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Post by bluecluessubtlety on Aug 6, 2011 9:14:16 GMT -5
For those who have a fully funded emergency fund, how long did it take to get there?
Did you make smaller purchases in the meantime?
I think mine will take 2 years to get there. Sheesh. Does this mean nada else for the next two years?
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mizbear
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Post by mizbear on Aug 6, 2011 12:09:34 GMT -5
You treat savings like a diet. If you deprive yourself of everything, you will fail. One of the girls told me that.
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sbcalimom
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Post by sbcalimom on Aug 6, 2011 12:11:04 GMT -5
We have a $10K emergency fund and it took at least 2-3 years to get there. This is between 3-4 months of expenses for us depending on how much we cut from our budget. What I did was put everything I could towards the EF until I reached $1K and then loosened the reins a bit. I had a monthly amount that went into the EF plus 10% of any windfall. I also would "round off" my checking account and alternate between the EF and the baby fund. We continued to save for other expenses and retirement while building the EF and living a somewhat normal life .
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Deleted
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Post by Deleted on Aug 6, 2011 13:43:45 GMT -5
I do not have a fully funded EF and I'm ok with that. I put away about 4% of our post-tax income away and as our income increase, I'll increase that. I'd rather put away extra in my Roth though. I plan to continue saving over time.
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leanna
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Post by leanna on Aug 6, 2011 13:45:53 GMT -5
It's been so many years ago that I can't tell you exactly how long it took to get there.
It's easier for me to tell you the story of being in debt to not being in debt.
When I got married I had a hefty sum of student loans - $30,000. This was in 1997. I guess now that is not considered that much but at the time it was killing me. When we got married we lived in a small apartment and socked everything away on that debt and lived dirt cheap to do so. I think it took 14 months approx to get out of that debt. And we had low salaries, so this was a big accomplishment.
After that, we just put that same money we had been putting on my student loans in the bank. It didn't take long (maybe a year) until we had saved a nice chunk for a down payment for a house.
It would probably be easier to help you more if you said how much your goal is for your EF and how you plan to get there. Also, do you currently own/rent? What are you other obligations? Etc.
I know that's not what you asked, so maybe you already have a plan, and are just looking to find out how it compares to other people. But, you know, it's hard to compare to other people, because we all have different circumstances.
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Poppet
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Post by Poppet on Aug 6, 2011 14:03:24 GMT -5
I only have a partially funded emergency fund. That is, around 3 months worth of cash to cover the barest of expenses. This means in the case of unemployment we could pay our mortgage, keep the lights on and eat rice and beans. Forget cell phones and most shopping excursions. The cats would have to switch to generic cat food and the kid would have to sustain himself on chicken flavored Top Ramen--oh wait! He already does and with pleasure ;D. Don't look at me like that, he's 17 what can I say? With unemployment benefits we could maybe sustain ourselves for 6 to 9 months. Nowadays, my ideal e fund would be 1 year's worth expenses in saved cash and a 6 mo to 1 year worth of stockpiled and properly rotated food. How long would that take to accomplish? Probably 6 months to a year of diligent prepping. I can't believe I just used the world prepping..
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dancinmama
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Post by dancinmama on Aug 6, 2011 15:32:39 GMT -5
We had a fully funded EF from very early on. When just starting out, we lived off of one income and saved the other as well as any OT and raises.
When we bought our first home, we put 50% of our savings toward the 20% down payment and the other 50% served as our EF. We've always had the money to cover any emergency ever since and have used that fund to pay cash for any big ticket items that we've needed along the way.
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giramomma
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Post by giramomma on Aug 6, 2011 16:36:03 GMT -5
It took us 2+ years to save up our EF. But, we saved up 8K, and we were grossing 30K a year. Since we were newlyweds living in an small apartment, we didn't really need to buy much, especially since we both had much stuff to the marriage, and we received wedding gifts.
We still ate out and still went to the movies. Going to an early show, just the two of us, was very cheap. We still hosted dinner parties. It was a very nice time, without "sacrifice" actually.
I'm very glad that we saved up when we were supposed to be poor. I imagine trying to save up for an EF now when we have kids.
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p8nt
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Post by p8nt on Aug 7, 2011 6:50:11 GMT -5
I don't have a fully funded EF yet, so this is a great thread. I'm in a pickle and my house payment is about 50% of my net income. I am getting ready to be given another 6.8% pay cut - almost 15% total in the last year. I am not upside down in my house so I can't get any relief, but there is not equity so I can't sell it either. You all inspire me to want to get it built up so I can breathe a bit easier.
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Deleted
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Post by Deleted on Aug 7, 2011 10:58:41 GMT -5
I think you need to really buckle down to get that first $1000 saved. For me, that was certainly the hardest part because I was paying off debt and living pretty close to the edge of my income. The tighter your budget, the more things seem like emergencies.
Post-consumer debt, I was able to increase my monthly savings contribution and still increase my personal fun allocation. Ultimately, I would really like to have 6 months of expenses (which is different than 6 months worth of income) available for emergencies.
But I also recognize that it would take one heck of an emergency to require that. If I lost my job, there would be unemployment benefits that would make my not-quite 6 months yet EF last considerably longer (or disability insurance or what have you). If I exhausted my EF and was still in a bind, I could look at cashing out my 401k. This is certainly a last resort, but the money is there. And because I know that it is there, I can confidently make larger retirement contributions - which will earn more and benefit me more in the long run - while I take my time growing my EF.
So, I don't think a 2 year timeline is bad. I also don't think stretching it into a 3 year timeline is bad if that allows you to enjoy life a bit more and stick with the plan.
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ambellamy
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Post by ambellamy on Aug 8, 2011 22:34:43 GMT -5
I did mine in mini goals. First i did a month of spending.... then a month of income... then 3 months of spending... and three months of income... and we just crossed the 6 months of spending marker.
We rewarded ourselves along the way and there were times when we just put a set amount in the account and use money for other things too. Its all about balance... but its nice to have 11k in the bank at 25!
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munjoyhill
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Post by munjoyhill on Aug 9, 2011 8:14:20 GMT -5
My late husband and I always had about $5,000 in an Emergency Fund. We weren't always careful though, sometimes we'd dip into it for non-emergency expenses, like our property taxes.
After my husband's death, I knew I was going it alone, so decided that my EF needed to be higher so I adjusted it to $6,500. What I also did is pay off our one credit card we had, which I think was about $8,000. I did this before joining WIR.
But I have revised the EF amount again, sort of short term emergencies (like a car repair) and long term emergencies, like losing my job.
I was laid off from my job late last year because the company I worked for sold the division I was in, but luckily I was hired by the new company the next day. But . . . I had 24 hours of sheer hell, trying to figure out what to do, how I was going to make ends meet.
So I have two EF: - Short Term $6,500 - Long Term - Currently at $8,500, but want to build it to $30,000
Each week on payday (I am still surprised that I am paid every week instead of every two weeks) I have an automatic transfer of funds from my checking to my savings account, this helps so much, the money is taken before I even have a chance to spend it. Once in a while I will add more to it as I can. I am a commissioned rep, my official budget is figured on my base salary, and my commission fluctuates from month to month (and is paid monthly), so I will divvy that up between savings and paying down debt.
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Post by bluecluessubtlety on Aug 9, 2011 8:31:47 GMT -5
Great responses.
I have no debt and have the initial $1k. So now time to move on to the 3-6 months. If I bank 10% of my net, the EF will take 2+ years. I have a budget and feel comfortable with what I've cut and what wants I've kept. Without an emergency like job loss, I don't want to cut anymore right now.
But that EF saving leaves nothing for retirement savings. I'm 42 so I'm concerned 2 years of no contributions is too long. And next year my son's tuition goes way up so I need to bank for that.
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saveinla
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Post by saveinla on Aug 9, 2011 8:48:27 GMT -5
blues,
I would suggest running your take home pay calculator with and without retirement savings. Maybe you can bank the difference towards your EF, so that you get to do both. HTH
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Post by bluecluessubtlety on Aug 9, 2011 10:43:07 GMT -5
blues, I would suggest running your take home pay calculator with and without retirement savings. Maybe you can bank the difference towards your EF, so that you get to do both. HTH Not sure I understand what you are saying.
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sapphire12
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Post by sapphire12 on Aug 9, 2011 11:05:13 GMT -5
blue -- If this economy has not taught you anything else, one thing is that you need to establish a personal safety net first. I understand you may not want to cut from your budget, but your priorities should be funding retirement and funding your EF. I don't recall where you stand on debt.
I agree at 42 you should not stop retirement contributions.
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Post by bluecluessubtlety on Aug 9, 2011 11:26:24 GMT -5
Sapphire, I hear what you're saying. There are a couple of things at play here. One, I got divorced last year. So while I have a good stable job I am intent on fully funding that EF for sure since I rely 100% on my salary. Our lifestyle has drastically changed since the divorce as far as downsizing home, vehicle, general lifestyle. I have no debt. But it's important to me to not change so much more of my son's life at this point. That is why I said I am not cutting more of the wants down to complete bare bones. Trust me, once he's at college, I can live in a studio like a monk. It doesn't take much for me and when he's off, I will again greatly downsize and probably at that point bank 50% of my salary.
When my son is in college, there are other ways I can fund his college (grants, scholarships) so I will completely max retirement then. Actually, two years from now when EF is done I will completely max retirement. In the meantime I put a minimal amount. I can't do both (EF and max retirement) because his high school tuition will go up so much from where it is now.
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sapphire12
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Post by sapphire12 on Aug 9, 2011 12:17:13 GMT -5
blue - Sorry about your divorce. I also missed that you have a son. Kudos to you for starting over and trying to maintain some sense of normalcy for your son.
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Post by bluecluessubtlety on Aug 9, 2011 13:41:14 GMT -5
Thank you. We were high faluting before so it's been drastic for him. Sheltered boy you know. We live in a 3 br house that he considers the ghetto. <eyeroll> So as long as I'm gainfully employed and comfortably make all the bills, I don't want to downsize much more, even if that means delaying the retirement funds somewhat. P.S. I do get child support and that goes into an account that so far has only been used for his school and extra curricular uniforms. I still pay his tuition out of my salary and his extras out of my salary. I am leaving as much CS as possible in an account so if things get tight with tuition I can draw from that.
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Deleted
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Post by Deleted on Aug 9, 2011 13:46:36 GMT -5
Blue, can you ask your son's school about scholarships for high school? I had friends who had them while I went to private high school.
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Deleted
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Post by Deleted on Aug 9, 2011 13:49:07 GMT -5
Also, your son can sign up for swagbucks (both of you can) and get free amazon gift cards. It is about $50-$75/year but that could allow him spending (and help with your budget), without costing you anything. There is a deal going on, I linked to it via my blog, where you start off with extra swagbucks.
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zibazinski
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Post by zibazinski on Aug 9, 2011 13:49:25 GMT -5
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Post by bluecluessubtlety on Aug 9, 2011 14:58:04 GMT -5
Blue, can you ask your son's school about scholarships for high school? I had friends who had them while I went to private high school. We are working on that. He will apply for everything available this year. I'm looking at worse case where I pay it all. As for swagbucks, we both had accounts and my hard drive recently crashed. In fact, picking it up from Geek Squad today. So I will get that reinstalled and start using it again.
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jdnstl
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Post by jdnstl on Aug 10, 2011 21:19:29 GMT -5
blues, I would suggest running your take home pay calculator with and without retirement savings. Maybe you can bank the difference towards your EF, so that you get to do both. HTH Not sure I understand what you are saying. blues- have you used paycheck city before? it is a neat site where you will see what your take home would with or without retirement contributions. if your company offers a retirement plan of some sort this can be very helpful. for example, if you currently contribute 5% but want to up it to 10% it will show you how it will effect your take-home pay & will take into consideration that the funds are taken pre-tax. the net effect on your take-home could be very minimal. i would suggest playing with that calculator & see if there could be a way to contribute to both retirement & savings.
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saveinla
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Post by saveinla on Aug 10, 2011 21:22:44 GMT -5
jdnstl,
Thanks for answering. I completely forgot to come back and check. And karma to you, for explaining it very nicely.
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CaptainDuck
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Post by CaptainDuck on Aug 10, 2011 22:10:20 GMT -5
I have 2 emergency accounts. One is for "regular" emergencies (car repairs, unexpected medical bills, home fixes, etc.) This one currently has $5000 in it and I'd like to get it to $10,000. The other account is for catastrophic emergencies (unemployment) and is not touched for any reason. I started this account last year and it is only up to $3200. I would like to get this one to $40,000, but I am also trying to pay off $24,000 in debt. I hope to have all 3 goals accomplished within 3 years (baring any emergencies
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Post by bluecluessubtlety on Aug 11, 2011 8:07:04 GMT -5
JD got it. I will check that today.
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createmyown
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Post by createmyown on Sept 12, 2011 15:46:36 GMT -5
I did mine in mini goals. First i did a month of spending.... then a month of income... then 3 months of spending... and three months of income... and we just crossed the 6 months of spending marker. We rewarded ourselves along the way and there were times when we just put a set amount in the account and use money for other things too. Its all about balance... but its nice to have 11k in the bank at 25! This is a great idea that really appeals to me. I think it will work for DH and me. Thanks so much for sharing!
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Deleted
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Post by Deleted on Sept 26, 2011 8:20:16 GMT -5
But that EF saving leaves nothing for retirement savings. I'm 42 so I'm concerned 2 years of no contributions is too long. And next year my son's tuition goes way up so I need to bank for that. Why one or the other? Put your emergency savings in a ROTH. If a real emergency comes up, then you can raid it penalty free. If not, you haven't missed the two years of retirement savings.
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