How large is your emergency fund?

[texmati]

We are considering going down to one income.

I find I'm terrified of spending any of the money that we have saved- either on the mortgage, or a new car or even moving it out into investment accounts.

I keep wondering what if, what if, what if. My husband argues that If anything were to happen, or we found we were just drowing, we both could work on getting jobs to supplement our income. (second job for him, or part time for me). I don't know... I've seen people go years looking for a job. At the same time, I know that just hoarding money is emotionally driven-- not the smartest, best move for our family.

How do you all manage this balance--especially those with only one income?

[sunnysandiegan]

Single income family of three....and we gradually built up our savings (short-term and long-term/retirement) while we paid off debt years ago. Then, we worked on adding extra towards our mortgage while building up what we call our mid-term savings. We went from about 3 month's worth of essential living expenses to maintaining 3-6 months' worth and then 6-9 months' worth and now 9-12 months' worth. We always have a minimum amount that has to stay in these accounts, but we do use these funds on occasion.

We always set annual goals for both expenses and savings. We typically use short-term savings for planned home improvements one year and a vacation the next year, trading off. Long-term savings is our retirement funds. We thankfully both started out with 401k funds when we met and we rolled those over in full to IRAs when those jobs ended. We've contributed to our Roth IRAs ever since, usually the max allowed by law.

Since you recognize the emotional component, I recommend exploring that further for yourself. "Terrified" is a strong word. What caused these strong feelings towards money? (Just for you to think about.) Work on releasing the emotions surrounding money.

[Denvergirlie]

we are basically single income family.

We have no debt with 6+ months of expenses in an emergency fund. Personally I would rahter see this be 12 months of expenses, but have settled on 6 months in order for us to "move on" to the next goal.

[Marissamom]

we can't seem to keep a large enough income that's stable enough to build up much of an emergency fund. we have $600, which is our monthly rent. I hope to get it up to $800 (about our monthly bills, rent, cable, and utilities) then start pre-paying my student loans. obviously this isn't where we would be ideally, but it's a starting place.

[2lilsweetfoxes]

We are a single income family. Quite a bit of debt. Family of 5. Stable job (I'm in the military). Our "baby" emergency fund is equal to one month's expenses (if we did not save anything that month). We've been really good the last few months about living within our income (prior, we were tapping into savings and credit cards, but have managed to stop the bleeding). Of course, that means: no eating out, strict meal planning, nothing "special". Which, of course, means, that we sometimes feel like saying forget-it and blowing a wad of cash on something. Now, if we want something, we say "next year, when we are rich". Sometimes it is something sillily-extravagant. Other times, it is something we'd really like to have, and may buy once our credit cards are paid off and we've saved the money to buy it.

The whole purpose of the emergency fund, IMO, is that if the unexpected happens, you can pay for it rather than tapping the credit cards, such as a tire blowing out on your car or breaking your glasses.

Once the cards are paid off, I may up it to 2-3 months expenses before attacking the student loans. And, at this rate, we'll be able to cash-flow our older DD's college in 9-10 years. I'll expect her to try for grants and scholarships, though, and do things like Running Start and testing out of classes to keep costs down.

[scrapadoozer]

We have a little more than 3 months worth of expenses in our emergency fund. I would love to get this to 6 months, but have had little luck with that thus far.

[ssantos]

We currently have 8 months of an emergency fund. I highly recommend at least 6 months. Two years ago we had one income with 2 small children. My husband lost his job. It took me about 4 months to find a job and my husband is still looking! The job I got was the job I had left 5 years before in a different city. We put our house on the market and moved. We paid rent and a mortgage for 8 months! Thank God the house finally sold. We had to dig into saving to get out of the house, but we still had a little bit left. We have gradually built our savings back up.

Try to agree on an emergency fund amount that you and your husband are comfortable with. When you reach it, you can go to one income.

[ssantos]

Originally Posted by texmati

At the same time, I know that just hoarding money is emotionally driven-- not the smartest, best move for our family.

I wanted to add that I really disagree with this statement. Had we not had emergency savings in our situation (see my previous posting), we would have lost our house, one of our cars, and our good credit rating. We would have had to move in with my parents in a city we did not want to live in and get whatever jobs we could find as fast as we could get them. My parents would not tolerate free-loaders.

As it stands, I am extremely happy with my job and we love where we live. If my husband gets a job soon, in the next year we will be in a position to buy a house in an area we really want to raise our kids in.

I think hoarding (saving) money is an extremely smart move - especially in our current economy.

[texmati]

Originally Posted by ssantos

I think hoarding (saving) money is an extremely smart move - especially in our current economy.

ITA... I guess my question is when do you move from saving to *investing* or even just plain old spending.

We have over a years worth of gross salary saved up. We now live on one income, since back to back pregnancies have caused me to be "quitting my job any day now" for the past 2 years. I'd like to actually make that move, but I"m afraid I'll chicken out when push comes to shove.

I think that a first step would be defining goals for our family. For the longest time (since we married) the only goal that we've had is to have enough so I could SAHM.

[Knittin' in the Shade]

we're a one-full-time working parent and one wahm-side-business parent family, and normally our goal is to have 9-12 months' expenses in emergency funds (about half that in a savings account, the other in 6 mo cd's) Currently, we've got 8 months' expenses amassed, as I just went back to school (doing pre-requisites for an accelerated bsn/msn program) and we paid for my tuition out of savings. We'll work over the next few months to get it back to normal.

[quantumleap]

We'd like a minimum of 6 months, and will eventually aim for 10-12 months of living expenses. Back in the good old days, we had this, but unfortunately we didn't factor in requiring two massive, very expensive moves! Bye bye emergency fund. Hello huge debt.
Anyway, it took us 10 months to get back on our feet after DP started looking for a job. By that I mean able to live without incurring further debt, having an income, ect.
If you have the freedom and ability to do so, I'd put away as much over 6 months as possible, to a maximum of 12 months.
If it was us though, I'd be equally comfortable getting rid off all debt and then having a plan to gradually save the emergency fund from the single salary. But, we don't have a mortgage, so that debt doesn't really enter in to it. yadda, yadda.

I agree that "hoarding" money is hardly a bad idea. Especially if you sock your emergency fund away in a high interest savings account or something similar (higher interest while maintaining easy access). We earn 4% interest on our emergency fund, as long as it stays above 1000$, and we can pull all or part of the money out without penalty or wait times whenever we want. I don't think this is a very unique account either, so I'm sure you can find something like it (or better!).
Do you come from a background where money has been seriously short or lacking over the long term? Is that where your unease is coming from?

[p.s]

i have an admittedly in the minority view. possibly even the emotionally driven persons to which you refer.
a child of immigrants who came to America for graduate school with nothing, and established their own way, and who liked to read alot of historical fiction and biographies/autobiographies growing up.... I formed in my mind a very clear need to always be able to pick up and go someplace else and establish myself/ my family.
That means having portable skills, that will always be in demand, and having enough liquid assets (cash) to move a family and buy a home, settle a household. When I am able to do this to a city like London, SF, or NYC, then I plan to work PT or SAHM. Extreme maybe, but it allows me to sleep at night.

[Poddi]

Well, we used to have about 6 months' expenses, but last year we took out most of them and put into our mortgage. We have about two months EF left right now and feel OK about it. DH's job is quite secure and we're not too worried. Once we pay off our mortgage (14 months left with our current aggressive payment plan) we should be able to save like crazy.

I'm also an adult immigrant and know how to live a very frugal life if needed. I don't think I ever got used to spending money like most others do.