Comments on: You Don't Need an Emergency Fund

By: Giving the Middle-Finger to My Emergency Fund | My Next Buck

Giving the Middle-Finger to My Emergency Fund | My Next Buck — Wed, 20 Jan 2010 15:13:19 +0000

[...] Well, I explained what I would do if an emergency occurred above, but that doesn’t get to the fundamental logic for me making this bold move. While I embrace an emergency fund, I do so begrudgingly. [...]

By: Where To Put My Excess Money? Roth? 401(K)? Emergency Fund? | My Next Buck

Where To Put My Excess Money? Roth? 401(K)? Emergency Fund? | My Next Buck — Mon, 30 Nov 2009 14:11:43 +0000

[...] Personal Finance world will be happy that I have finally come around on an emergency fund after so boldly claiming that I didn’t need one several months [...]

By: Shawanda

Shawanda — Wed, 08 Jul 2009 23:50:44 +0000

I’m going to have to disagree with you on this one. My emergency fund is approaching eight months worth of living expenses. It’s fairly large precisely because I’m single. I don’t have anyone else to rely on but me. If there are people who can count on parents or other family members when they’re in a pinch, then that’s great they have the option. However, I still believe people should be self reliant.

I’m glad you mentioned the notion of tapping a Roth IRA. One of the main benefits of a Roth is that you can withdraw contributions penalty free. But, if you’re a 20-something investing in a Roth IRA, then most of your money will likely be in stock. If an emergency arises, then I hope the value of your stock is up. Otherwise, you could potentially lock in your losses when you cash out.

There was a time when I would pay off my credit cards before saving for emergencies. I figured if the unexpected occurred, I’d just go back in debt. I’m not sure that’s such a viable option anymore. Bank of America cut my credit limit in half. I have excellent credit and a low debt utilization ratio. I can only imagine what happened to the credit lines of people living close to the edge.

Besides all that, I perfectly agree with everything else you said.

By: Stephanie PTY

Stephanie PTY — Wed, 08 Jul 2009 22:01:07 +0000

I agree with you up to a point – there are many things to save for, and many ways to get money if an emergency should occur. But I do have a few points of contention…

First of all, an emergency fund doesn’t magically appear once you get married and have a family. You have to build it up, and if you don’t have one from before, you have to build it from scratch. Wouldn’t it be better to just gradually build it up, starting when you first reach adulthood? Then you would already have it when these big life changes happen.

Secondly, my car disagrees with you about being young and not needing an emergency fund. My parents won’t pay for all of my car repairs, and I didn’t have any other savings besides an emergency fund to speak of the last two times by car needed repairs. The first time, I drained my e-fund. The second time, I had to put it on my credit card, and that delayed the amount of time it took me to pay off my credit card debt by two or three months.

Right now, with everything going on in my life, I’m really glad to have the emergency fund I’ve got… even if it’s less than $600 right now. There’s a huge chance I’ll need it for something soon – and I’m single, 22, and just out of college!

By: J. Money

J. Money — Wed, 08 Jul 2009 21:08:48 +0000

Oh man, I’m a HUGE fan of emergency funds so I’ll have to battle you on that one day I will say, however, that you list some pretty creative ways around one. All of which are indeed ways to get your hands on money, but tapping a Roth or the ‘rents should hopefully be avoided as best as possible.

Whether you *need* and E Fund or not, that padding can prevent a looooot of stress down the road my friend. Even if it’s just 1 months of extra savings sitting there.

Regardless, your writing is coming out magnificently! Keep it up bro

By: Brian

Brian — Wed, 08 Jul 2009 19:33:09 +0000

@ Mrs.Micah – you are absolutely right. Our lives are flexible and should the situation arise we can adjust on the fly to make ends meet.

@JH I think its a lofty goal for 20-somethings to just have money “sit” and not be there for a purpose (saving goal, etc.) I think just being aware of your financial situation is a win. Technically all of my money is an “emergency fund” but i just don’t designate it as such. I wonder if i would continue working so many jobs if i had 2 months of expenses in a designated fund. That said, i do have 2 months of expenses in liquid cash, they are just saving for other things.

By: JerichoHill

JerichoHill — Wed, 08 Jul 2009 15:46:51 +0000

I disagree that young 20-somethings with no family don’t need an emergency fund. I agree that they don’t need the same kind or amount as a 30-something with family and a mortgage.

I found having 2 months living expenses when I was 20 and single was excellent. I was not wedded to my job financially and thus I wasn’t pressed to accept a job I didn’t enjoy. That makes a huge difference in life satisfaction.

By: Mrs. Micah

Mrs. Micah — Wed, 08 Jul 2009 15:36:36 +0000

I think that you’re right that families definitely need emergency funds. But I as long as young people focus on saving something (as possible) then they probably don’t need a specific emergency fund. At our age, we can temp, we can find ways to make ends meet–as long as we don’t have people depending on us, it’s a lot easier.

By: jim

jim — Wed, 08 Jul 2009 14:40:13 +0000

Emergency funds are crucial and it’s great that you talked about ways to help you boost it. You might want to talk about how you can boost your savings, at least a little, by using CD ladders.