Multiple Questions

saveorretire · December 2015

Nesties, I have a couple of questions for you all so please advise! I am between the age of 24 and 34 and I have a very small 401k. 2000.00 (SMALL). I am a little torn between investing in a 401k and building a regular savings account. I guess my biggest fear is, putting a lot of money into retirement and not living long enough to even see it to enjoy it. Currently I have stopped contributing and have been saving 100.00 a month into a regular savings. I really want to get my ducks in a row before January 1-2016! my questions for you all are: sn: i know every ones opinions vary and everyone has different situations

1. what is priority for you all RETIREMENT OR BUILDING AN EMERGENCY FUND
2. how much liquid cash do you save in a regular savings monthly. ( i think i may need to increase my amount)
3. how much liquid/ready to use cash do you have available at your fingertips in case of an emergency? ( right now i have 2000.00) my goal is 10,000.00)

thank you all in advance!

jessica490 · December 2015

1. Both, but since we are 33 we already have an established e-fund with maybe 4-6 months worth of expenses in it (We just bought a house so we are working on building that up little more). But we also increase our 401K percentage every year and will be opening ROTH IRA's soon so this has become more of a priority for us.

2. If you are on the younger side I would make sure you establish some sort of e-fund...only if it's $1,000. You want that cash on hand in case an emergency happens. The amount varies per month for us, it just depends on how much extra we have left after paying bills.

3. We have about $12K in our e-fund but want to get to $20K. Houses are more expensive than condo's so we want to be prepared for the more expensive fixes. My company is also integrating with our parent company over the next few years so there is a chance I could get laid off.

CuriousKiddosMama · December 2015

1. Retirement is our biggest priority. We have a fully funded 6 month emergency fund (although as I say that we are actually adding to our e fund each month right now due to the downturn in oil and dh being in the oil industry. However we are not cutting our retirement savings to do this, we have cut other areas like eating out and hair cuts).

2. This is not an easy one to answer. Between what we are adding to our e fund and just general savings (car repair, vacation, insurances) we are probably saving 25% of our income. Half of that for yearly items like insurance, but the other is just savings.

3. Our E fund is about 40k. It used to be 25, but we upped it significantly when we bought a new house to cover mortgages and taxes during a layoff. Total liquid if you include all other savings (new car, house repairs, those listed above) is probably close to 70. This is way more than we should have liquid, and we were looking at better ways to invest some of this until we needed it, until dh company had its first huge round of layoffs earlier this year. We will be keeping it liquid for now.

als1982 · December 2015

1. Our priority is retirement. (In addition to debt payoff.)

2/3. Our liquid savings/efund is only $1,000 and we contribute no additional every month. Our monthly 'bare bones' expenses and mortgage only take up about 20% of our take home pay, so if needed, we could redirect our retirement contributions, entertainment and 'mad money' plus extra debt payments in lieu of a larger emergency fund.

simplyelise · December 2015

1. Both? We're currently in debt payoff mode, but I firmly believe that you need to value liquid savings AND retirement. After we get debt free next August, we'll be focusing on both growing our efund to 6 months of expenses and increasing our retirement contributions to 10-15%

2. We currently don't put money towards our efund monthly as we're in debt payoff mode. We put $100/month towards a new car and around $2500/month toward debt. After we're debt free, we'll probably be looking to save a total of about $2400/month with some going towards Roth IRAs, some going towards efund savings, and some going toward car replacement fund.

3. Absolutely everything right now would probably be about $4500. But $1200 is the car fund, $2000 is our efund and everything else extra in checking. We both make similar amounts, have very low living expenses, no kids, no house, good insurance, and live in a town with low unemployment, so we don't keep a lot liquid currently in favor of paying off the student loans which are accruing interest at 6.8%.

saveorretire · December 2015

thank you all so much! all of your advice is greatly appreciated!

cbee817 · December 2015

1. what is priority for you all RETIREMENT OR BUILDING AN EMERGENCY FUND

We're at the point where retirement is priority.
2. how much liquid cash do you save in a regular savings monthly. ( i think i may need to increase my amount)

Usually $2,000/month but the money moves to Roth, 529's, home repairs, etc throughout the year.
3. how much liquid/ready to use cash do you have available at your fingertips in case of an emergency? ( right now i have 2000.00) my goal is 10,000.00)

3 months of expenses are available right away, 6 more with a small penalty.

littlemushroom · December 2015

1. Both. We just bought a house at the end of May, so we are in the process of building a house fund/efund. We both have been contributing to our 401k before we bought the house and have continued to do so, me at 9% with employer match and H at 8% with employer match. We are looking to have those increased to 15% within the next few years.

2. We save in our joint accounts $700/month total (not including the amounts that go to our individual accounts). That is across all our various joint accounts for house, efund, car, vacation, etc. We are working to get the house/efund account up to between 20k-25k within the next couple years, then will re-evaluate how much to save in liquid savings vs retirement savings. More will likely go to retirement at that point.

3. Across all of our checking/savings accounts, probably around 15-20k. With the goals we have, that will be up to around 35k in a few years. We want a 6 month efund plus have enough to pay for a new roof for our house outright.

PurpleBookmark · December 2015

1. Both. My DH is now fully vested in his pension but we also have money automatically taken from his paycheck to an additional retirement account through his company. All of our savings from his take home pay are currently going towards building up our emergency fund.

2. My goal is $100/month plus any additional money like "extra" paychecks, tax returns and any raises.

3. $1,000 currently earmarked for emergencies although if it were a true emergency we could also access our gift and holiday accounts as well.

brij2006 · December 2015

1. what is priority for you all RETIREMENT OR BUILDING AN EMERGENCY FUND

We prioritize with Dave Ramseys' baby steps. So our emergency fund trumps retirement. Once that was to 6 months of expenses, then we started retirement.
2. how much liquid cash do you save in a regular savings monthly.

We don't put a set amount aside each month. However, we always have something we want to currently be saving for. Whether it be a house project, a trip, or to upgrade a vehicle. So we will budget accordingly to either cash flow something in that month, or save up over a few months to pay for it.
3. how much liquid/ready to use cash do you have available at your fingertips in case of an emergency?

Our emergency fund is $15,000, which is 6-9 months of our expenses (depending what all we cut). We will not touch that unless it's a major emergency or a job loss.

hoffse · December 2015

1. Retirement is our priority. The most valuable asset you have as a young person is time for compounding interest to work its magic. You say you are afraid you won't live long enough to enjoy it. Do you have a chronic illness or some other reason why you think you won't live that long? If not, then I suggest prioritizing retirement.

2. Our monthly liquid cash savings at this point depends entirely on whether we are saving for a specific goal or not. If we don't have a specific goal in mind we invest it, rather than save it as liquid. Cash that is held liquid loses its value at about 1% per year based on the rate of inflation. Having a reasonable emergency fund for your situation is important, but hoarding vast amounts of cash beyond that actually has you losing money in real terms.

3. At any given time we have around $10K liquid across multiple accounts - but many of these are earmarked for spending. Obviously if a huge emergency happened we would raid the vacation fund and the clothing fund and the gift fund.

Emergency funds are really personal. Conventional wisdom is that you want 3-6 months of bare bones expenses in savings. Practically, I think you need to consider things like insurance deductibles, your savings rate, and job security before nailing down a firm number. H and I don't keep as much liquid as recommended because we could afford to live on either one of our incomes alone. So we don't have to insulate ourselves against job loss to the same degree that a family with a sole breadwinner needs to do. On the other hand, we are homeowners, so we do need to be prepared for something like the A/C to die. That's not something that renters have to worry about. The right number for emergency savings is going to be different for every person.

But please do not view liquid savings and retirement as an either/or thing. You need both.

short+sassy · December 2015

Welcome to the board! There is a lot of wisdom here. For your situation, it seems like you should focus on both beefing up your retirement and your e-fund/savings. Considering you already have a decent start on your savings goal, I'd especially focus on your retirement. Like @hoffse points out, money has an exponential time value. I'm just making this number up, but to hit a goal of $5M at retirement, will take putting away substantially more money for someone starting at the age of 35 vs. the age of 25.

1. what is priority for you all RETIREMENT OR BUILDING AN EMERGENCY FUND

My priority is retirement....or more specifically...creating passive income I can retire on through investing in rental properties. For me, that is the best option because I don't want my money tied up in a retirement vehicle that I can't access without penalties until I'm in my 60s. But then, I do have a chronic illness that makes me much more vulnerable to not live much past my 60s and/or have increasing serious medical problems. However, if that is not your situation, 401Ks and that kind of thing are excellent choices for some of your retirement savings.

But, if you're nervous to tie up all your retirement savings in retirement-type accounts, putting money into some good mutual funds for long-term growth can also be a great...yet very liquid...option. Though you'll lose the tax savings retirement accounts have, so that's the downside.

2. how much liquid cash do you save in a regular savings monthly. ( i think i may need to increase my amount)

3. how much liquid/ready to use cash do you have available at your fingertips in case of an emergency? ( right now i have 2000.00) my goal is 10,000.00)

I keep an e-fund of around $1,000, but also usually have another $1,000 hanging around in various accounts. Although I own a house, I don't have any kids, so that is part of why I keep it on the lower end. I also have multiple sources of income and a large Home Equity Line of Credit (HELOC) I could (but wouldn't normally want to) tap into. So those are more reasons I feel comfortable being on the low side with my savings.

But I don't have a low savings because I spend recklessly. I just focus on putting my excess income on paying my HELOC down. Which is an instrumental account in expanding my "real estate empire". Or at least it will be an empire one day, lol.

CuriousKiddosMama · December 2015

And I should mention that our e fund is large because we are a one income family. I'm a stay at home mom for the next several years if things work out that way

short+sassy · December 2015

CuriousKiddosMama said:

And I should mention that our e fund is large because we are a one income family. I'm a stay at home mom for the next several years if things work out that way

Heehee...our posts read together are a perfect example of why the right amount for an e-fund is going to be different for each family's situation.

CuriousKiddosMama · December 2015

short+sassy said:

CuriousKiddosMama said:

And I should mention that our e fund is large because we are a one income family. I'm a stay at home mom for the next several years if things work out that way

Heehee...our posts read together are a perfect example of why the right amount for an e-fund is going to be different for each family's situation.

Absolutely true!!!! This really is a personal decision no matter what expert you listen to.

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