Emergency funds

[Ashley01]

Do you have an emergency fund? How many months do you have put away, or having months of expenses are you saving? What's your theory on spending it? What will you use it for? Have you used any of it yet?

I have one and my small goal is to have 4 months of living expenses I should complete this goal next month! I also have a baby emergency fund of just 500 to hold me over until I can touch the bigger one. I plan to spend mine if I lose work, if me or dd end up sick, a family emgerncy, if my car breaks down and my car fund doesn't cover it. I have used 700 of it to put towards a car in the fall. Once I reach my goal I will take a break and splurge a little and take dd on a weekend trip then I will boost it to 6 months and so on. Once I get enough I will take all but 4-5 months of expenses and put it towards a downpayment on a house or a car!

[dagney]

I would say set up a line of credit with your bank and don't touch it. (This is easier to set up when you don't actually need the money.) Our line of credit is our emergency fund if we need it. I would rather pay off loans at 8.5% - 3% now instead of have money sitting in the bank earning 1/4%. I know that this is not the "popular way" to do things but it does make financial sense.

[brunt]

My concept of "emergency fund" has never been static.

My original target was three months of living expenses. This was my absolute first savings goal. It would have gone before even paying off debts (I didn't have any at the time). Once I got there, I tried for six months, then a year. All in readily available "near cash" investments.

At the same time, one of my goals was to reduce my living expenses to the absolute bone so that it was easier to meet these targets.

The funds had two potential uses, one was just to be a cushion in a minor emergency. If the motor on my vehicle went, I could fix it without having to borrow money. No sense paying interest if you don't have to. The secondary use was in case of medical emergency, or if I lost my job.

I started on this 12 years ago, and I don't have a dedicated emergency fund now as there is enough cash around to handle just about any emergency. The ultimate goal is to hit the point where your funds will basically carry you for the expected rest of your life.

It is important to define what constitutes an "emergency", so that the hard-saved money will not be squandered, and to have absolute agreement between the spouses on this issue.

Fortunately, I have never had the need to dip into the savings (touch wood),

[ahatt]

Our e-fund only has about $1,000 in it right now. We are working on saving up 3 months of basic living expenses. It's a bit difficult to save at the moment, as my DH is returning to school in September so we are now saving for his education at the same time.

We will only use our emergency fund if we lose our jobs, and are unable to pay our bills, or if a family emergency came up and we had to take time off of work. Or if something serious happens to one of our pets (we have a separate budget for their vaccinations and annual pet visits). We have fortunately not had to use it yet, but it's nice to have the peace of mind that it's there if we absolutely need it. Or, (as Brunt also mentioned above) if one of our cars had serious problems and it would cost an excessive amount of money to fix that would put us into debt otherwise, then we would use our e-fund in that situation too.

I would not suggest opening a line of credit as an emergency fund, as the purpose of an e-fund is so that you don't go into (or go further into) debt if an emergency situation arises. It obviously comes down to personal choice though.

[KellyC]

We have a line of credit that we keep just in case (actually, we have 2). We also keep an emergency savings account, minimum I am comfortable having is 10,000. I am paranoid though and I like money. LOL!

[Ashley01]

Wow I didn't realize people considered line of credits emergency funds. The point of a emergency fund is to not go into debt if something happens. I'd rather have the cash there ready to use then to possibly be without money for 2-3 months. Living off credit, finally get back on my feet and then have to pay it back. But to each there own!

[rutlandgrl]

Do you have an emergency fund? How many months do you have put away, or having months of expenses are you saving?

We have 1 year of EMERG Funding $30,000.
Funeral Expenses Paid For
Savings of $10,000 hope to increase
Travel Account $ 2500.00

Our monthly expenses are about $3000 so we are pretty good. I work from home, we sold the second car and we pay ourself 10% off every bit of monies that come to us regardless of what it may be. This put the fund to a great place. We are covered for insureance if one of us passes with his work and our life insurance.

What's your theory on spending it?
We do not spend an emergency fund. It is nice to know that if we did need it tis there if we get ill, lose work hours or a disaster happens.

What will you use it for? Have you used any of it yet?
??Dont understand this one and Emerge Fund is always needed

I agree with Ashley01 No line of Credit is Emerg Fund. My opinion only. When we remember what we pay for coffee at (Tim's or the Star) for Booze and Cigs or Crafts whatever the vice we need to remember that this could be one of these funds. We will always have money however what we choose to spend it on is the real savings.

Trac

[Shwa Girl]

Do you have an emergency fund? How many months do you have put away, or having months of expenses are you saving? What's your theory on spending it? What will you use it for? Have you used any of it yet?

Ashley01, to answer your question, I went to an article by Gail Vaz Oxlade, in MoneySense
http://www.moneysense.ca/2011/03/14/...nse-at-a-time/

[Eeyah]

Shwa Girl I was just about to suggest the same article! great minds think a like

I personally believe that an Emergency fund is exactly that, for emergencies only. Car,vacations, and anything else all come out of a seperate savings account. Right now with so much job un-security personally I'd be aiming for closer to a year of savings (8-12 months) 3-4 months isn't enough these days....it's taking some people YEARS to find work once they have been laid off/lost there job. Overly cautions....maybe...but at least if we were ever in the situation I know we'd survive

[Valiant]

I take into account the cost of a:
Funeral
Settling my estate
A fire, destruction of home and property
Having to move
Loss of health
Legal matters of my 'Power-of-Attorney provider & living expenses
Family members needs and/or emergency (may involve travel or loan)
Loss of job
Living expenses (as is)
Living expenses changes (due to inflation: 8% increase expected soon)
Fluctuating world-wide markets (Japan industrial exports crisis, possible Canadian west coast/farming/fishing crises, American exports)
Major appliance repairs/replacement

Other than that,
I try to live and enjoy life frugally and sensibly.
And I'm counting the days and years till retirement, when I will have OAP and GIS. And if and when that happens, I have plans for some of the things I've always wanted to do...visit family, travel a little, maybe rent or own a little cottage at a lake in some out-of-the-way affordable location, attend some social functions and events I've never had time or money for, hire taxis to take me places. I haven't lost my sense of adventure, but I plan to pare down my things to a minimum, and get all my affairs in order. I don't need much to make me happy, and some of the best things in life are still free.

[kris10]

I am not organized at all,lol. I do have about 17 thousand and counting in savings but i haven't put anything into specific funds because I just say to myself well what if I need it for something else?...I am a worrier with money,lol. I know it sounds like a lot but i don't own a house yet either and I'd like to do that some day with some of it so it would go quickly. i guess once I build up more & more to feel safe, then i might be easier to try to seperate it into the specific categories and stuff. It just sits in a gic & majority of it is in a tfsa for now.I figure itleast I am earning interest on it for now.

[poppleton]

We have an emergency fund of six months worth of expenses, and thankfully have not had to use it. We set aside money on a monthly basis to accumulate into a variety of budget areas (car repairs/insurance, life insurance, gifts, clothing, etc.), and our emergency fund is outside of these areas and only to be used in case of loss of job, etc.

I have been very pleased with how much peace we've gained since fully funding our emergency fund! It's a wonderful thing!

[ashedfc]

Excellent, lot of visitors to this topic understand what it means, the benefit of having one, etc.
However, it does not make sense to have an emergency fund money sitting aside & carrying a credit card outstanding balance (as we come across a lot of cases). It's just mismanagement of funds. If you find yourself in such a situation, than, it's always recommended to pay the credit card first, so the balance goes to zero. And in rare cases, even credit card can be an emergency fund (although I don't recommend it).
My personal case, my emergency fund is invested in precious metals & my line of credit is available for emergency.

[Loner]

I only have a little over $250,000.00 in savings
which are in RRSP and investment account
and money in chequing/savings

[kanewtz]

No emergency fund.

I have the ability to draw from my home line credit if need be....although I don't see us needing emergency money as my job is extremely stable...although with my wedding in two weeks...you never know.