Emergency Fund

Gator By Marriage · Mar 9, 2019

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.

divits · Mar 10, 2019

Absolutely. Ever since I was in my late 20's I've always had a fallback fund. It can be hard for a lot of people to do on top of a long term savings plan but it's just as important. I just considered it like an insurance payment and tried to forget it was there hoping I'd never need it.

itsgr82bag8r · Mar 10, 2019

First thing we advised our children to do when they got their first job out of school & were “on their own”. Not digging a credit hole on top of emergency financial bleeding is very important. Failure to heed that eventuality can cost you years to recover.

ChiefGator · Mar 10, 2019

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.

FireFoley · Mar 10, 2019

ChiefGator said:
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!!!!

ChiefGator · Mar 10, 2019

FireFoley said:
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!!!!

Thanks fortunately I can afford it, Insulin is very expensive and for me (I have bad habits) I need to most recent versions of almost every med.

TLB · Mar 11, 2019

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.

Gator By Marriage · Mar 11, 2019

TLB said:
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.

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.

ChiefGator · Mar 11, 2019

TLB said:
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.

TLB · Mar 11, 2019

Thanks, but I understood you correctly (I may not have expressed myself well). HSA was/is simply my vehicle for your slush fund ;)

TheDouglas78 · Mar 11, 2019

ChiefGator said:
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.

We went HSA the same year as we became custodial guardians... we contribute to our 401k, IRA, Savings and HSA every paycheck. The HSA is great for medical especially surprise medical. We carried over $500 from last year (due some health issues last year)… the rollover aspect is what sells it for us.

TLB · Mar 11, 2019

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.

TheDouglas78 · Mar 12, 2019

TLB said:
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.

For an extra few dollar out of my paycheck, each year my employer puts an extra 1000 in my HSA on the second paycheck of every year.

bradgator2 · Mar 12, 2019

I 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.

BMF · Mar 12, 2019

Gator By Marriage said:
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.

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).

Gator By Marriage · Mar 12, 2019

BMF said:
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).

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.

BostonGator84 · Mar 16, 2019

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.

Gator By Marriage · Mar 16, 2019

BostonGator84 said:
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.

Hang tough. You will get there!

-THE DUDE- · Mar 18, 2019

bradgator2 said:
I 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

ChiefGator · Mar 19, 2019

-THE DUDE- said:
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

Unless it does not work. And I had the same glasses for many years, and got them for free from my employer as safety glasses. So it does not work the same for everyone. Good suggestion though.

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