Comments on: Emergency Funds: I’ve Changed My Strategy

By: Millionaire Acts

Millionaire Acts — Wed, 04 Nov 2009 15:37:13 +0000

As for me, I built my emergency fund by paying myself first. As soon as my emergency fund gets fulfilled with the goal amount, I invest the rest of my savings in other investments such as mutual funds, trust funds and stocks.

By the way, I wrote a similar post on emergency funds on Millionaire Acts. http://www.millionaireacts.com/1802/why-do-you-need-an-emergency-fund.html

By: Shawanda

Shawanda — Tue, 20 Oct 2009 23:01:36 +0000

I’d pull back on the investing and get the 6-month emergency fund established first. Being that you’re a 25-year old man, I wouldn’t be surprised if your investments are extremely volatile. If there was an emergency, you wouldn’t want to be forced to sell and lock in losses during a down market (or I guess you would).

Either way, glad to see you’ve come around.

By: Financial Samurai

Financial Samurai — Tue, 20 Oct 2009 20:33:54 +0000

Matt – Good one on the marriage part. I feel responsible for taking care of my wife forever, and that is something I don’t take lightly!

Brian – Good chatting today buddy. Sounds like a good goal to have. I know you will save it up, and do good with it.

Best

By: Evolution Of Wealth

Evolution Of Wealth — Mon, 19 Oct 2009 15:51:40 +0000

I don’t always like to bring this up but if you are funding a Roth IRA, then you can access the contributions in that account at any time without any penalties. This could in fact act as your emergency fund for you in some ways. Keep in mind that depending on your holdings it will take a little longer to access this money than a regular savings account.
I do think that an emergency fund is a very important piece to the financial puzzle and commend you for starting one. However, when money is tight it is important to speed up the velocity of what you have by make the money you have work in multiple ways.

By: RainyDaySaver

RainyDaySaver — Mon, 19 Oct 2009 15:39:51 +0000

I definitely advocate an emergency fund. Better to fund one now while you’re a renter, because I think of it as a necessity once there’s a mortgage.

@Matt Jabs: I know a few women who also tend to throw caution to the wind when it comes to finances, security be damned! Although marriage did seem to make a few take a long, hard look at their spending/saving habits.

By: Matt Jabs

Matt Jabs — Mon, 19 Oct 2009 15:24:28 +0000

You know what will make you completely change your view on EF? Getting married.

Women are hardwired to value and be smarter about “security” than men are. They are usually prepared much better than we males who just like to throw caution to the wind. Our EF gives my wife an incredible amount of financial peace – and because marriage is a union of two to form a better one – I listened, and she was right.

Also, a lot of Americans have at least one credit card “just in case of an emergency.” Why not build your own EF and just use that instead?

Cheers!

By: Matt Kelly

Matt Kelly — Mon, 19 Oct 2009 15:03:56 +0000

I place the 3 – 6 month emergency fund in priority right after paying off all non-mortgage debt.

Try starting with a $1000 emergency fund. Sell stuff do whatever it takes to get there and then start paying off debt. After your debt is paid off use the same intensity to grow your $1000 emergency fund to equal 3 – 6 months of living expenses.

Nice work getting the emergency fund started.

Matt

By: Mrs. Micah

Mrs. Micah — Mon, 19 Oct 2009 14:51:25 +0000

I think that given your change in situation to having a car payment, it makes a lot of sense that you’re working on an emergency fund. The biggest problem with secured debt like houses is the likelihood that the lender won’t work with you if you’re in a transition period where you can’t make 4 months of payments (whereas with student loans you may get a short-term unemployment reprieve).

Now that we don’t have a car-payment, we can make our old fund stretch farther.

By: Peter

Peter — Mon, 19 Oct 2009 14:20:46 +0000

While I doubt we’ll have to use our emergency fund as well – that’s what it’s there for – for an unexpected emergency. Emergencies are rarely expected and rarely come at a convenient time.

We were thankful to have a good emergency fund when my healthy 27 year old wife had a freak blood clot that put her in the hospital for a month, and caused over 250k in medical bills.

We were blessed in that we had a good emergency fund that paid for our insurance deductibles and costs – and we had good health insurance.

So while it may be a good emotional choice to build your emergency fund – and you may not feel like you need it – I have to say that I think it is a great financial choice as well because you’re insuring against future problems that could cause debt, foreclosure, bankruptcy or worse.