Confusing Emergency Fund Question - Page 2

JVincent · 05-17-2008, 06:30 AM

I would say that 3 months of expenses in an emergency fund that you never touch is good enough for most people, then have another 3 months saved up for things like home repairs or medical bills that come up. Keep adding to both as you go on.

Kim · 05-17-2008, 07:32 AM

I agree with the PPs who have mentioned the difference between planned expenses (car, home repairs, etc.) and emergencies as things you don't anticipate. I'd classify an emergency as something like unexpected medical issues, job loss, etc. The things you hope NEVER happen but it's good to be prepared if they do.

Yes, emergencies can probably fall into a gray area where home and car are involved. A planned expense may be knowing you need to replace your roof, furnace, etc. eventually. An unexpected expense may be discovering your home has some sort problem with the foundation that needs to be fixed (you didn't anticipate this and couldn't have planned for it). Bottom line: you categorize that kind of expense as a home maintenance or emergency doesn't really matter as long as the money is there.

Jiller · 05-17-2008, 09:24 AM

Thanks for all the advice. The hardest part is only being able to save $100 a month for EF as it is, let alone having a separate account on top of it for other planned expenses. For now, I guess I just have to focus on putting anything extra in EF, knowing I may have to use it for other very expensive things that are necessities. "baby steps".

LawDawg · 05-17-2008, 03:38 PM

Yeah I think baby steps are the way to go in any new situation!! However, if you put everything you have into the EF now and something does happen you are going to have to tap that EF and have little left. If you put it only a little into the EF and a little into another account and something happens you still have a little money in your EF. It really is the same either way.

I think the point is to plan for all events and an emergency -- save for it all.