Savings

jessica490 · February 2016

Ok, so I guess it varies by situation and just what people are comfy with...I hate that we have $12K just sitting there earning no interest, but it makes me feel safer just to know it's there if we need it. I would like to have $20K in there and that would be the MAX I would ever keep as cash on hand so that we could rest easy and put more to retirement....

LillibetteV · February 2016

jessica490 said:

als1982 said:

We personally DO consider retirement "savings" and are maxing out all available accounts. Additionally, we also put $3,000 or so extra a month towards our student loan balance. Otherwise, we only keep $1,000 emergency fund.

What would you do if you or your H ever lost your job with only $1K in an e-fund? I can't remember if you are mortgage free or not.....but say you had a mortgage and car payments, student loans, cable bill, etc, how would you pay for those things? It would make me nervous with only $1K as a cash fund...or do you have others liquid accounts you can pull from for an emergency?
I always though my job was safe until layoff's were mentioned months ago...since then we've been trying to build our e-fund (currently at almost $12K) and I still feel like I would panic and not have enough....what if our furnace broke? those cost around $5-6K on top of paying all our normal bills while I was unemployed?
Anyone can chime in, but I'm just asking you since you mentioned you only have 1K.
I tend to think of the worst possible scenario lol

Me too! $1k would be too little for me. We keep 1 month of necessary expenses as a buffer in our checking account and another 2 months in the efund. This covers 3 months if we BOTH lost our jobs and didn't qualify for unemployment which is unlikely. If DH lost his job we'd be fine because my salary could cover us, and if I lost mine the efunds would stretch for 2 years since they would just have to make up the few hundred dollars we need each month that his salary wouldn't be able to cover.

hoffse · February 2016

I will add that H and I are going to start building our e-fund $5K/year each year until I partner. I'm 4 years away, and unless they change the rules between now and then I'll be up for equity immediately.

That's going to do really wonky things to our cash-flow for the first year or two because most of my take-home will be back-loaded at the end of the year. However, I'll be paying quarterly taxes as though my income is steady throughout the year. I'm not super interested in trying to figure it out down to the penny, so we are just going to assume that the taxes will consume all of my take-home for the first 2 quarters. We are building our e-fund so that our lifestyle doesn't have to change if/when that happens.

Conventional wisdom among young partners is to just take out a HELOC to manage the cash flow for the first couple of years, but that seems stupid if it's something we can anticipate and plan for. We have plenty of notice that it's coming. If something changes with equity track or my career goals between now and then, we can adjust at that time.

als1982 · February 2016

jessica490 said:

als1982 said:

We personally DO consider retirement "savings" and are maxing out all available accounts. Additionally, we also put $3,000 or so extra a month towards our student loan balance. Otherwise, we only keep $1,000 emergency fund.

What would you do if you or your H ever lost your job with only $1K in an e-fund? I can't remember if you are mortgage free or not.....but say you had a mortgage and car payments, student loans, cable bill, etc, how would you pay for those things? It would make me nervous with only $1K as a cash fund...or do you have others liquid accounts you can pull from for an emergency?
I always though my job was safe until layoff's were mentioned months ago...since then we've been trying to build our e-fund (currently at almost $12K) and I still feel like I would panic and not have enough....what if our furnace broke? those cost around $5-6K on top of paying all our normal bills while I was unemployed?
Anyone can chime in, but I'm just asking you since you mentioned you only have 1K.
I tend to think of the worst possible scenario lol

Well, we don't have cable or car payments and are just a few short months away from having our student loans paid off. Regardless, we are able to afford all our bills on just one of our salaries. Only having a $1,000 efund isn't for everyone (we also don't have children), but when we have an extra $5-$6k a month coming in that we could redirect to an emergency instead of debt repayment or retirement (which is what we're focused on now) it works for us.

vlagrl29 · February 2016

We like to keep 6k in it - our e fund is for emergencies like unplanned medical bills, car expenses, house repairs. We aren't even concerned about lay offs because we are both self employed and could afford everything on DH's salary alone BUT that's too tight for me which is why I also own my own business.

Mustard76 · February 2016

I'm for sure in the minority here, but I need to have significant cash in our e fund to have any peace of mind. I have a lot of unease about our mortgage if one of us were to lose a job. H and I both have stable careers and we each receive a raise every year, but you just never know. After purchasing our current house, we certainly learned that we overdid it. We can afford our lifestyle, but both of our incomes are required to do it, that was a big mistake. So the only way I feel good about it is to keep a large e fund and to continually build up our cash "oh shit" fund at home.

dragonstarjk · February 2016

hoffse said:

What would you do if you or your H ever lost your job with only $1K in an e-fund? I can't remember if you are mortgage free or not.....but say you had a mortgage and car payments, student loans, cable bill, etc, how would you pay for those things? It would make me nervous with only $1K as a cash fund...or do you have others liquid accounts you can pull from for an emergency?
I always though my job was safe until layoff's were mentioned months ago...since then we've been trying to build our e-fund (currently at almost $12K) and I still feel like I would panic and not have enough....what if our furnace broke? those cost around $5-6K on top of paying all our normal bills while I was unemployed?
Anyone can chime in, but I'm just asking you since you mentioned you only have 1K.
I tend to think of the worst possible scenario lol

I can't speak for @als, but H and I keep a lot less in our e-fund that many would be comfortable with. We keep right around $5K, and we dip into it frequently to help cash-flow large reimbursable expenses while we are waiting for reimbursements to arrive.

I am comfortable with this because we would BOTH have to lose our jobs to be in a really tight spot. Living on a single income would not be comfortable for us, but it would be possible.

I also get cold-calls for jobs once or twice a month. H is starting to get them too. We could find something else if we needed to.

Same here. We only keep $1K liquid and $2K in a CD as an e-fund. We are comfortable with this because our mortgage payment is low ($850/month) and our other debts are small and have flexible payment options. It would be really tight living on one income, but doable. We also have a lot of discretionary spending that we would immediately cut if one of us lost our jobs, such as monthly TV/magazine/misc. subscriptions, etc. If all else fails, we have several large credit card lines available at our disposal, although we would have to be absolutely desperate to rely on those.

csuave · February 2016

als1982 said:

jessica490 said:

als1982 said:

We personally DO consider retirement "savings" and are maxing out all available accounts. Additionally, we also put $3,000 or so extra a month towards our student loan balance. Otherwise, we only keep $1,000 emergency fund.

What would you do if you or your H ever lost your job with only $1K in an e-fund? I can't remember if you are mortgage free or not.....but say you had a mortgage and car payments, student loans, cable bill, etc, how would you pay for those things? It would make me nervous with only $1K as a cash fund...or do you have others liquid accounts you can pull from for an emergency?
I always though my job was safe until layoff's were mentioned months ago...since then we've been trying to build our e-fund (currently at almost $12K) and I still feel like I would panic and not have enough....what if our furnace broke? those cost around $5-6K on top of paying all our normal bills while I was unemployed?
Anyone can chime in, but I'm just asking you since you mentioned you only have 1K.
I tend to think of the worst possible scenario lol

Well, we don't have cable or car payments and are just a few short months away from having our student loans paid off. Regardless, we are able to afford all our bills on just one of our salaries. Only having a $1,000 efund isn't for everyone (we also don't have children), but when we have an extra $5-$6k a month coming in that we could redirect to an emergency instead of debt repayment or retirement (which is what we're focused on now) it works for us.

Yes, when H was working this could have described us very well. We made sure to buy a house and do a 30 year mortgage so that we could not stress over payments if we went down to one salary (which we did).

And since we both work/worked at large companies there is a decent severance that comes with a layoff that can pay bills for a few months.

short+sassy · February 2016

I'm comfortable with a $1,000 e-fund because my f/t job is not my only source of income. In a worst case scenario, I can pay all our monthly expenses with just my other income streams. Than I would also have the "insanely pathetic, half the national average" $925/month UE, for a bit of cushion. Of course, that is only for 6 months. Last time I was unemployed, it was over one year before I found another job (sigh), but that was during the worst of the UE crisis.

Stephanie2167 · February 2016

Thanks to this board helping me fix how I pay my bills (I was front loading all my bills and going on a shopping spree at the end of the month when I felt rich), this month I was somehow able to put into saving 40%. This does include my annual bonus I received as well. For next month we should be at about 25% (not including our tax return we should be getting next month). This would not be doable without having paid off my credit cards and fixing how I pay my bills. I also put 16% into my 401k and hubby does a measly 6%.

ThinkingCapital · February 2016

How much you should have in emergency savings depends on several factors. In addition to how much you make, how much you spend, what debts you have, etc. you'll also want to consider how "risky" your current income situation is. For example, someone who works contract work and is the sole income-earner in a family will want to have more saved than a family where two people earn steady incomes from full-time work.

PurpleBookmark · February 2016

We save roughly 5% per month and are hoping to up that to 10% by the end of 2016. This does not include our retirement which is automatically deducted from DH's paycheck. We also save any "extra" money, like our two extra paychecks per year. They go straight into savings.

With our federal return we put the majority into our emergency fund and when our state return comes in we will fund our Christmas and birthday accounts as well as contribute more to savings.

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