I should have been putting cash away. I would have felt pretty stupid if the financial problem was much worse. I have quite a bit of money "saved" but mostly all in investments. Having more FDIC insured in the bank is where I should have been heading during that time.