Comments on: Where I Put Our Emergency Money

By: Pay Ourselves First: The Way We Save and Invest | The Sun’s Financial Diary | A Personal Finance Blog on Saving and Investing

Tue, 17 Jul 2007 15:34:53 +0000

[...] hit the bank. We basically put our saving and investing on autopilot so we don’t forget to transfer money from checking account to high-yield savings accounts (the accounts for our emergency funds) and purchase mutual fund shares every month. That makes our [...]

By: Ron

Ron — Wed, 30 May 2007 17:29:15 +0000

Depending on credit in an emergency should be your last choice. Cash in a protected account must be your first line of defense if something terrible happens. What could happen? A major injury that ultimately causes you to lose your job. It could take months for everything to settle and have any insurance policies in place kick in. It could take many more months before you could obtain other work, if ever. Should something like this happen, how long do you think it will be before your creditors start calling those loans?

If you don’t have money saved back for this kind of emergency you are hurting your family.

Ron

By: brody

brody — Thu, 10 May 2007 00:01:03 +0000

Emergency money should not include anything prone to inflation like paper currencies. You shouldn’t hold cash, because that is the first thing that will be worthless when the economy collapses. Instead, invest in precious metals such as platinum, gold, and silver. These investments do not lose value to inflation, are easy to store/conceal/transport, and will last forever. Their are different ways to invest in gold or silver, but I recommend holding the physical metal, or opening an offshore digital gold currency account.

By: Tim

Tim — Mon, 30 Apr 2007 16:08:17 +0000

e-funds depends on your risk situation. if you are in a risky career field, you might opt to have and boost an e-fund for income disruptions. if you are in a riskier lifestyle, you might opt to have and boost an e-fund for medical/repatriation/etc. if you are in a riskier time for things breaking, you might opt to have and boost an e-fund for repairs and/or replacements. if you are in an area prone to riskier climatic changes, you might opt to have and boost an e-fund seasonally.

it’s all situationally dependent. moreover, for income disruptions, you will not need the entire e-fund immediately, so est. maturities or liquidity periods allows you to access funds without having everything in cash.

e-funds are also like insurance, you only need it when you need it. b/c no one has a crystal ball with which to see 20/20 into the future (if you do, let me know), e-fund is a safety precaution. now people might depend on a HELOC, but hey if you need cash now a HELOC takes time and doesn’t work on the weekends or whenever the banks are closed.

By: Q

Sun, 29 Apr 2007 23:33:05 +0000

Hi Sun,

Yes, if I borrowed money from my Home Equity Line of Credit in case of emergency, I would have to pay interest. The thing is, in 6+ years of marriage, we’ve never had an emergency. I am not a fool to think that an emergency could not occur. It’s just that they don’t occur very often. So I choose not to save up the $10,000 or more dollars in cash that an emergency fund would require. I just personally feel better keeping as much of my money invested in stocks as possible. For those of you that keep emergency funds, it’s a good idea for you, and it sets your mind at ease. This is wonderful! It’s just not for me.

My Home Equity LIne of Credit is just that – a line of credit that’s always available to me. I have a checkbook that I can write checks out of. So if an emergency comes up, I just write a check.

By: April 29th Links to Links | The Sun’s Financial Diary | A Personal Finance Blog on Saving and Investing

Sun, 29 Apr 2007 21:05:21 +0000

[...] Million to My Name said he doesn’t have an emergency fund after he read where I put our emergency money., which was also mentioned at Krugergold [...]

By: majic

majic — Sun, 29 Apr 2007 12:02:52 +0000

In the UK, you can set up an cash ISA (individual savings account) which works much like a savings account, but you don’t pay tax on the interest. However, you can only put £3000 a year in, and if you take any money out during the tax year, you lose interest on that.

These accounts pay something in the region of 5-6% maximum, so although it’s not a great deal it’s better than many accounts. It’s a good solution if you’re not likely to need to dip into the fund regularly, so I would only use it as a last resort.

You can also get stock & share ISAs, something I’ve not investigated too thoroughly. IIRC it’s much the same deal as a cash ISA but with a limit of £7000 of stocks put in a year.

By: Sun

Sun — Sun, 29 Apr 2007 02:56:30 +0000

Majic: Your scheme is more like ours, I am just curious what kind of tax-free savings fund you have. Is it like tax exempted mutual fund?

Q: In your case, you will have to pay interests for the money borrowed, right? Besides, normally how long it will take before you can get the money?

By: Advanced Personal Finance » Blog Archive » Friday Favorites #4

Advanced Personal Finance » Blog Archive » Friday Favorites #4 — Fri, 27 Apr 2007 14:10:15 +0000

[...] The Sun gives us his take on where and how much in the emergency savings account. [...]

By: Links - 27/04/07 « Krugergold Finance

Links - 27/04/07 « Krugergold Finance — Fri, 27 Apr 2007 07:07:04 +0000

[...] Emergency Fund(theSunsfinancialdiary) There are lots of discussions on why an emergency fund is the foundation of personal finance. Before starting investing your money in the stock markets, you should have a safety net to protect your assets. As for how much is enough for an emergency fund, a commonly accepted standard is that you should have no less than three months’ worth of money to cover your daily expenses, including all your obligations such as mortgage, loan, and insurance, etc. The total amount then is your average monthly spending multiplied by number of months you need to go through the uncertain period. [...]

By: Majic

Majic — Thu, 26 Apr 2007 20:42:39 +0000

£100 ($200) Floating round the house for “I need money NOW and the ATM is broken” situations
£1000 ($2000) emergency fund, instantly accessible checking a/c
£3000 ($6000) in a quickly accessible (less than one day) high rate of return, tax-free savings fund

Although all these tend to fluctuate up and down depending on how I feel like structuring any spending / investments.

By: Q

Thu, 26 Apr 2007 16:49:23 +0000

I simply don’t keep an emergency fund. If an emergency occurs, I will lean on our Home Equity Line of Credit. Until then, I invest our cash.

Nevertheless, I am going to send what few readers I have to your site to read this, because I think such a fund is critical for most people.

By: Moneymonk

Moneymonk — Thu, 26 Apr 2007 16:42:24 +0000

Everyone is different, because everyone expenses are different.

We have a mini emergency fund of $1500 and we have a large fund which is about $10K.

I view emergencies different, to me an emergency threatens your survival. So our mini fund of $1500 is for refrigerator breaks, water heater or stove needs to be replace or dental expenses or car issues.

The $10K fund is strictly for job loss. We never touch that account.

So there are mini emergencies and there are major emergencies. I just separate the 2 and have a different account for each one.