How many months of emergency savings do you have?

[kendraj426]

We have probably 2 months of the essentials in savings, and the rest (about 6 months comfortable living, more if we cut down to bare essentials) in a brokerage account, most of which has been in long enough that we wouldn't have any penalty for cashing it out.

[kendraj426]

Feb 17, 2015 10:00:34 GMT -5 callmeKD said:

how is everyone calculating their savings? ie does 1 month savings = your actually total monthly expenses or are you calculating 1 month as = salary earned for one of you?

We calculated a month of savings as total monthly expenses for the household. That way if something crazy happened, and we did both loose our jobs, we would have a good cushion. I grew up in a household that could barely afford monthly expenses, and my parents had absolutely nothing saved up for retirement because they didn't have anything extra to save. So, I'm a bit overzealous when it comes to saving money. DH has to remind me sometimes that we can have nice things and still have plenty of money for a catastrophe. Of course, we don't always agree on what those 'nice things' are!

[xanthepants]

I look at it as monthly expenses less fun money, savings and daycare (we have family options in a pinch). More than likely it would actually only be 1 of used laid off or unable to work unless we were jointly injured. So I think our savings could stretch a bit further. There are also plenty of things we could cut, sell or liquidate to hit over a year. My H is super conservative though and he only feels secure if he is sitting on a pile of money. We've waited a long long time to renovate and there is plenty of money to comfortably do so, but I think until daycare expenses are eliminated, he just cannot commit to it. Luckily we paid off all my student loan debt and concentrated for 2 years in building up a cushion.

[CoverGirl82]

I voted for less than 3, but my goal is to get to 6. We need to pay off the loans DH and I took from our retirement savings when we bought our current house, which we plan to do in 2015. Once we do that, we can up our savings and by the end of 2016 we should have at least 6 months for emergency savings.

[MrsPavlov]

We currently have 5 (liberal) months' worth of expenses saved (probably close to 6 if we scrimped), and we put back another month's worth every 1.5 months, on top of retirement saving in a 401k which would be our absolute last resort (about 10 months worth in there). Our emergency fund money is in a money market account with a debit card hooked to it (that we keep locked up) so we can get to it in a snap if need be. My goal is to reach 8 months' worth of expenses and then keep it steady there, and just use what we keep saving at that rate for some major purchases coming up (new car for DH, downpayment for new house, paying down second mortgage, etc.) Ideally I'd like to have 12 months in the hole. Love this thread. I'm a little spreadsheet obsessed and this is one of my favorite topics.

[toratoratori]

I voted 3, but it's more like four. We could stretch it to 5 if we needed to.

[Unknown]

We don't keep a separate "emergency fund" when we get raises or have extra money we up our 401k contributions or add it to our LO's college fund. We also have quite a bit of equity in our home, so if we were ever in a difficult financial situation we have money we would be able to use. We never have more then 2-3m in a regular savings account.

[anewadventure]

we used to have our EF in a money market account but at our bank, that account type was NOT covered by FDIC insurance. the piddly extra interest was not worth it to me. apparently money market accounts are sometimes covered and sometimes not (of course - why would it be simple?) so i'd double check at your own banks.

to answer the question, i'm with sandandsea. we have 6 months total expenses which would be longer at bare bones. we also have extra investments in mutual funds that i don't consider to be part of the EF outright. similarly, 401ks, house equity etc. doesn't count as they are not liquid assets.

i also agree at tackling that student debt as hard as you can. i know it seems hopeless when you owe 60k and the payoff isn't "immediate" but it is worth it. save 3 months in an EF and then go after that debt. what helps the most is to make an excel spreadsheet with your amortization schedule. then play around with the payment amount so you can really SEE the difference that the extra payments over the minimum can make in the long term view. it is shocking, and motivating. your H might benefit from a discussion with that spreadsheet in front of him, so he can let go of needing a huge amount of cash just sitting there depreciating. either invest that cash or put it towards your debt, if you can stomach to do so.

[sandandsea]

www.whatsthecost.com/ is a great website for calculating what an extra payment will do and to do the math of your debt snowball for you. Together, we had 6 figures in student loans when we graduated college, but kept a tight budget, put every raise/bonus towards it and had them paid off by the time we were 29 and started TTC. Totally worth it and I'm soooo glad they're gone. Our money can do so much for us when we don't have to pay a huge monthly payment (and interest).

Keep three months of expenses in savings/efund and then focus on the debts. Once that's gone, then beef up the efund to where you want it.

[welly01]

Feb 17, 2015 14:37:21 GMT -5 anewadventure said:

i also agree at tackling that student debt as hard as you can. i know it seems hopeless when you owe 60k and the payoff isn't "immediate" but it is worth it. save 3 months in an EF and then go after that debt. what helps the most is to make an excel spreadsheet with your amortization schedule. then play around with the payment amount so you can really SEE the difference that the extra payments over the minimum can make in the long term view. it is shocking, and motivating. your H might benefit from a discussion with that spreadsheet in front of him, so he can let go of needing a huge amount of cash just sitting there depreciating. either invest that cash or put it towards your debt, if you can stomach to do so.

I've done this before and I know the difference just a small payment can make.  But just $75 a month cuts 7 years off my loan.  Definitely playing around with how much I can put toward it each month.  It IS very motivating, thanks for the suggestion! 

[queenbabee]

6 months. Because Dave Ramsey told me to lol.

[northerngal]

We are tackling a ton of credit card debt right now and just bought 2 acres to start building on. We would probably be living on credit cards for as long as possible if we lost our jobs.

[mae0111]

True emergency savings liquid in a savings account - about 2 months.

We also have about a year's worth in a brokerage account in ETFs and a few liquid stocks. It's earmarked for college savings, but not locked up in a 529 plan, so we could get to it pretty easily if needed.

[traveltheworld]

I know we sound crazy - but we have barely a month. We both work in finance-related professions so I find it very hard to let money just sit in a savings account instead of generating a better return elsewhere (stocks, paying down mortgage, etc.)

That said, a lot of our investments are very liquid so if we needed money, we should be easily able to get access to funds quickly. We also both have a high degree of job security and very good disability and life insurance policies.

[McBenny]

We used to have an 8 month one but then had a lay off in the family that wiped us out. Now we have none.

[amiee]

We only have about 1 month now (we always put the bulk of our tax returns in savings so now that we finally have DD's ss# and can file it will go up)- but we've also bought a new heat/air unit, build a new bedroom in basement b/c our lil family was expanding, and had a baby (but had enough to pay all the bills immediately) all in the last year so our savings took a bit of a hit. Thankfully no student loans, but we still have car payments

[amiee]

We only have about 1 month now (we always put the bulk of our tax returns in savings so now that we finally have DD's ss# and can file it will go up)- but we've also bought a new heat/air unit, build a new bedroom in basement b/c our lil family was expanding, and had a baby (but had enough to pay all the bills immediately) all in the last year so our savings took a bit of a hit. Thankfully no student loans, but we still have house payment, car payments (not bad though and we had to buy cars then - they both gave out), daycare, and NEED to put on new siding. Should have the cars paid off in a couple of years, hope to finish the siding about the same time. We try and keep enough in that even if an emergency cost catches us we have a couple of months left over and if nothing happens (not had that occur yet) we'd have more.

Hubby is a teacher and not likely to lose his job as he is special ed and there aren't a lot of those around here (plus he's been with the system a long time and doesn't do things that jeopardize his position). I have a grant funded job which renews every 4 years. Based on this our goal is to get as much paid off in the next couple of years and then spend a year saving a lot in case I don't get funded. So far, I've been through three grant cycles though so I only worry about it when we write for the grant. Neither of us can get bonuses or work extra paid hours. We make ok money for our area, but we are a lcol- since he's a teacher and I work at a non profit it isn't a whole lot though.

If I did lose my job our problem would be insurance- not affordable to have a family plan at hubby's work. I could make enough working part time to pay my bills and/or we could cut back (remove daughter from daycare and cut back on a couple of things) and probably be ok = other than insurance. I think that when I go to add her to the life insurance policy I'll ask what they charge for health insurance in case I ever need to go that route.

I'm hoping the next four years goes by smoothly and we can get a few things done (siding mainly), pay off cars and build up our savings. Reading all these comments makes me wonder how people save so much money- maybe you have less bills or make more money to begin with?

[texasmomma22]

You could look into a personal loan for your college loan with a lower interest rate. I have one that is 9% and it stinks. I would say with everything I have been hearing about the oil industry save it. Many of my friends worked and are in the same position with being cut or hours being cut.

[sandandsea]

Feb 19, 2015 14:15:04 GMT -5 amiee said:

I'm hoping the next four years goes by smoothly and we can get a few things done (siding mainly), pay off cars and build up our savings. Reading all these comments makes me wonder how people save so much money- maybe you have less bills or make more money to begin with?


Stuck in the box:

I don't think that there's any magic trick to building wealth.  You have to make more than you spend and live below your income.  DH and I are where we are because we both have good paying careers that we work out butts off for, we waited until our 30s to start our family, we made paying off Student loans a priority in our 20s, we don't buy things on credit, we live on about 40% of our income, we save a lot, we budget, and we delay purchases until we can pay cash.  I also listen to the Dave Ramsey podcast often to get inspiration to do even better with our finances!

[momofcatan]

I have about 1-2 month total expenses in our savings account, but most of our retirement savings is in a TFSA which we can withdraw from at any point without penalty. If need be we could draw from there.

[momofcatan]

Feb 20, 2015 1:06:35 GMT -5 sandandsea said:

Feb 19, 2015 14:15:04 GMT -5 amiee said:

I'm hoping the next four years goes by smoothly and we can get a few things done (siding mainly), pay off cars and build up our savings. Reading all these comments makes me wonder how people save so much money- maybe you have less bills or make more money to begin with?


Stuck in the box:

I don't think that there's any magic trick to building wealth.  You have to make more than you spend and live below your income.  DH and I are where we are because we both have good paying careers that we work out butts off for, we waited until our 30s to start our family, we made paying off Student loans a priority in our 20s, we don't buy things on credit, we live on about 40% of our income, we save a lot, we budget, and we delay purchases until we can pay cash.  I also listen to the Dave Ramsey podcast often to get inspiration to do even better with our finances!

So much this! Everyone's bills, income, COL of living is different. The only commonality with those who save is that they spend less than they make. There are definitely sacrifices that we've made to be able to put money into savings every month, but I know that is a priority for us.

[twinmomma]

Feb 19, 2015 14:15:04 GMT -5 amiee said:

I'm hoping the next four years goes by smoothly and we can get a few things done (siding mainly), pay off cars and build up our savings. Reading all these comments makes me wonder how people save so much money- maybe you have less bills or make more money to begin with?

My friends always marvel at how we save and ask how we do it. Honestly, we just do it. Our savings account is just as sacred as our electric bill when it comes to transferring the money every month. The only way to save is to make it a point to shave off a set amount of your monthly budget and just make it happen. There's really no magic trick behind it. Over the years as our expenses have fluctuated we've had to majorly adjust the amount we can put away every month, but we have always made a point to squirrel away something. A great tip my mom told us is that as we get raises, just dump that into retirement/savings accounts instead of increasing our lifestyle costs. 

[welly01]

Feb 20, 2015 9:44:11 GMT -5 twinmomma said:

Feb 19, 2015 14:15:04 GMT -5 amiee said:

I'm hoping the next four years goes by smoothly and we can get a few things done (siding mainly), pay off cars and build up our savings. Reading all these comments makes me wonder how people save so much money- maybe you have less bills or make more money to begin with?

My friends always marvel at how we save and ask how we do it. Honestly, we just do it. Our savings account is just as sacred as our electric bill when it comes to transferring the money every month. The only way to save is to make it a point to shave off a set amount of your monthly budget and just make it happen. There's really no magic trick behind it. Over the years as our expenses have fluctuated we've had to majorly adjust the amount we can put away every month, but we have always made a point to squirrel away something. A great tip my mom told us is that as we get raises, just dump that into retirement/savings accounts instead of increasing our lifestyle costs. 

I totally agree with this.  My monthly transfer to my roth IRA and emergency fund account is a bill.  I know what day it comes out, so I know I have to have the money in there to cover it.

[amiee]

Thanks Ladies!! We put money in savings every month. I have it transferred over automatically so I'm not tempted to use it for something else. It just seems like maybe we aren't putting enough in, but for the near future I'm not sure we can put much more in (at least not until daycare is over). Perhaps we should look and see if we can cut back on something? We don't really get raises at all (he's a teacher and I work at a non profit), so I guess cutting back on something is the only option.

Reading over mine- I hope I didn't sound judgmental or something negative- It just seemed like ours was inadequate in comparison, which made me freak out in my head .

[sissykate21]

Feb 20, 2015 10:04:56 GMT -5 welly01 said:

Feb 20, 2015 9:44:11 GMT -5 twinmomma said:

My friends always marvel at how we save and ask how we do it. Honestly, we just do it. Our savings account is just as sacred as our electric bill when it comes to transferring the money every month. The only way to save is to make it a point to shave off a set amount of your monthly budget and just make it happen. There's really no magic trick behind it. Over the years as our expenses have fluctuated we've had to majorly adjust the amount we can put away every month, but we have always made a point to squirrel away something. A great tip my mom told us is that as we get raises, just dump that into retirement/savings accounts instead of increasing our lifestyle costs. 

I totally agree with this.  My monthly transfer to my roth IRA and emergency fund account is a bill.  I know what day it comes out, so I know I have to have the money in there to cover it.

I second this! Our savings, while still meager at this point, has become a financial priority for our family and so we treat it just like we would a bill. We don't ever skimp, skip or pay late. If we have a tight budget that pay period, we cut back somewhere else. 

[sandandsea]

Feb 20, 2015 13:11:59 GMT -5 amiee said:

Thanks Ladies!! We put money in savings every month. I have it transferred over automatically so I'm not tempted to use it for something else. It just seems like maybe we aren't putting enough in, but for the near future I'm not sure we can put much more in (at least not until daycare is over). Perhaps we should look and see if we can cut back on something? We don't really get raises at all (he's a teacher and I work at a non profit), so I guess cutting back on something is the only option.

Reading over mine- I hope I didn't sound judgmental or something negative- It just seemed like ours was inadequate in comparison, which made me freak out in my head .

I feel inadequate at times too, I think it's normal, especially in today's society!  The Dave Ramsey podcasts really help me shift my attitude when I start to feel like that.  We live in a VHCOL area (SF Bay Area) and our next house will be at least $1M.  People come in and pay over asking all cash, and I think to myself how in the heck are they doing that!?  Are they made of solid gold or something?  What am I missing!?!?  What's wrong with me!? Then, I stop worrying about them, and focus on what we can do ourselves to better our situation.  And, I focus on our goal and forego other things in lieu of it - do I really want that shirt or would I rather have the next house?  The big goal almost always wins and it makes it easier to say no to other things.

The best way to build wealth is to save.  So, whatever you are able to save, do it, and as you get more money (side jobs, tutoring, birthdays, etc.) be purposeful with your money.  There was a study done that the most important factor regarding retirement wasn't the type of account you held, the rate of return you got, etc. but was simply if people saved money for it.  So, even it it's only $50 a month, it's better than nothing, and having the awareness and focus to increase it as you can.

[katelou]

If we had to, we could live off our savings account for 12 months or a little more. That is to say, our savings account does not equal our annual income.

That's not counting our retirement savings.

We are not high earners, we make $80K combined (maybe $84 this year bc DH did some extra work) and chose to live below our means to save. We have a tiny house and drive ancient cars. I wish we had more space, a garage, a second bathroom... but you can't beat a $650 mortgage payment, so I keep telling myself we'll thank ourselves later.

[MaiTaiBeth]

we have 6 mos but are planning on buying a more expensive house in the next couple of years so there goes that.....

eta. moving to one of the best school districts in the state.  Current city has had a lot more crime lately and just seems to be getting worse.

[lingchow8655]

Usually about 2-3 months saved but we just had to use it for pipes that went bad. So right now none wah-waaaah

[melohdy]

We are finally starting to climb our way out of the hole we have been in for the last year. It started with maternity leave and then moving two states away - our savings was zapped and we accrued a bit of credit card debt.