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Emergency Fund

April 2nd, 2007 at 05:58 am

I'm having trouble getting enthused about socking money away in a general Emergency Fund.

It's pretty easy for me to accept putting money away for specific purposes, like the property taxes or car repairs. I can see the purpose of the savings in my mind's eye.

But "emergencies" is so general, and the need to have the money on hand feels remote. It's been impossible for me to throw every extra penny toward building it up as Dave Ramsey recommends for "step 3"--it's even been uncomfortable trying to make myself get a small, steady monthly amount in there.

So I want to start keeping track of when it's come in handy, or would have if there'd been enough money in there.

March, Emergency vet visit - $460
April, PSE&G budget bill balancing - $102
Jan-March, costs of Indian meal moth infestation (airtight food containers and traps) - $60

That's a total of $622, or about $207 a month. I've been begrudgingly putting $100 or less a month into the EF account, and actually had to pay the vet bill out of the car/house repair money.

So, as of today I'm decreasing the amount automatically going into New Car Savings, and increasing the amount going into the EF. And I'll keep reminding myself here of why that's important.

9 Responses to “Emergency Fund”

  1. Elly Says:

    I'm just on step two of the Baby Steps. I can't wait to get where you are! I don't know about you but I just feel a lot better having even the $1000 baby emergency fund. Takes a little bit of the stress away. Good luck to you!

  2. tinapbeana Says:

    stressless, my DH is the same way: for him an EF is really intangible and he freely admits he just doesn't get it. when i talk about saving 3 months worth of expenses, he immeditately says "but the odds of both of us being out of work are nonexistant!". true, but that's not the point...

    so i tried to put some numbers behind it, to at least get us started. i told him i'd like to have enough saved to pay the deductibles on our car and homeowners insurance, plus emergency room co-pays for each of us. this comes to about a thousand total. when he brought up that we don't have to actually have to pay the deductibles, i agreed but said that was just an easy number to compare to, not necessarily what the money would be used for.

    at this point he seems ok with this method...

  3. Broken Arrow Says:

    Another way of looking at it is to set money aside for the sake of making money. It's just going to be in a savings or maybe MMF account, pulling in low risk low yields in your ah portfolio.

  4. Ima saver Says:

    I really enjoy the interest I get each month!!

  5. JanH Says:

    I understand the need for labeling it. My smaller emergency fund contains some labels. Household maintenance, auto maintenance, eye/dental, appliances, etc. I have a spreadsheet with those categories and how much is in each category. When I put the money in at the end of the month, I designate how much goes into each category. I've had to use the dental, auto and household at least once already. I didn't think of a pet one, although we've had several large pet events before. Good idea.

  6. scfr Says:

    Such a logical decision to write it all down so that after a couple months you could look back and see whether or not the EF was important --- very smart of you!

  7. Lux Living Frugalis Says:

    Once it is there you will be amazed at how much peace it can bring you! I agree that it's smart to log when you've used it to help you picture that it really has/will come in handy!

    Good for you! Appears you are making progress adding to your totals!!

  8. Aleta Says:

    I read Joe Dominguez's book "Your Money or Your Life" and a system that he uses is by using graphs to track your income and expenses and also a graph showing your capital. His point is that one day your capital will reach and surpass your expenses and then you have financial independence in that you can live off the interest of that money. Different people need different ways of looking at their money. I enjoyed the book and maybe you would too. It's available in the library.

  9. baselle Says:

    I love money that sits there quietly and breeds. Keep with the emergency fund.

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