- Dec 31, 2018
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Being retired I don't have a traditional emergency fund. I do have several funds for various purposes in liquid assets. The first has at least two years of normal expenses, and is funded from my current income to keep it at two years. The next is a health spending fund to take care of mostly the very expensive diabetic meds I take. Then a third one for vacations and other things that are not in my budget, this is mostly funded by months where the budget is more than spending.
Working folks should have six months, as well as those other two that I have.
I hope everyone, especially those in their younger years, reads this post and takes your view Chief. I am in a similar situation as you, without the expense of expensive meds (hang in there and stay well), but being aware of that potential and putting aside for that is paramount. Sadly, as the factual stats show, about 65% of all people don;t have 500 bucks should an emergency arrive. I chalk it up to our must have (oh sorry, want) society, the ability to get credit if you can breath and then using all that credit, having to have a new phone every other week and leasing a vehicle that you would not have if you were purchasing a car!. Good read Chief!!!!
Take heart in the fact that you are making the effort! So many think it's too hard and either give up or don't try. I mentioned at the beginning to having 6 months set back; well, it didn't happen for us overnight. It was hard and it took quite a while. Stay strong and you will get there.Life's not so simple for most Americans to where we set ourselves on the right track from the start. At this point in our lives (late 40's kids reaching tween ages) we have ourselves in what we consider a deep debt hole, which to me is a priority over significant emergency funds (sounds 4$$-Backwards, I know). We set ourselves with roughly 1-2 mo expenses in savings, with the goal of adding another month every year by small deposits every paycheck. That's the emergency fund, though I also know we have significant 401k if push comes to shove for a true emergency. I know our family is there as well, if required - my sister has used that card often, I prefer not to.
Like Chief, I do have an HSA for medical, but I work constantly to pay for medical needs out of paychecks and allow the HSA to quietly grow for use in retirement.
Ideally, I'd want to get us to 3-6 mo emergency cash, and likely move us out of savings into a money market acct or similar. But we're not yet to a point of doing so. For now, maintaining 1-2 mo in savings is taking a lot of effort.
Life's not so simple for most Americans to where we set ourselves on the right track from the start. At this point in our lives (late 40's kids reaching tween ages) we have ourselves in what we consider a deep debt hole, which to me is a priority over significant emergency funds (sounds 4$$-Backwards, I know). We set ourselves with roughly 1-2 mo expenses in savings, with the goal of adding another month every year by small deposits every paycheck. That's the emergency fund, though I also know we have significant 401k if push comes to shove for a true emergency. I know our family is there as well, if required - my sister has used that card often, I prefer not to.
Like Chief, I do have an HSA for medical, but I work constantly to pay for medical needs out of paychecks and allow the HSA to quietly grow for use in retirement.
Ideally, I'd want to get us to 3-6 mo emergency cash, and likely move us out of savings into a money market acct or similar. But we're not yet to a point of doing so. For now, maintaining 1-2 mo in savings is taking a lot of effort.
I don't actually have an HSA, but rather a slush fund. Now I do think for many an HSA is a great idea, but I never bothered and being retired I don't know how that might work either.
Just correcting the impression.
Interestingly enough, my current employer and last both put a starter amount in the HSA each year you signed up to contribute to it. More money from their pocket to yours.
Do you have one? How do you maintain it? How much should be in there?
For me it’s 6 months gross in a money market. I don’t always agree with Dave Ramsey, but am 100% in agreement with him on this front. It has saved our bacon several times.
For a federal employee, an emergency is a must. I was retired for this last one, but went through several shut downs during my career (though I was never furloughed). When I was working, way too many USG employees figured since they had job security, they didn't need a fund. I imagine there's a bunch now singing a different tune.I'm a Dave Ramsey guy - it's how I really got into saving money. I agree w/ you that I don't always agree w/ him, especially about credit cards. I pay for everything I possibly can on my credit card (but pay it off each month, of course) for the points. Wife and I do a lot of free travel due to points.
On the emergency fund, yes that is so important. I missed a paycheck in January (I'm in the Coast Guard). I saw so many people panicking. I could have gone months without a paycheck and felt comfortable (sure, I didn't like missing the paycheck....and certainly wouldn't have enjoyed missing multiple paychecks - but it was good knowing I had the money to pay bills).
Hang tough. You will get there!We are trying to build up our emergency savings. Right now we have about 1 month, but we are working (slowly) towards a 3-6 month goal. The Mrs. has a lot of health expenses that keeps it difficult to build that up, but we are trying.
Go LASIK...best thing i ever did with my HSA funds. Cost me about 1,700 2 years ago and was spending roughly 300-400 per year on Dr. visit, contacts, glasses. In 2 more years it'll be about break evenI am also a lucky one and that my employer puts in $3000 a year into my HSA. Mainly because we have a high deductible health insurance plan with a $3000 annual deductible... so I think they feel guilty about that.
2019 HSA contribution limit for a family is $7000. So I put in the other $4000 to max it. At 26 paychecks a year... it's $154 a paycheck.
Now with a kid that is doing allergy shots (freaking expensive), a kid in braces, and 4 of us wearing glasses... I have not been able to build that fund. We use it all every year.
Go LASIK...best thing i ever did with my HSA funds. Cost me about 1,700 2 years ago and was spending roughly 300-400 per year on Dr. visit, contacts, glasses. In 2 more years it'll be about break even