Has anyone ever used their Emergency Fund?

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REITired
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Has anyone ever used their Emergency Fund?

Post by REITired » Fri May 22, 2020 5:46 pm

Hello all - Newbie here with a bit of a market research question...

I will preface this topic by saying that I 100% agree with having an Emergency Fund and currently have 6 months saved up in a "high-yield" savings account and have been thinking that my wife and I should beef that fund up to about 9 months.

I know this is a deeply personal topic and is very much a function of what makes someone feel most secure, but got to wondering what data would show on how often people actually have used their Emergency Fund (does this exist?). So I'm interested to know from you all if you've ever had to touch your E-Fund? If so, how often?

Wasn't sure if this one was more for the personal finance thread or here, so feel free to move this around.

Thanks.

retired@50
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Re: Has anyone ever used their Emergency Fund?

Post by retired@50 » Fri May 22, 2020 5:57 pm

Sure. Several times in my life I found myself unemployed / laid off. The first was back in 1991, and I still had 28 years left on a mortgage. :shock:

I was glad I had some money set aside.

Regards,
This is one person's opinion. Nothing more.

livesoft
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Re: Has anyone ever used their Emergency Fund?

Post by livesoft » Fri May 22, 2020 6:00 pm

Here is a past poll that you may find interesting:
viewtopic.php?t=35769
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RadAudit
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Re: Has anyone ever used their Emergency Fund?

Post by RadAudit » Fri May 22, 2020 6:02 pm

I'm 73 and retired. Yes. I have an emergency fund. It's in a money market account. And, I use it.
FI is the best revenge. LBYM. Invest the rest. Stay the course. - PS: The cavalry isn't coming, kids. You are on your own.

KlangFool
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Re: Has anyone ever used their Emergency Fund?

Post by KlangFool » Fri May 22, 2020 6:04 pm

OP,

I had been unemployed for more than 1 year a few times. I believe that answer your question.

KlangFool

lakpr
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Re: Has anyone ever used their Emergency Fund?

Post by lakpr » Fri May 22, 2020 6:13 pm

Yes, twice. In 2001 I lost my job for about 6 months before I found a new one. Also in 2006 my wife had a very complicated pregnancy, the medical bills were huge, something like $240k in 2006 dollars, and my co-pay obligation itself was something like $18k. I had depleted my EF to pay those off, then rebuilt.

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Phineas J. Whoopee
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Re: Has anyone ever used their Emergency Fund?

Post by Phineas J. Whoopee » Fri May 22, 2020 6:15 pm

I have. Why do you ask?
PJW

nbseer
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Re: Has anyone ever used their Emergency Fund?

Post by nbseer » Fri May 22, 2020 6:19 pm

I use my Roth conversions as an emergency fund. Comes in handy when I need quick cash for a large expense and it's tax-free.

Rosencrantz1
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Re: Has anyone ever used their Emergency Fund?

Post by Rosencrantz1 » Fri May 22, 2020 6:19 pm

livesoft wrote:
Fri May 22, 2020 6:00 pm
Here is a past poll that you may find interesting:
viewtopic.php?t=35769
I found that interesting - thanks.

As for myself, I've never used my emergency fund (except when it tends to get larger than is reasonable - and then I buy equities)

Normchad
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Re: Has anyone ever used their Emergency Fund?

Post by Normchad » Fri May 22, 2020 6:19 pm

What a great question. I have an emergency fund, and have never used it.

However, that is really just fortunate luck. The emergencies described by others could have just easily happened to me.

I am happy I have it bit really helps keep me calm in an uncertain world.

I do have 5 months expenses at the bank. In addition to that, I consider my credit cards and my Roth IRA accounts as potential sources of cash if I needed them.


I highly recommend keeping one, even if you think you don’t need it.

Topic Author
REITired
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Re: Has anyone ever used their Emergency Fund?

Post by REITired » Fri May 22, 2020 6:20 pm

livesoft wrote:
Fri May 22, 2020 6:00 pm
Here is a past poll that you may find interesting:
viewtopic.php?t=35769
This is fantastic! Thanks for sharing.

stan1
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Re: Has anyone ever used their Emergency Fund?

Post by stan1 » Fri May 22, 2020 6:22 pm

We have not had job loss, but we have many times used cash or even funds in our taxable account to replace a heater or air conditioner unit that unexpectedly became unrepairable or to replace a car that unexpectedly became unreliable.

Liquidity has allowed us to quit a job we didn't like, somewhat impulsively buy a new house before our old house sold, and remodel parts of our house without taking out a loan.

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REITired
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Re: Has anyone ever used their Emergency Fund?

Post by REITired » Fri May 22, 2020 6:25 pm

Phineas J. Whoopee wrote:
Fri May 22, 2020 6:15 pm
I have. Why do you ask?
PJW
As I consider beefing up my Emergency Fund, I can't help but to think about the opportunity cost associated with not investing that additional cash in the market. So am trying to strike that balance between securing enough cash in case of an emergency vs. putting that cash to work in the market. I've seen suggestions like "keep 3-6 months, or 6-9 months" but have no idea what percentage of people ever really need to use that money for an emergency. For me, that percentage would impact how many months I stock my Emergency Fund with.

Thanks for the response!

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Phineas J. Whoopee
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Re: Has anyone ever used their Emergency Fund?

Post by Phineas J. Whoopee » Fri May 22, 2020 6:29 pm

REITired wrote:
Fri May 22, 2020 6:25 pm
Phineas J. Whoopee wrote:
Fri May 22, 2020 6:15 pm
I have. Why do you ask?
PJW
As I consider beefing up my Emergency Fund, I can't help but to think about the opportunity cost associated with not investing that additional cash in the market. So am trying to strike that balance between securing enough cash in case of an emergency vs. putting that cash to work in the market. I've seen suggestions like "keep 3-6 months, or 6-9 months" but have no idea what percentage of people ever really need to use that money for an emergency. For me, that percentage would impact how many months I stock my Emergency Fund with.

Thanks for the response!
You may be interested in our wiki article Placing cash needs in a tax-advantaged account.

PJW

lakpr
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Re: Has anyone ever used their Emergency Fund?

Post by lakpr » Fri May 22, 2020 6:30 pm

REITired wrote:
Fri May 22, 2020 6:25 pm
Phineas J. Whoopee wrote:
Fri May 22, 2020 6:15 pm
I have. Why do you ask?
PJW
As I consider beefing up my Emergency Fund, I can't help but to think about the opportunity cost associated with not investing that additional cash in the market. So am trying to strike that balance between securing enough cash in case of an emergency vs. putting that cash to work in the market. I've seen suggestions like "keep 3-6 months, or 6-9 months" but have no idea what percentage of people ever really need to use that money for an emergency. For me, that percentage would impact how many months I stock my Emergency Fund with.

Thanks for the response!
Emergency fund is supposed to be there for you in an emergency; trying to optimize on that might blow back badly ...
Consider, hypothetically, what would you do if you lost your job tomorrow. Can you be confident that you can out-compete the 33 million other folks looking for a job? THAT should give you an answer of how many months of EF you should keep.

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greg24
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Re: Has anyone ever used their Emergency Fund?

Post by greg24 » Fri May 22, 2020 6:38 pm

The question seems to be written as if everyone has a separate account labeled "break glass in case of emergency!"

We have an account with a bunch of cash. We use the account to get cash from the ATM, pay monthly bills, sometimes having higher bills such as when we decide to go on vacation, treat ourselves, or the one time we had to buy new windows and a furnace/AC in the same calendar year. I mentally consider it my "slush fund".

Yes, we use this account, and I'm glad we have cash on hand so we can spend without stress. Was it ever an "emergency"? Well, we kind of have shaped our lives and our accounts to avoid emergencies. Cash helps smooth out unexpected expenses.

printer86
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Re: Has anyone ever used their Emergency Fund?

Post by printer86 » Fri May 22, 2020 6:44 pm

Yes. Back in 2006, I found myself without a job after joining the wrong start-up company (my first commission check from them bounced).

My emergency fund not only covered the time that I was out of work, but it also helped me pay our bills as I grew my commission based income at my new job. It took 20 months for us to become cashflow positive again.

For me, my emergency fund was never constructed to make money. It was there to allow me to make money.

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MikeWillRetire
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Re: Has anyone ever used their Emergency Fund?

Post by MikeWillRetire » Fri May 22, 2020 6:48 pm

Yes, I had some health problems that kept me out of work for 9 months.

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celia
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Re: Has anyone ever used their Emergency Fund?

Post by celia » Fri May 22, 2020 6:53 pm

The reason many Bogleheads haven’t used an Emergency Fund is that they are properly insured (life, home, liability, medical), prépare a budget that includes an allowance for home/car repairs, try to stay healthy, and learn from others here that ‘life’ happens. By this time in the economic cycle, they can see that most jobs are not ‘safe’.

In other words, they planned by putting money away for unknowns, even if they did not name it an ‘Emergency Fund’.

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Re: Has anyone ever used their Emergency Fund?

Post by HEDGEFUNDIE » Fri May 22, 2020 7:08 pm

REITired wrote:
Fri May 22, 2020 6:25 pm
Phineas J. Whoopee wrote:
Fri May 22, 2020 6:15 pm
I have. Why do you ask?
PJW
As I consider beefing up my Emergency Fund, I can't help but to think about the opportunity cost associated with not investing that additional cash in the market. So am trying to strike that balance between securing enough cash in case of an emergency vs. putting that cash to work in the market. I've seen suggestions like "keep 3-6 months, or 6-9 months" but have no idea what percentage of people ever really need to use that money for an emergency. For me, that percentage would impact how many months I stock my Emergency Fund with.

Thanks for the response!
I just posted this on another thread. You should consider buying EE bonds as your emergency fund, which pay 3.5% annually if held to “maturity” (doubling in 20 years).

You put in $10k per year (x2 with a spouse, x3 with a trust) and then if you need it in an emergency you withdraw from the most recent tranche(s). This preserves your earlier tranches to double as planned and still gives you liquidity with the recent tranches without much opportunity cost.

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Re: Has anyone ever used their Emergency Fund?

Post by Ferdinand2014 » Fri May 22, 2020 7:09 pm

REITired wrote:
Fri May 22, 2020 5:46 pm
Hello all - Newbie here with a bit of a market research question...

I will preface this topic by saying that I 100% agree with having an Emergency Fund and currently have 6 months saved up in a "high-yield" savings account and have been thinking that my wife and I should beef that fund up to about 9 months.

I know this is a deeply personal topic and is very much a function of what makes someone feel most secure, but got to wondering what data would show on how often people actually have used their Emergency Fund (does this exist?). So I'm interested to know from you all if you've ever had to touch your E-Fund? If so, how often?

Wasn't sure if this one was more for the personal finance thread or here, so feel free to move this around.

Thanks.
I have never used mine in 26 years.
“You only find out who is swimming naked when the tide goes out.“ — Warren Buffett

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Re: Has anyone ever used their Emergency Fund?

Post by dru808 » Fri May 22, 2020 7:12 pm

I did have an emergency before I even thought about an efund. I was able to cover said emergency without an efund, had to sell stuff and found money in unexpected places, an efund would have eased that time considerably. That said, I do now have enough money that I don’t need a separate efund and would advise anyone without a large general taxable portfolio to also have one.
60% US equity | 25% International equity | 15% US Treasury bonds

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Re: Has anyone ever used their Emergency Fund?

Post by dboeger1 » Fri May 22, 2020 7:15 pm

Earlier this year, I was hit with an unexpectedly large tax bill when filing for 2019. My wife and I had both taken new jobs recently which increased our incomes substantially, so I was not totally confident on where our withholding would leave us. The funny thing is my emergency fund had gotten larger than intended, so I put a bunch of it into stocks with the intention of rebuilding it soon. Then I filed taxes and it depleted most of what was remaining. I still would have been fine, except a number of other bills came in all at the same time, including my wife's credit card payment after she had spent on things I did not know about (wasn't a big deal, but it took me by surprise). After doing a thorough audit of all our payments, I discovered that we were going to have just a bit under what was needed to pay the pending tax bill, which was scheduled to withdraw from our account within the next couple of business days. Thankfully, I was able to get my father to Zelle over some money instantly to cover the bill and pay him back within a month, but had he not had the money, I don't know what I would have done. It's interesting to think that this perfect storm of bills happened to us in a time when we were otherwise very financially secure, with a net worth of about $300k, no mortgage or other debt, dual high incomes with no kids, etc. We were well off, but we simply didn't have enough cash to cover a sudden barrage of expenses. Obviously, this "emergency" is nowhere near as bad as things like layoffs or insane medical bills. So yes, you're right that there's an opportunity cost to an emergency fund, but it's not there for returns. It's there for security.

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Re: Has anyone ever used their Emergency Fund?

Post by sailaway » Fri May 22, 2020 7:17 pm

We don't have a chunk of cash sitting around waiting for a disaster to happen. That being said, we are currently pulling out of our cash reserves, as we tend to do at some point most years. We set our workplace deductions to max based on normal expenses and anything beyond that we pull from cash reserves. Lots of extra donations going on this year.

This works well for us, being FI, but it has been my technique most of my adult life, since I have often had very lumpy income and expenses.

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Re: Has anyone ever used their Emergency Fund?

Post by Afty » Fri May 22, 2020 7:32 pm

greg24 wrote:
Fri May 22, 2020 6:38 pm
The question seems to be written as if everyone has a separate account labeled "break glass in case of emergency!"

We have an account with a bunch of cash. We use the account to get cash from the ATM, pay monthly bills, sometimes having higher bills such as when we decide to go on vacation, treat ourselves, or the one time we had to buy new windows and a furnace/AC in the same calendar year. I mentally consider it my "slush fund".

Yes, we use this account, and I'm glad we have cash on hand so we can spend without stress. Was it ever an "emergency"? Well, we kind of have shaped our lives and our accounts to avoid emergencies. Cash helps smooth out unexpected expenses.
+1. Another Boglehead suggested calling this “cash reserves,” which I like. We’ve recently used our cash reserves to replace a broken washing machine, to pay for plumbing repairs, and to make property tax payments.

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Re: Has anyone ever used their Emergency Fund?

Post by johnegonpdx » Fri May 22, 2020 7:46 pm

Don't know if this counts. I used my cash reserve during the late 90's to escape my job in Japan. Went back to school to get an MBA in the Bay Area and jump into tech. Not really an "emergency" strictly speaking, but at the time, living the life of a "salaryman" in corporate Japan did feel like an affliction I needed to cure rather urgently.

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Re: Has anyone ever used their Emergency Fund?

Post by dru808 » Fri May 22, 2020 11:38 pm

greg24 wrote:
Fri May 22, 2020 6:38 pm
The question seems to be written as if everyone has a separate account labeled "break glass in case of emergency!"

We have an account with a bunch of cash. We use the account to get cash from the ATM, pay monthly bills, sometimes having higher bills such as when we decide to go on vacation, treat ourselves, or the one time we had to buy new windows and a furnace/AC in the same calendar year. I mentally consider it my "slush fund".

Yes, we use this account, and I'm glad we have cash on hand so we can spend without stress. Was it ever an "emergency"? Well, we kind of have shaped our lives and our accounts to avoid emergencies. Cash helps smooth out unexpected expenses.
This, it’s what I do, no dedicated efund just a general fund that can act as an efund.
60% US equity | 25% International equity | 15% US Treasury bonds

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Re: Has anyone ever used their Emergency Fund?

Post by HawkeyePierce » Fri May 22, 2020 11:45 pm

Twice.

Once when I was in a horrible job at one of the big consulting firms. One day I just quit. Packed up and moved to a new city without a job lined up. My emergency fund kept me going while I searched. Having the cash to make that move led me to a new job that got my foot in the door of the world of tech startups.

Then I used it again, two years later, when I was abruptly fired from that startup. I spent about two months doing nothing to recover from burnout, then started interviewing. I had a few offers when suddenly I scored an intro at a major tech company. Landed the job and started making 2.5x what I was making before. By having enough cash not to need the first job that came along, I was able to wait for the perfect opportunity. I'm still at this job and have gone from making $80k at my previous role to $320k today.

In my case, my emergency fund has made me money by giving me flexibility, even if I missed out on some gains by not having that cash invested instead.

Spedward
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Re: Has anyone ever used their Emergency Fund?

Post by Spedward » Sat May 23, 2020 12:00 am

No - but it serves its purpose consistently. Especially in times like now. I know it is there if needed - comfort.

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Re: Has anyone ever used their Emergency Fund?

Post by dogagility » Sat May 23, 2020 6:39 am

REITired wrote:
Fri May 22, 2020 5:46 pm
So I'm interested to know from you all if you've ever had to touch your E-Fund? If so, how often?
In 30 years of adult life, I've never had the need to use an emergency fund. However, I'm a flexible person regarding career and living location.
Still have a modest emergency fund though. :beer
"The stock market is a device for transferring money from the impatient to the patient" -- Warren Buffett

backpacker61
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Re: Has anyone ever used their Emergency Fund?

Post by backpacker61 » Sat May 23, 2020 7:08 am

I was unemployed in parts of 2009 and 2010, during the GFC (about a year unemployed in total). I've been working 35 years (as of now), and am lucky as that was my only bout of unemployment so far.

I received a severance package from my employer, which helped meet my expenses for about 6 months or more. I also made withdrawals from my account in VMLUX (Vanguard Limited-Term Tax-Exempt Fund Admiral Shares). That's not normally a fund some would consider for an EF, per se, but it worked pretty well for me.

If you work in a public sector job (state/local/federal/school district), you can probably keep a smaller EF. But particularly in the tumultuous world of private sector employment, having assets to draw on (whether or not you explicitly choose to call it an EF) is pretty important.

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Re: Has anyone ever used their Emergency Fund?

Post by abuss368 » Sat May 23, 2020 7:35 am

I do not have a separate emergency fund account. I prefer simplicity because it works. That said we have one checking account and one money market account with Vanguard.

Rather than number or purpose of accounts I simply look at it as cash.
John C. Bogle: Two Fund Portfolio - Total Stock & Total Bond - “Simplicity is the master key to financial success."

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Harry Livermore
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Re: Has anyone ever used their Emergency Fund?

Post by Harry Livermore » Sat May 23, 2020 7:37 am

I have been self-employed for 30+ years and am intimately familiar with the ups and downs of work, income, and the economy. I have always had an emergency fund. Like greg24 said, I think of it as a "slush fund". I have had many flush months and many lean months, but it all averages out to a very nice living over the course of a year. We have been very lucky. I use the EF as needed, not just for "emergencies", but for working capital for our household.
I also have large, unexpected repairs in mind: the oil burner's coil cracks in the dead of winter, so we need $7K overnight. Sometimes misfortune also has bad timing: maybe the very next week I break my leg and can't work; the EF will carry us for the 90-day elimination period on my disability policy, or until my leg heals.
As I said in another EF thread, I don't ever want to have to choose between paying the mortgage and buying heating oil, just because I had a slow month. I use the EF as needed and fill it back up as able. I try to keep it at 12 months' worth of expenses; the COVID debacle has made me think I should beef that up, maybe to 24 months.
I also don't want the stress of having to sell funds to deal with an emergency or bad work situation, because I will be stuck with a tax bill, or be selling low (and if I have held a stock or fund long enough, both of those things can be true at the same time) Yes, for the mother of all emergencies, I would sell my VTSAX and have another year in the bank.
Life is full of chance, luck, good and bad fortune. And often these things happen in a "lumpy" way. I think it's overly simplistic to assume that you can just set a 70/30 index portfolio, "be properly insured" and "stay the course", and not experience a string of bad luck the derails your entire financial life.
TL/DR: Yes, I use my "emergency fund" all the time.
Cheers

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Re: Has anyone ever used their Emergency Fund?

Post by stoptothink » Sat May 23, 2020 8:47 am

We just did a few weeks ago to pay off our mortgage. Other than that, nope. If you are financially solid, chances are you have a multi-tiered EF that could including Roth IRA, HSA, credit cards with no interest for a period. In our position (no debt, paid off home, 2 working professionals in stable jobs that individually easily cover our expenses, 6-figures in Roth, ~$35k HSA, two credit cards with 12 months no interest), I can't even fathom a situation where a dedicated EF would "save us". At this point, our primary reason for having a stash of cash throughout the year is so that we can max out Roth IRAs and 529s (to state deduction max) the first of every year.

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Re: Has anyone ever used their Emergency Fund?

Post by ScubaHogg » Sat May 23, 2020 9:46 am

HEDGEFUNDIE wrote:
Fri May 22, 2020 7:08 pm
REITired wrote:
Fri May 22, 2020 6:25 pm
Phineas J. Whoopee wrote:
Fri May 22, 2020 6:15 pm
I have. Why do you ask?
PJW
As I consider beefing up my Emergency Fund, I can't help but to think about the opportunity cost associated with not investing that additional cash in the market. So am trying to strike that balance between securing enough cash in case of an emergency vs. putting that cash to work in the market. I've seen suggestions like "keep 3-6 months, or 6-9 months" but have no idea what percentage of people ever really need to use that money for an emergency. For me, that percentage would impact how many months I stock my Emergency Fund with.

Thanks for the response!
I just posted this on another thread. You should consider buying EE bonds as your emergency fund, which pay 3.5% annually if held to “maturity” (doubling in 20 years).

You put in $10k per year (x2 with a spouse, x3 with a trust) and then if you need it in an emergency you withdraw from the most recent tranche(s). This preserves your earlier tranches to double as planned and still gives you liquidity with the recent tranches without much opportunity cost.
So I had never thought of this, but it clicked right when I read it. That, LTT, a mortgage in retirement, interest only mortgage, you are really changing my thought process on a bunch of things.

Any chance did a summary post of all your, let’s say, non-traditional ideas?
“There is no problem so bad you can’t make it worse.” - Chris Hatfield, Astronaut mantra

HEDGEFUNDIE
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Re: Has anyone ever used their Emergency Fund?

Post by HEDGEFUNDIE » Sat May 23, 2020 9:51 am

ScubaHogg wrote:
Sat May 23, 2020 9:46 am
HEDGEFUNDIE wrote:
Fri May 22, 2020 7:08 pm
REITired wrote:
Fri May 22, 2020 6:25 pm
Phineas J. Whoopee wrote:
Fri May 22, 2020 6:15 pm
I have. Why do you ask?
PJW
As I consider beefing up my Emergency Fund, I can't help but to think about the opportunity cost associated with not investing that additional cash in the market. So am trying to strike that balance between securing enough cash in case of an emergency vs. putting that cash to work in the market. I've seen suggestions like "keep 3-6 months, or 6-9 months" but have no idea what percentage of people ever really need to use that money for an emergency. For me, that percentage would impact how many months I stock my Emergency Fund with.

Thanks for the response!
I just posted this on another thread. You should consider buying EE bonds as your emergency fund, which pay 3.5% annually if held to “maturity” (doubling in 20 years).

You put in $10k per year (x2 with a spouse, x3 with a trust) and then if you need it in an emergency you withdraw from the most recent tranche(s). This preserves your earlier tranches to double as planned and still gives you liquidity with the recent tranches without much opportunity cost.
So I had never thought of this, but it clicked right when I read it. That, LTT, a mortgage in retirement, interest only mortgage, you are really changing my thought process on a bunch of things.

Any chance did a summary post of all your, let’s say, non-traditional ideas?
If I ever do, I may have to charge for it :wink:

sergio
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Re: Has anyone ever used their Emergency Fund?

Post by sergio » Sat May 23, 2020 9:53 am

We kind of used it. I did some calculations and our emergency fund grew to something like 18 months of expenses. So we took out 6-8 months to pay for a new Honda Accord with cash.

Now that our company is going through a potential acquisition, we've started beefing it up again. This also includes putting all new HSA money in money market , rather than investing it.

DaftInvestor
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Re: Has anyone ever used their Emergency Fund?

Post by DaftInvestor » Sat May 23, 2020 10:02 am

Yes - multiple times through the years - for an unexpected job loss and for unforeseen home expenses.

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Re: Has anyone ever used their Emergency Fund?

Post by Hector » Sat May 23, 2020 10:27 am

I don’t have a separate EF or even funds to pay regular bills. It’s just one bucket and necessary money comes from bonds part of it which also includes checking account.
I have experienced a situation where I needed more cash $$ than I ever imagined.
Last edited by Hector on Sat May 23, 2020 10:48 am, edited 2 times in total.

catlady
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Re: Has anyone ever used their Emergency Fund?

Post by catlady » Sat May 23, 2020 10:30 am

We’ve used it a couple times for large unexpected expenses and to cover overages when we had job losses. If we wouldn’t have had the emergency fund in those situations we would have likely looked for alternative payment options or went with cheaper solutions before selling index funds to cover. Having cash on hand takes some stress out of those situations.

InMyDreams
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Re: Has anyone ever used their Emergency Fund?

Post by InMyDreams » Sat May 23, 2020 10:33 am

It doesn't have to be only cash - I know more than one person who have used their one year emergency food supply during economic hardship. It too is a form of savings, but takes careful management.

jeep5ter
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Re: Has anyone ever used their Emergency Fund?

Post by jeep5ter » Sat May 23, 2020 10:47 am

Yes, I have used mine. I keep it in a short term municipal bond fund that has checkwriting feature. Low volatility and tax free, unless I use it.

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Watty
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Re: Has anyone ever used their Emergency Fund?

Post by Watty » Sat May 23, 2020 11:12 am

One thing that has not been mentioned is that there can also be "good" emergencies too.

For example here are some I have heard of;

1) Before I met her my wife had a roommate that was engaged and had a nonrefundable prepaid honeymoon in Hawaii. They broke up and called off the wedding and her roommate was not going to go by herself. For the just price of a plane ticket and the time off work without pay my wife was able to go with her and have an otherwise free vacation. They had a great time.

2) The local big airline started up a new route to Ireland and had a promotional airfare for just a few hundred dollars. We had all the other expenses but I bought the tickets within the hour before it was sold out and we went to Ireland two weeks later instead of a road trip that we had planned.

3) I know someone who's grandmother should have given up driving years before. She eventually agreed to sell the low mileage car in great condition to them for a very low(but not too outrageous) price. If they were not able to quickly write the check the Grandmother would have likely changed her mind. Everyone was glad that she would not be driving anymore.

4) My wife was going through a series of both chemo therapy and then radiation treatment for cancer but there was a long break between them. With her doctors OK we took a non-budget trip to the Virgin Islands which really helped her mental outlook since she was feeling overwhelmed. (She is doing great 15+ years later now.)

There are lots of unexpected things which can come up which you can only do if you have money that is readily available.

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mmmodem
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Re: Has anyone ever used their Emergency Fund?

Post by mmmodem » Sat May 23, 2020 11:57 am

REITired wrote:
Fri May 22, 2020 6:25 pm
As I consider beefing up my Emergency Fund, I can't help but to think about the opportunity cost associated with not investing that additional cash in the market. So am trying to strike that balance between securing enough cash in case of an emergency vs. putting that cash to work in the market.
I've never used the EF. We've each been without a job for months at some point. DW is going on 3 years now. We keep our budget manageable with one income, so the EF was never tapped. We've had to pay for emergency flights and a car once but we bought used and cash flowed our emergencies out of our income.

It's perspective. I don't look at our EF as lost opportunity cost. It was buying security. We kept it at 6 months knowing it was only the first tier of our EF. We have taxable to cover for longer emergencies. When our taxable account grew to several years worth of expenses, that's when I decided a conventional EF sitting in a high yield savings account will no longer be needed.

A-Commoner
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Re: Has anyone ever used their Emergency Fund?

Post by A-Commoner » Sat May 23, 2020 2:46 pm

I have a taxable account which, modesty aside, is in the 7 figures. I consider that my emergency fund. In the one emergency that happened to us in the last 3 years - my daughter had a skateboarding accident, fell on the ground and sustained a small laceration on her forehead - we used up our entire health insurance deductible for the year, about $10k, just for that 1 emergency room visit. Thankfully it was just a minor injury.

I paid for that via credit card. Then I paid for the whole balance at the next billing cycle.

So the credit card served as the emergency fund which was paid off promptly a month later.
Last edited by A-Commoner on Sat May 23, 2020 3:56 pm, edited 1 time in total.

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willthrill81
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Re: Has anyone ever used their Emergency Fund?

Post by willthrill81 » Sat May 23, 2020 3:07 pm

We have never used our emergency fund. We save every month for non-monthly and irregular expenses, and that basically eliminated our 'financial emergencies' and greatly smoothed out our cash flows. TMK, this is very similar to what the YNAB software does.

A job loss is about the only realistic event that would cause us to really need an emergency fund, and I work under a long-term contract with our state that could not be ended without a minimum of one year's notice, and we could cover all of our essential spending from our state's unemployment benefits alone. So our need for an emergency fund is almost nil.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

deltaneutral83
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Re: Has anyone ever used their Emergency Fund?

Post by deltaneutral83 » Sat May 23, 2020 3:48 pm

Call liquidity whatever you want (emergency fund, cash reserves, cash on the side lines, dry powder, etc. etc.) but would you rather have too much earning next to nothing and never need it and live a drama free life or not have much/any and have to take permanent life altering loss; and then of course anything in between.

It seems to me the folks who suffer the most are the ones who needed liquidity but didn't have it rather than the ones that had too much and never touched it. Again, I fully understand the umpteen methods to access cash other than a boring bank account but the data suggests most people to be in better shape this way. If you have a tangible NW of sizable amount, this is all mostly moot, even if you lose non trivial amounts, it may not even change your life or lifestyle if say you lose 20% of your net worth. If your net worth is barely above 0 and you make (or some say "forced into") a six figure permanent loss, it can send you to Bankruptcy court.

Waiting_for_Godot
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Re: Has anyone ever used their Emergency Fund?

Post by Waiting_for_Godot » Sat May 23, 2020 6:21 pm

The only time I used my emergency fund was when I first started working in 2010; bounced between a few temp jobs before finding a salaried position. Since then, unemployment has been sufficient for the two layoffs that I have dealt with. That being said, I can envision it taking some time to gain new employment in the current environment, and am glad to have what others would say is an overly conservative AA. I'll adjust once I'm employed.

lazynovice
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Re: Has anyone ever used their Emergency Fund?

Post by lazynovice » Sat May 23, 2020 6:44 pm

Not since it was labeled Emergency Fund about ten years ago.

Now that we have a seven figure taxable account and a paid off mortgage, we are going to move the EF into taxable at our AA. We have been happy to have it and slept well knowing it was there but it is time to let it go. My concerns about selling and incurring big gains are now gone with all the TLH we did in March and April.

khram
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Re: Has anyone ever used their Emergency Fund?

Post by khram » Sat May 23, 2020 7:27 pm

I was unemployed for 3 years, and went back to school for 2 years. I used it then. I did have a job at school that barely got me by in LCOL city, and the summer between I saved enough to make the 2nd year more comfortable.

All this to be said, oversaving a bit for EF is so much better than thinking credit cards are your EF. So many young people are blinded by the bull market of the past 10 years they always say in personal finances recommendations "debt is a flaming emergency, you can always charge your card back up if you run into an emergency." These people have not experienced balance chasing during a recession.

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