For those of you who have a at least 6-8 months saved in your EF, congratulations! My dream is to be there.

It's so difficult though, being on one income and only making enough to barely cover the bills. I have us saving $50 a paycheck so far; not much, but something.

Anyway, I'm confused about something. How are we supposed to save for 6-8 months, while at the same time using the EF to pay for just that...emergencies? It's very possible we may need to replace our furnace this year and my husband will absolutely need to either buy another car or put a new motor in the one he already had. Both of these purchases will be thousands of dollars, in other words, just one will wipe out our EF. How in the world, do we save for emergencies PLUS 6-8 months worth in case something were to happen to his job?

Our son's surgery bill just came in. (Hopefully, there will be no more!) So far, it's costing us around $700 after insurance paid their portion. Although I was hoping to put half the tax rebate into savings, the other half to pay off a year's worth of car insurance, it looks like it's going to pay off his surgery. My parents say to just pay the hospital in $20 installments, but I'd rather pay it all off (debt snowball) so it won't haunt me the next 4 years like my daughter's birth did!

This is just me but for the hospital bill, if they agree to installment payments WITH NO INTEREST, I'd do that rather than pay it off at once. Especially if you're trying to save for emergencies and have other things coming up that will be big money, that's what I'd do. But if they charge interest or fees to make payments, then I'd go ahead and pay it in full.

As for emergency funds, that's what they're for. If you need it for an emergency, you use it and start over again building it back up. But it's nice to have that money there if you need it for something major. If something happens while you're trying to build it back up, you do the best you can.

The car and the furnace are supposed to be covered by other money - money you have set aside in a 'reserve account' for a larger future purchase. Because auto expenses and house maintenance are planned expenses, you can save up for them to happen. They don't have to come out of your emergency fund.

While I agree with being debt-free, if you can pay the hospital in installments interest-free (ie: it doesn't cost you any money to stretch out the pay-off), that is usually the best option while you're trying to save.

Savings has to be something that you are loath to spend. Hold onto that cash with a white-knuckled grip! While the other attitude is to hate getting into debt, the best attitude to have is once you're in debt, to try to pay it off while still adding to your savings account! Try not to reduce any of the money that you have on hand unless absolutely forced to. That reserves the emergency fund for true emergencies.

__________________
"I've been rich and I've been poor but independently wealthy is where it is at."

My blogs:
Oh!: http://oh-cookie.blogspot.com/
The Foundation Club: http://thefoundationclub.blogspot.com/
12 Months to a Homemade Christmas: http://12monthstoahomemadechristmas.blogspot.com/
Experiences, Not Things: http://experiencesnotthings.blogspot.com/

If you'd like to be friends on Facebook, PM me.

The way I see it, the emergency fund is just for what you haven't foreseen. If there are things that you see looming, you should have something budgeted for those first. You pay the bills this month, then set aside something for the expenses coming up in the next couple of months, and so forth. Looking forward this way, there are fewer and fewer emergencies that pop up. I use emergency funds when the amount set aside for something doesn't quite cover it. Like if a set of tires cost more than I set aside for it. Then I know to increase what I set aside for the next set of tires.

I agree with the others. The furnace and car are planned future purchases and should be saved for separately.

As for the hospital bill, I would call the financial office and ask them what they can do for you if you pay in cash. Most hospitals just want money and will lower the bill anywhere from 20-50% if you pay them a chunk of cash.

Even when emergencies come up we still pull money out of our paychecks and apply it to the emergeny (if it is current) or to the fund. Good luck to you on figuring it out!

Ok this Is What I Have a Question with Too.


What exactly is An emergency?


Isen't it different to everyone?

While I do Agree that You Should Save for Car repairs and Home Repairs -
There are stll Times That I Would Call an emergency.
My Friends Boiler Just Burst into Flames . and They needed a replacement at $3500.00 No Warning no nothing, and they did shop around to Compare prices.
Isen't that an emergency even though it is for the home?

Also If you are saving For the car and the House Shouldn't you be saving in a health emergency Fund Too?
And For that Matter how about a vet care Fund? What else Is NOT an emergency?
I have the same Questions as Op has too cause stuff is always Happening around Here , That Doesn't Have To Come out Of Savings necessarily BUT It Limits the Amount we Can Save. Even If I Plan For everything , It still seems Stuff Is Happening Constanly

__________________

We have money that we set aside every month for irregular expenses such as, Dentist, Vet care, gifts, Christmas, clothes, car maintenance and repair, zoo membership, etc. Things that we know will come up in the future. We figure out how much we need to save by looking at how much we've spent in the past and then dividing by 12 to get the monthly amount. If we're not sure how much it will cost we guess and go from there.

Other than that I think an emergency is anything bad that you haven't planned for. Your friends boiler would obviously be an emergency, but a new couch "just because" wouldn't.

She said it perfectly.

We've used our emergency fund a lot but then we just pay ourselves back. The important thing is that we're borrowing money from ourselves rather than from a bank or on credit. It's a lot less stressful that way.

__________________
Mom to dd (age 9) and ds (age 11)

I'm gotten to the point where I won't touch my EF for anything! LOL I'm so proud to have it where it is I'm not about to let any emergency wipe it out! We have a plumbing problem so I just had them bill me in 2 seperate payments and worked it into the budget instead of the EF fund. We had dh's medical bills from the hospital, I used some of the tax return. I find a way to pay so I haven't had to touch the EF fund so far. But if you have to, that is what it's for. However if you know you have big bills coming up you can start setting aside what you can now so it won't be as big of bite. Plus, tis the season for yard sales and try selling on Craigslist for extra money!

__________________
A woman is like a teabag. You never know how strong she is until she gets into hot water.-Eleanor Roosevelt

I have a home repair and auto maintenance category in our budget -- ($150 for the house and $100 for the car -- what isn't spent is saved in a separate account.)

HOWEVER -- I just started the whole budgeting thing so I don't have much reserves built up anywhere yet. Hopefully nothing major will break right now. After I pay off our debt -- I will have a great amount left over in the budget everymonth to save in the EF and for other big expenses.

I sooo wish I had started budgeting and being frugal sooner.

__________________
Grace

Wife to Stoney

Mommy of Sarah (9), Hannah (7.5), and John(5)