Rukh O'Rorke
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Post by Rukh O'Rorke on May 16, 2020 11:02:54 GMT -5
Let's talk the EF! We've been noting increased focus in the WIR threads, wanted to take the conversation broader during these troubling times.
How much do you have in strict EF funding? Have your increased the focus on EF funds since the pandemic reared it's ugly head? How/how much?
How many months worth of regular living would that be?
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Rukh O'Rorke
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Post by Rukh O'Rorke on May 16, 2020 11:04:54 GMT -5
I started out the year with an EF of about 500. Luckily, I did have some things in the works and EF goals that I have been able to meet. Initially - my goal was an additional 10k saved for 2020 in EF funds, but I am continuing to focus on that saving (rather than 401k) to meet my EOY 2021 goal of 20k this year/as soon as can be. And yet - 20k does not seem like a lot of security these days!!! I'm currently at 13,500. Could maybe stretch to 3-4 months at bare bones on that, cutting everything. If mortgage and utilities were willing to be gracious, could go further. Lock down and nothing on TV is a bitter pill to swallow, however! Before I went back to school in 2013, I had a year+ of expenses in my taxable account. That felt secure! I'd like to get back to that but no telling how long it may take, and if my good luck with employment will hold out. Fed student loans at 0% and no payments is helping me out right now, but I'm wondering how long that may last.
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Deleted
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Post by Deleted on May 16, 2020 11:20:26 GMT -5
I have about $32k in strictly liquid funds. I've never had a real EF . . . only about $5 or 6k in personal savings. Some of this came from DH's savings, which transferred to me. Some was $$$ I was saving for us to go to DC. I used to also have $520k in retirement funds, but I have tried not to look in over a month.
I would say that is about a year if I cut back and prices didn't skyrocket. I have no car payment, and my house payment is only $830. (I pay $1025, however.) I could easily manage, I think. But my actual income is as secure as anything is these days since it consists of my state pension and SS.
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saveinla
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Post by saveinla on May 16, 2020 11:21:32 GMT -5
Our budget is already very small - we don't spend much - other than travel & donations.
We have 1 years worth of expenses in an EF, but are trying to save more. If I don't give to any of the charities and cut out what little fluff we have, we can go around 18-20 months I guess.
One of our goals was to cut down on the mortgage - refinance and start paying it down, which will take off a huge weight, but that is on hold right now.
I know all about the keep your money and invest in the stock market and we have that in our 401K - completely invested in the S&P 500, so the other part of it is paying down the mortgage.
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sesfw
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Post by sesfw on May 16, 2020 11:25:31 GMT -5
In the late 1980s there was one week that we had $5 to buy groceries for a couple of days until payday. Think we bought milk, bread, cereal, eggs, peanut butter. The details are sorta fuzzy.
Ever since then I have cash stashed in a lot of places. The car, hidden in my wallet, envelopes with cash a couple of places in the home,
To loosely quote Scarlett O'Hara ..... I will never again go hungry, nor my kinfolk.
My EF is truly an emergency fund, and most of the time I forget I have it.
It's sad so many people haven't been able to do this.
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Deleted
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Post by Deleted on May 16, 2020 11:26:59 GMT -5
I think people who either have cash in the bank or guaranteed income from SS/pension are going to weather the pandemic a lot more comfortably than those who don't.
Right now, I could survive for 7 years on my EF. I'm hoping to replenish it in the next 2 years with income from my business and book royalties. In two years, if my savings is still dropping, then I will get some sort of job locally or do more freelance writing for other people.
Why two years? Because I saved the money back when I moved so I can travel and build my business without the encumbrance of an employer. Hadn't really planned for a pandemic...
I'll never live without an ample EF again. The difference in the stress level in my life is remarkable.
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Deleted
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Post by Deleted on May 16, 2020 11:37:25 GMT -5
What I consider my actual emergency fund is 15K which would probably cover about 5 months. It was 20K until February, but I raided it to fund my 2020 Roth. However, I've been planning for the 2020 apocalypse for several years and have another 20K I stashed away to carry me for awhile after child support ends. I fully intend on spending this down over a minimum of 18 months though, so it's not really EF. I had planned for this to be closer to 30K, but then I totally screwed up everything last year. I think a year of cushy budget would make me feel pretty comfortable which would be around 50K. That's probably never going to happen before I retire though!
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Artemis Windsong
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Post by Artemis Windsong on May 16, 2020 11:46:22 GMT -5
I have been saving since the 1970s. My H. and I are doing well with SS. He manages to come up with extra cash to supplement that.
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giramomma
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Post by giramomma on May 16, 2020 11:59:08 GMT -5
I'm more like Phil..we're a little lighter on the actual cash EF because of our taxable account. Our actual EF is 10K. We have another 15-20K in cash for short/medium term spending. With some reallocation, as long as DH was working half time to cover health insurance and I was teaching, we could weather me not having full time work for at least 5 years.
No, there wouldn't be extensive family vacations, and I could kiss having options at the end of our lives goodbye (and say hello to gov't run nursing homes..) But, we're OK.
And no, I'm not beefing up the EF anymore. In the next 18-24 months, we're looking at spending 25K, minimally, between braces, a vacation, a new-to-me-car, and finishing my grad school. We actually should be doing some house repairs, as well as buying some newer furniture for the girls)...So, it could get closer to 30K.
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Blonde Granny
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Post by Blonde Granny on May 16, 2020 12:08:31 GMT -5
I guess I'd have to say I really don't have one. I keep about $ 12K in 3 separate bank accounts, my FA keeps funds held back from the different brokerage accounts, just in case. In a case of true panic and trouble it would only take a week or so to liquidate the brokerage accounts....but I don't ever see a need that could happen that large.
I'm well insured, house is paid for, so is 2020 Cadillac SUV. I live on SS and VA disability and even then I only use 2/3rds of that money per month, the rest goes into savings at the bank. I'm cautious, I use YNAB for my budgeting and watch what I spend.
Being 75, I don't have the ability to recoup problems or mistakes, there simply would not be enough time, so safety is my goal.
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bookkeeper
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Post by bookkeeper on May 16, 2020 12:09:46 GMT -5
In the late 1980s there was one week that we had $5 to buy groceries for a couple of days until payday. Think we bought milk, bread, cereal, eggs, peanut butter. The details are sorta fuzzy. Ever since then I have cash stashed in a lot of places. The car, hidden in my wallet, envelopes with cash a couple of places in the home, To loosely quote Scarlett O'Hara ..... I will never again go hungry, nor my kinfolk. My EF is truly an emergency fund, and most of the time I forget I have it. It's sad so many people haven't been able to do this. "As God as my witness, I will never be hungry again!" one of my all time favorite movie lines.
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jelloshots4all
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Post by jelloshots4all on May 16, 2020 12:19:39 GMT -5
I don't really have an EF. I keep $10k in my savings. I worked with my CFP, and needed to withdraw some money from my accounts in January as I have been unemployed. He told me which accounts I could withdraw from without tax implications. I took out enough for at least 6 months. Closing in on 5 months, and I still have enough.
Yes, I am receiving UI, however it does not come anywhere close to what I earned while working. But, having invested since I was 22 yrs old has paid off. And increasing my investments as my income has increased was even better.
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Deleted
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Post by Deleted on May 16, 2020 12:20:09 GMT -5
Like Blonde Granny, I don't have money earmarked for emergencies. I'm retired and have kept the average withdrawal rate a hair under 3.4% since I retired 6 years ago and my invested assets are up from when I retired even after the last couple of months. The amount I withdraw is more than I need for everyday spending and the rest is a cushion for mid-level emergencies or extraordinary expenses (major travel, although that's down to zero right now). If I don't need it it goes into charity or the 529 accounts. What I consider "major"- replacing the car, for example- would just come straight out of the investments.
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bookkeeper
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Post by bookkeeper on May 16, 2020 12:20:40 GMT -5
We carry more emergency funds/cash funds because we have no monthly income in our retirement. DH has not drawn social security yet and I am 5 years younger than him. I have 18 months to two years of living expenses in cash, CD's or money market accounts. We could chop expenses in half if we really tried. Our largest expense is health insurance which is almost $2000 per month.
We had an emergency last fall when my husband was in a very serious car accident. He had hospital bills over $300,000. Our out of pocket costs were around $10,000. He was lucky, he got to come home. If he would have needed to remain in a nursing home, things would look very different - even with long term care insurance.
I saw a lot of head injuries while we were in the rehab unit of the hospital. I can only imagine how the lives of those families changed by having their loved one out of work and disabled.
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Knee Deep in Water Chloe
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Post by Knee Deep in Water Chloe on May 16, 2020 12:27:40 GMT -5
I keep $5K cash in actual EF. I have another max $10K cash in sinking funds that could be moved to other areas if need be. (I say max because at some point those sinking funds do get used for whatever they're designated for.) I have several excess debt payments that could be reduced to their minimum payments that would also free up cash if I needed it.
However, in a complete "oh shit, I have to pay to save my child's life" moment, I have $100K in secured credit lines with the potential for much more.
I have told each of my children during the last three months that "this is why I've been telling you for the last 20 years that you need to live within your means and have savings".
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Lizard Queen
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Post by Lizard Queen on May 16, 2020 12:39:43 GMT -5
I've had $800 cash sitting in a safe since my mom gave it to me 12 years ago. I guess you could call that my dedicated emergency fund. Otherwise, I don't have one. I've always kept my recurring bills quite below my means, and I've kept a cushion in one bank account or another since I graduated high school. For truly SHTF levels of need, I feel fortunate to have inherited an IRA from my father. It's much more accessible than my own retirement accounts, so that is always an option we could live for years off of without tapping into my own retirement accounts.
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weltschmerz
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Post by weltschmerz on May 16, 2020 13:14:09 GMT -5
I think people who either have cash in the bank or guaranteed income from SS/pension are going to weather the pandemic a lot more comfortably than those who don't.
^^This^^ I have 3 pensions coming in, (federal.provincial and from my work) and have a tax-free savings account that I can live off for 2 years. I never touch it. Zero debt. I'm also getting a Covid stipend for $300, to help seniors with the rising cost of food and having deliveries from the grocery stores. I'm doing OK.
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Ava
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Post by Ava on May 16, 2020 13:24:03 GMT -5
I don't have an emergency fund. Right now I have approx. $2,500 in my checking account and $4,500 in savings. With those 2 I could survive approximately 3 months. After that, I have $22,000 in Roth IRA contributions that I could tap without tax repercussions.
I am, fortunately, employed at the moment. If I were furloughed or downsized, I will qualify for unemployment (right now it's 39 weeks here), plus the company gives severance and pays for unused PTO, of which I have 24 days at the moment.
The idea of becoming unemployed scares me emotionally. But when I think rationally about it, I will be able to survive for 8-9 months without touching the Roth Ira contributions. I could survive 2 years if I need to use those contributions.
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Tiny
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Post by Tiny on May 16, 2020 13:52:27 GMT -5
I have an EF (3 months fixed expenses- so 15K) but then I have 3 mortgages and have 3 "houses", two are rentals. (each house has a separate EF for maintenance/taxes/insurance if it's not escrowed -so another 8K). I'm single no kids - so only have one income to rely on. I would loose sleep if I couldn't cover the bills for the next 8 to 12 weeks out of 'savings'. That said, I did look long and hard at my finances back in March (I get sent home to work around March 15th) - I was looking ahead to not collecting rents AND possibly not having a job. In May 2020 I was going to use $30K in CDs (from the sale of a rental) to pay off one of my mortgages and pay down another some. I decided to hold the cash and consider it part of my "EF" at least until the end of 2020. I'll re-evaluate again and either continue to hold it or I'll just pay off the mortgage as planned. Back in March I went into "build cash on hand" mode and starting unwinding some of my discretionary spending - For some reason it takes me 4 to 6 weeks to fully cut back on spending (probably because of CC usage and bill dates.) I've added almost 5K to my EF at this point - so another month's worth of expenses (not including the 30K in CDs earmarked for mortgage pay off). My employer announced a cut in some forms of compensation (bonuses/vacay cash out, raises) And it's possible I will see about 12 to 15% less in expected income for 2020. I've reviewed/reworked my yearly 'budget' plans to accommodate the loss of $$ (so my 401K is still maxed for example). If I keep my job - I can use some/all of the money I added to the EF to put towards the long term budget plans I put on hold. I have to admit I'm feeling pretty positive about having had the EF and how not painful it was to rework my budget/spending. That was a source of re-assurance/comfort in March and April. So far I'm current on rents and it looks like my job is secure - and we're 10 weeks into the pandemic. . I'm optimistic about the future at this point (even with less than expected income for 2020). Before the Pandemic my EF let me sleep at night. And it was a source of comfort during the uncertainty of the early weeks of Shelter in Place, etc. And it's a source of comfort going forward. Bad stuff can still happen - but maybe it won't be catastrophic just uncomfortable and unpleasant.
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resolution
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Post by resolution on May 16, 2020 14:20:22 GMT -5
I keep around $10k in the bank as a cushion so I don't have to juggle transaction dates, and $20k in money market funds at the brokerage. Between the two, that would get us a year of living expenses plus health insurance on the exchange.
I also have about $75k in an S&P500 fund that is intended for a down payment for our next house, which could be repurposed if we become unemployed for longer than a year. Although if we are out of work that long, the S&P500 funds will probably have taken a huge dive as well.
Normally I split my investing so some goes into retirement and some goes into the brokerage account. When this all started in March, my first instinct was to divert our investing into the money market for emergency savings, but instead I have made myself focus all of our investing on the Roth IRAs first. That way if either of us lose our jobs, we will have fully funded our retirement for the year. Once I have maxed out both IRAs, then my investing toward the end of the year will be focused on the brokerage account. I will probably raise the cash portion gradually to $30k and keep putting the rest in mutual funds.
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teen persuasion
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Post by teen persuasion on May 16, 2020 16:10:30 GMT -5
My mental EF is a savings account plus the checking balance (which floats around a lot over a year, lumpy big expenses here and there). It's currently just under a year's expenses, but up from a half year just last fall.
In the past I kept an EF of 18 months or more, but we never needed to touch it, so I've been pushing higher amounts into retirement accounts (draining off the savings account), especially when we hit 50 and had additional catchup amounts to fill. It's still available, in a true emergency, because we've got 5 years of expenses in Roth IRA contributions. We've also not been reimbursing ourselves for HSA expenses, so that's another EF bucket to tap painlessly.
If one or both of us were unemployed, UI would cover expenses, because we are pushing large amounts to retirement (80% of my income, 30% of his). Our expenses are low, we paid off the mortgage over a decade ago, no debt at all.
So I have tiers of EF.
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Post by The Walk of the Penguin Mich on May 16, 2020 16:56:42 GMT -5
I don’t have an EF, I have a savings account that is my holding pen for investments. I save monthly, and when the account gets over about $15k, I divert the excess to investments that I can access. I keep about 2 months living expenses in checking, so I could exist for about 8 months with no income coming in, on my own. I could probably live another 2 years off the investment account before needing to dip into retirement accounts. These are just my accounts, not TD’s.
I am reaching a point where I need to consider replacing my 13 year old car. I probably have 5 years or so, so think I will start diverting more money in that direction.
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Deleted
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Post by Deleted on May 16, 2020 17:10:32 GMT -5
Same here. I'm a month ahead in my budget, so there's a buffer there, I would take home more on UI than I take home now, then there is the EF sitting in checking, the set back child support, the taxable account, the Roth contributions...once I've exhausted these, the 529 money might be on the table (sorry kids) or even selling the house and downsizing. There are tons of loan options, I have a 30K HELOC or could do a cash out refinance, there is 100K in open credit on cards and I could take a 50K 401K loan...but I think I'd exhaust other options first.
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Deleted
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Post by Deleted on May 16, 2020 21:29:34 GMT -5
I think someone needs to define EF. Like I said, previously, I had a few thousand in savings. Now I have 30+k. It isn't really for an emergency. It is liquid and just there.
I think $5000+ in a savings account is sufficient if your job is secure. Mine was as a tenured teacher.
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Deleted
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Post by Deleted on May 16, 2020 21:55:16 GMT -5
IMO the EF is for loss of income, so retired people wouldn't really have a need for one. Job loss isn't the only thing that could cause loss of income though. Accident or illness could do it. My coworker had to take tons of unpaid FMLA when her daughter was sick. They were traveling back and forth to the clinic an hour away every day and eating out all the time too. To me, that's what the EF is for. Of course, if you don't have adequate sinking funds (like me the past couple years), then other things might become "emergencies" that really should have just been budgetted for.
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bobosensei
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Post by bobosensei on May 17, 2020 6:46:00 GMT -5
With the extra 600 a week from feds for unemployment I will be able to live very minimally without touching savings. So that gets me to July. I have another 3 months in uninvested liquid savings. My brokerage account has 34k right now, but that went from 40k to 29k with covid 19. But I can figure 7-10 more months there. So I could get by a year if I had to.
I have the ability to defer car payments 3 months and mortgage for 6. That gets me further, but I'm not planning on that at this moment.
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jeffreymo
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Post by jeffreymo on May 17, 2020 7:16:57 GMT -5
Prior to the pandemic really ramping up I signed up for a 0% for 12 months credit card and we had about $2500 we had accumulated from credit card cash back. That was our plan.
Since then we’ve added $3900 from the stimulus, plus $3500 from our tax refund, plus $2500 lump sum whenever my wife’s unemployment claim gets approved. So we’ll have $12,400 by the end of this month.
We’ve got our expenses down to about $3,000/month so this would give us about 4 months living expenses which we would only need to tap if I got let go from my job.
I always thought that we’d be able to trim expenses and use a zero percent credit card if needed to get by on one of our work incomes. I never considered what we would do if both of us lost our jobs at the same time, which thankfully hasn’t happened.
Our hope is to keep this emergency fund in place after this is all over and cross our fingers that DW returns from furlough in August according to schedule. This would put us in a better position post-pandemic than we were when we entered it. ETA: If our situation got really ugly we could use our Roth’s, 529’s, and we’re currently using our HSA for medical expenses. We’ve also thought about relocating to a small town where we grew up with super low housing costs which would allow us to own a home free and clear after selling ours.
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Rukh O'Rorke
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Post by Rukh O'Rorke on May 17, 2020 8:16:35 GMT -5
I think someone needs to define EF. Like I said, previously, I had a few thousand in savings. Now I have 30+k. It isn't really for an emergency. It is liquid and just there. I think $5000+ in a savings account is sufficient if your job is secure. Mine was as a tenured teacher. broadly - money for the unexpected, unanticipated? Like a tree through a newish roof that you weren't planning on replacing any time soon....unemployment, medical or legal issues? May vary. For me, unemployment is my largest worry. unemployment payments (should one be able to get it!!) would not cover my bills, and I think my salary would be a time consuming job search to replace. I don't really think you need one once you are retired, especially with guaranteed income that covers all expenses and some pot of money for other things that can be tapped. You already have it covered.
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Rukh O'Rorke
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Post by Rukh O'Rorke on May 17, 2020 8:18:36 GMT -5
With the extra 600 a week from feds for unemployment I will be able to live very minimally without touching savings. So that gets me to July. I have another 3 months in uninvested liquid savings. My brokerage account has 34k right now, but that went from 40k to 29k with covid 19. But I can figure 7-10 more months there. So I could get by a year if I had to. I have the ability to defer car payments 3 months and mortgage for 6. That gets me further, but I'm not planning on that at this moment. That's fantastic! glad to hear this!
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Rukh O'Rorke
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Post by Rukh O'Rorke on May 17, 2020 8:20:01 GMT -5
IMO the EF is for loss of income, so retired people wouldn't really have a need for one. Job loss isn't the only thing that could cause loss of income though. Accident or illness could do it. My coworker had to take tons of unpaid FMLA when her daughter was sick. They were traveling back and forth to the clinic an hour away every day and eating out all the time too. To me, that's what the EF is for. Of course, if you don't have adequate sinking funds (like me the past couple years), then other things might become "emergencies" that really should have just been budgetted for. excellent point! and I also have not put away for those!!
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