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Emergency Fund


I don’t know why it’s taken me so long to write about our EF. I guess it just seems like a boring topic to me??? Or also because I know the popular opinion is going to be to get rid of it (throw the excess at debt). Probably a little bit of both.

Remember when I first started blogging, we had a pretty decent-sized EF. Although, I hadn’t officially called it an EF. I simply called it “assets.” See here.

At the time (March 2014) we had $11,750 in assets.

  • $4,00o in checking/savings account
  • $1,750 in Capital One 360 Savings
  • $6,000 in a money market account.

Since then there have been a few changes.

First, I ended up shuffling money around a bit.

I started some dedicated savings accounts in my Capital One 360 account and moved all the money from my checking/savings into Capital One 360 (<<that’s a “refer a friend” link). Instead of one general savings, I have lots of savings for separate purposes.

My current savings are:

  • $200/month toward car repairs/new-to-us car fund
  • $125/month to dental/vision/health
  • $100/month to annual expenses
  • $100/month for Roth IRA
  • $25/month for 3-6 month expenses
  • $25/month for travel/Christmas fund
  • $10/month for girls’ birthday expenses

You’ll notice I don’t actually have an account called “Emergency Fund.” I consider my 3-6 month expenses account as an emergency fund account. It should be noted, however, that if there were a true crap-hit-the-fan emergency, I wouldn’t hesitate to dip into my other savings accounts, as well, in order to avoid going into debt. BUT, I like having each separate savings account for its own specific purpose. And in the meantime, I hope we won’t have any true crap-hit-the-fan emergencies! Yikes!

Currently, our 3-6 month savings account has nearly $4,500 in it.

What’s happened to the rest of the money?

Well, it’s been spent!

Way back in April I put $1,000 toward debt. This was an intentional spending of money, as many readers expressed that they thought our current savings were too high.

I’ve also had 2 months where we’ve been over budget. Once was only by about $20, but the other time was by $640! Ouch! Both times I dipped into the EF to cover these expenses.

I still have my money market account, which is separate and has not been touched. And, finally, I’ve been saving $25/month (ever since I first started blogging), which is automatically deposited into my 3-6 month savings every month.

So there you have it. Almost a year after starting to blog, and after having to dip into our EF a couple of times, our net assets are still nearly what they were at the beginning of my blogging journey. Savings has always been a bit of an issue with hubs and I (because we BOTH are natural savers and want to stockpile money like the apocalypse is coming). I know this is a large EF for someone in as much debt as we have and many will say to continue throwing it at our debt. But having this safety net makes us feel…well, safe. Plus, we’ve actually had to dip into it a couple times so I’ve been glad its there. And I haven’t rushed to refill it or anything (just the same old $25/month we’ve always done), so I feel okay with that, particularly since hubs’ income is variable and we have young kiddos.

So there you have it. The deets about our emergency fund.

Do you have an Emergency Fund? If so, how much did you have in it while you were in debt?


Texan at heart; Arizonan on paper. Lover of running, cheese, camping, and family (fur-family included!). Blogger, motivated to get out of debt YESTERDAY! Follow along with my journey!

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  • Reply Jackie |

    I think your EF is great! Your still paying down debt. Plus it’s great that the money is there if something happens.

  • Reply Laura |

    I think with your husband being self employed it is good to have cash on hand just in case he gets hurt, a client doesn’t pay, etc. I would leave your emergency find as is. Good job!

  • Reply Adrienne |

    People are so quick to judge and say this is right and this is wrong. Personal comfort is huge. What allows an individual to sleep at night matters much more than right or wrong. My husband and I have a heap of debt, but we have a plan. What we do not have is a emergency fund. We are obsessed with our long term savings and paying down debt that we are too strapped to build an emergency fund. We are changing that this year. We were just discussing it last night. I’m on track to save $600 this month out of our discretionary budget which will help us in all the scenarios you have listed. While, it would be amazing to put that $600 to our other debts it gives us no piece of mind.
    You can read about our journey if you are interested.

  • Reply mary m |

    I agree with the previous posters. You’re not throwing debt money towards it, but you have it there if you need it. And because of your variable income, that’s a NEED.

  • Reply Walnut |

    I think keeping the emergency fund in tact is critical. One thing you might think about is continuing to periodically transfer money from your capital one savings accounts over to your money market account. It seems like the money market account is more of the “untouchable” account, so it would be pretty awesome to work up to 3-6 months of expenses tucked away in there.

  • Reply Alexandria |

    As an adult I have never had a cash balance of less than $5,000, and also never any non-mortgage debt. I have always felt that the “mini efund” should be $5k instead of $1k. One very important part of not going into debt is having enough cash to weather emergencies. I just don’t think $1k goes very far.

    Certainly no complaints from me. If you are big on savings, that is a very good anti-debt habit to have for the long run.

  • Reply Jen From Boston |

    An emergency fund will help you avoid increasing your debt, so for goodness sake’s keep the EF!!! Especially because you’re not salaried, your husband is self-employed, and you have children. If anything, I worry that your EF isn’t large enough!

  • Reply Jane |

    Thanks for sharing- I love to see how other people budget. I’ve never seen it done like this. It’s a very loose budget, but you’ve got the emergency fund there for any unexpected costs so I imagine it still gives you peace of mind. It seems to be working well for you!

  • Reply Jane |

    Also, I follow a similarly loose budget but between my husband and I we always seem to have some type of other expense so I allocate 50/week to that and if it’s not used at the end of the month, I transfer to either savings or debt payoff depending on my priorities. I share more about this at http://www.ourmoneyblog.com

  • Reply Maureen |

    I think that your EF might actually be a little “too light.” Am I the only one saying that? Hubby is self-employed and you have twins under 3! Even with debt repayment, as you have experienced, it only takes one month of car repairs and major dental work to derail even the best of plans. I think you have done an excellent job so far and stay with what makes you comfortable and fits your family’s needs. I personally think David Ramsey’s whole scheme is out of line, but where he advocates a $1,000 EF and no personal retirement savings until all your debt is paid off, I vehemently disagree. Whey would you pass up your best compounding years and then spend the next 10 years playing catch up?

  • Reply Adrienne |

    Preach it Maureen! I come from the land of Dave Ramsey worship. While I think it’s freaking awesome that people who would otherwise do absolutely nothing about their finances can learn something, anything! from Dave Ramsey, no one interested in wealth building would ever follow his lead. Our goal is to one day have a full $20k emergency fund to live for six months if necessary and it will take us years to reach this goal. But I will sacrifice poverty today for those compounding years any day! I did some number crunching to determine if it makes sense for me to stop funding my IRA at a meager $150 month and put it towards student loans. I determined that I would save 9 months and $10k in interest. Now, I don’t remember the exact numbers but it went something like this: If I continue to invest for the next 10 years as is and then stop, in early retirement I would have about $50k. Those numbers are adjusted for inflation. It’s a no-brainer!

  • Reply Chris Martin |

    Thank you for writing about this. My Family started our Debt Free journey last April. We have followed Dave Ramsey’s baby steps but we got it a little backwards. We did not have an Emergency fund until the other day. Thank god Murphy was busy somewhere else and did not pay us a visit. Our successes has inspired us to share our story with others. You can see our debt and our journey on http://www.OurDebt.net . I wrote an article last week that could help people save to start their emergency fund. “Discover How to Save $50 a Week Easy” http://www.ourdebt.net/save-50-a-week/

So, what do you think ?