I’m doing some thinking about my emergency fund so I thought I’d post this poll! Feel free to elaborate or not!
My question is how much cash do you hold in your emergency fund, in relation to your expenses. So if you had to live off your e-fund only, how long could you sustain?
0 voters
I don’t have an emergency fund, but I have access to a $40k line of credit. My reasoning is that the interest of pay on a short term loan to myself is less than the investment benefits I would lose out on by having a bunch of money sitting in a savings account.
Caveat - more than 2 years, but I am retired and am trying to mediate “having” to withdraw funds during a really bad market. So it’s not financially optimal, but psychologically comfortable (and fits with my very lazy money strategy)
We keep a fair amount in cash (about 7 months non reduced expenses right now). Since we’re single income and have a young child and own a home, it feels prudent even with also having absurd levels of credit available (another 6-9 months of expenses of open credit lines). We do swing wildly though, periodically dumping huge amounts into home projects, IRAs, or doing something like paying off a car if the buffer gets too large. We get as low as 2-3 months worth of cash sometimes.
My answer is weighted heavily by being married to a “stuff the mattress full of cash” mentality, in spite of my explanations about inflation and interest rates.
Right now I have about 4 months but the goal is 6 months. I used some of my e-fund during my house purchase so still building back up. I’m pretty comfy with 6 months, because I also have sinking funds for big unexpected expenses like house repairs, car repairs, computer/school things, and vet expenses. My e-fund is planned to be super bare bones and I also have access to quite a bit of credit if I needed it for a true emergency
I should also clarify my answer. I have 2 years now, but until 3 months before quitting my job, we were running with 6 months, and probably would have dropped to 3 months except that it was a balance of risk tolerance.
It’s complicated! We have less than 1 month in actual cash-on-hand because I impulse bought an I bond last October but could access a lot of money through previously unreimbursed HSA receipts and Roth contributions. And in the unlikely event that I got sacked, I could also cash out my 457(b). So in a real emergency there’s a lot that we could tap.
Calling it three months, but I’m very much in the ‘money is fungible’ camp, so that’s just the amount I have in a credit union that I could withdraw or use immediately if I needed to. I keep about the same in ‘safe’ investments (money market fund) that would take a day or two to transfer, and then right now there’s about a year in iBonds (2/3 of which I could withdraw with 3mo penalty, 1/3 that won’t be accessible until next Jan). But the ibonds are mostly because their rates were good enough that I skipped bond fund investments for a bit, not sure how long I’ll keep doing that if their rates keep dropping.
I have 8-12 months available if need be, so i voted for the 1 year slot. This is a lot, but my part time job doesn’t allow for much cash flow (it pays my living expenses but i don’t add to my savings from my income) so building it back up is hard and I’m hesitant to fuck with it.
Thanks to all who responded! I’m at 3 months right now but I would feel safer with 1 year. I honestly didn’t even think about credit! I don’t even know the total credit available to us (probably a lot) but I’m surprised to hear it’s common to think of that as a sort of e-fund. It makes a lot of sense though and it makes me feel like I’m in a better position than I previously thought! It’s also nice to hear that some of you swing in your amounts because that’s been true for us and I’ve felt like it was an indication that I wasn’t doing things “right”.
I voted 6 months, but that’s a leftover amount from when we were DINKs and I’m working to update it now. I will feel more comfortable with 1 year at present, and then as we approach retirement, I plan to have 2+ years.
I voted 6 months, but it’s really more complicated than that. Our dedicated emergency fund is indeed about 6 months worth of spending, minus taxes and all forms of saving. However, on top of that we have dedicated “escrow” balances for expenses we anticipate in the future, such as for vacation, the next car, etc. Some would call these sinking funds, I think. Anyway, if you factor those in (as we probably would in a time of desperation) we have more like a year and a half worth of expenses saved.
I am currently at 7 months but would also feel better with 1 year.
We’re currently at a year, maybe more, but I would have invested more of that if we weren’t planning to spend it on home improvements, and am willing (if not thrilled) to spend down to 3 months.
With more in an investment account and even more in an HSA for medical emergencies.
We have 3-4 months of required expenses saved up, less if we kept got rid of all of our fun spending.
We also have two W2 incomes, though, so we’re balanced between “oh no we have kids and a mortgage” and “it’s highly unlikely we’ll BOTH lose our jobs at the same time”.
If we only had one wage earner we’d probably want to have more.
Oooo I never think to count this, but good thought, thanks for the reminder.
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