Have you ever used your emergency fund?

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4nursebee
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Have you ever used your emergency fund?

Post by 4nursebee »

While we were working we were quite comfortable carrying just a couple months worth of expenses in the bank as our emergency fund. We had 401Ks, Roths, then we paid down debt. As we approached retirement, the peace of mind of readily accessible money was desired, so we built up to two years worth of base expenses. I see questions every now and then about where to park this emergency fund, lots of worries over such, but rarely if ever a post about situations where the funds were needed.

When younger and working, I think a minimal emergency fund is perfectly okay. It is easy to tighten the belt a bit, there are more paychecks coming in, and Roth contributions could always be accessed.

As we age, we see h ow readily things ought work out under many situations, regardless of an emergency fund existing or not. We can always access retirement funds.

These thoughts make me wonder what the big deal is over an emergency fund on a practical basis.

Which brings me to the question, what is the base rate of ever needing an emergency fund? Have you ever needed a dedicated emergency fund that could not have been readily handled by other means?

I'm thinking to not keep so much on hand...
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miamivice
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Re: Have you ever used your emergency fund?

Post by miamivice »

I do not have an emergency fund, so I have never used one.

The one time in my life that I could have used an emergency fund is when I had no money, therefore, no emergency fund. That was a bit of a catch 22.
jebmke
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Re: Have you ever used your emergency fund?

Post by jebmke »

We ditched our EF almost 30 years ago. We had never used it and by that time, there was no reason to have one. My entire portfolio is my EF now.
When you discover that you are riding a dead horse, the best strategy is to dismount.
zag00
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Re: Have you ever used your emergency fund?

Post by zag00 »

Thankfully i've been able to cash flow all "emergencies" with the rare occassion of needing an additional $100-500 from the EF.
stoptothink
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Re: Have you ever used your emergency fund?

Post by stoptothink »

Yes...to pay off our home, to pay a car off, to pay for a vacation, but never once for an "emergency". This topic has been beaten to death on this board, but IMO, once you get to a certain level of financial stability there is no real point in a dedicated cash EF. If a true emergency every came up, we have several levels of resources (including a six-figure HSA and a decade of receipts, brokerage account, i-bonds, multiple credit cards with 0% interest for a long period, Roth IRAs etc.) that could be tapped before we actually need to use cash, so we generally keep ~$5k in an ALLY savings account.
LuckyGuy
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Re: Have you ever used your emergency fund?

Post by LuckyGuy »

We built up a 6 month emergency fund in our 20’s. Never used it. We are now in our 50’s and have lumped it our retirement portfolio.

Thinking about it, that’s a good story :happy
Normchad
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Re: Have you ever used your emergency fund?

Post by Normchad »

I used to have a dedicated emergency fund. But I never used it. I just got lucky, and never had a big emergency.

I don’t have the emergency fund anymore. But I still think it’s a good idea for most people.
Compound
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Re: Have you ever used your emergency fund?

Post by Compound »

I’ve been thinking about EFs recently as well and have been considering what to do with ours. We have a sizeable EF/cash reserves account and haven’t needed to tap into it to any appreciable degree. I’m trying to decide if we should do what others have done and do away with the “bucket” of EF, and just have the portfolio itself serve as the EF. I feel a strange sense of attachment to the fund, kinda like a security blanket of sorts. Maybe it’s time to let it go.
Robdac
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Re: Have you ever used your emergency fund?

Post by Robdac »

We have one and we've never used it. And at 9%+ inflation, cash certainly isn't king these days. Like you, we sometimes think about ditching it.
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Sandtrap
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Re: Have you ever used your emergency fund?

Post by Sandtrap »

jebmke wrote: Mon Aug 01, 2022 2:46 pm We ditched our EF almost 30 years ago. We had never used it and by that time, there was no reason to have one. My entire portfolio is my EF now.
+1

Same here. :D :D
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KlangFool
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Re: Have you ever used your emergency fund?

Post by KlangFool »

OP,

1) Multiple periods of unemployment lasting more than 1 year

2) Multiple eye surgeries during unemployment.

3) Son started college during unemployment.

4) Daughter started college the following year.

5) Niece's house flooded in Houston during the 100 year's flood.

Need I say more....

KlangFool
Last edited by KlangFool on Mon Aug 01, 2022 3:00 pm, edited 1 time in total.
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notoriousMG
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Re: Have you ever used your emergency fund?

Post by notoriousMG »

Up to 4 years ago, I never had more than $1k worth of emergency funds. I borrowed $25k from my retirement account for medical bills and would float other unexpected expenses on balance transfers. Being debt-free and building savings is a tremendous feeling and a great privilege. The past year and a half, I used $15k from my emergency fund for medical expenses and unexpected home expenses. I can sleep better at night knowing that I can provide coverage for myself and my family when needed without borrowing away from my future. I really shudder at how much poverty I had to endure and how much other people have to endure. It is very expensive to be poor.
Joyful
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Re: Have you ever used your emergency fund?

Post by Joyful »

4nursebee wrote: Mon Aug 01, 2022 2:42 pm While we were working we were quite comfortable carrying just a couple months worth of expenses in the bank as our emergency fund. We had 401Ks, Roths, then we paid down debt. As we approached retirement, the peace of mind of readily accessible money was desired, so we built up to two years worth of base expenses. I see questions every now and then about where to park this emergency fund, lots of worries over such, but rarely if ever a post about situations where the funds were needed.

When younger and working, I think a minimal emergency fund is perfectly okay. It is easy to tighten the belt a bit, there are more paychecks coming in, and Roth contributions could always be accessed.

As we age, we see h ow readily things ought work out under many situations, regardless of an emergency fund existing or not. We can always access retirement funds.

These thoughts make me wonder what the big deal is over an emergency fund on a practical basis.

Which brings me to the question, what is the base rate of ever needing an emergency fund? Have you ever needed a dedicated emergency fund that could not have been readily handled by other means?

I'm thinking to not keep so much on hand...
I have 2 types of emergency funds: 1 - Fully Funded Emergency Fund (FFEF) and 2 - a Baby Emergency Fund (BEF). My FFEF is 1 year of expenses in CD's and iBonds for the most part. My BEF is with Sallie Mae Bank along with over 10 Sinking Funds. The Sinking Funds are for my Car, Vacations, Healthcare deductible, Technology, etc. etc. When I retire my FFEF which will have 3+ years of expenses and will then become my Cash Bucket as I employ the 3 Bucket strategy during retirement. I will always have and maintain my FFEF, BEF and my sinking funds so that I can avoid using my Retirement investments for anticipated and unanticipated emergencies. Having emergency funds allows me to sleep like a baby at night and not get upset when things break/breakdown, etc.
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Quirkz
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Re: Have you ever used your emergency fund?

Post by Quirkz »

Sure. I've tapped into mine multiple times, mostly for surprise home repairs. The main reason I keep it, though, is in case I every lose my job. We've mostly been a one-income household, and I feel like it's an important insurance policy to have the padding if I have to go back on the job hunt. I've been lucky enough not to have it happen recently, but I also went through a couple of layoffs early in my career when I didn't have an emergency fund and sorely needed it.

I keep about 6 months of expenses for the EF. If I've got more than that on hand, I invest it.
H-Town
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Re: Have you ever used your emergency fund?

Post by H-Town »

4nursebee wrote: Mon Aug 01, 2022 2:42 pm While we were working we were quite comfortable carrying just a couple months worth of expenses in the bank as our emergency fund. We had 401Ks, Roths, then we paid down debt. As we approached retirement, the peace of mind of readily accessible money was desired, so we built up to two years worth of base expenses. I see questions every now and then about where to park this emergency fund, lots of worries over such, but rarely if ever a post about situations where the funds were needed.

When younger and working, I think a minimal emergency fund is perfectly okay. It is easy to tighten the belt a bit, there are more paychecks coming in, and Roth contributions could always be accessed.

As we age, we see h ow readily things ought work out under many situations, regardless of an emergency fund existing or not. We can always access retirement funds.

These thoughts make me wonder what the big deal is over an emergency fund on a practical basis.

Which brings me to the question, what is the base rate of ever needing an emergency fund? Have you ever needed a dedicated emergency fund that could not have been readily handled by other means?

I'm thinking to not keep so much on hand...
We have never used our EF. But like insurance policy, just because we don't use it, it does not mean that it has no utility. However as our net worth grows, we can self-insure pretty much anything. EF is more needed for those who just started out saving. They are susceptible for job loss, accidents, recession, etc.
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yules
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Re: Have you ever used your emergency fund?

Post by yules »

4nursebee wrote: Mon Aug 01, 2022 2:42 pm While we were working we were quite comfortable carrying just a couple months worth of expenses in the bank as our emergency fund. We had 401Ks, Roths, then we paid down debt. As we approached retirement, the peace of mind of readily accessible money was desired, so we built up to two years worth of base expenses. I see questions every now and then about where to park this emergency fund, lots of worries over such, but rarely if ever a post about situations where the funds were needed.

When younger and working, I think a minimal emergency fund is perfectly okay. It is easy to tighten the belt a bit, there are more paychecks coming in, and Roth contributions could always be accessed.

As we age, we see h ow readily things ought work out under many situations, regardless of an emergency fund existing or not. We can always access retirement funds.

These thoughts make me wonder what the big deal is over an emergency fund on a practical basis.

Which brings me to the question, what is the base rate of ever needing an emergency fund? Have you ever needed a dedicated emergency fund that could not have been readily handled by other means?

I'm thinking to not keep so much on hand...
Just because I haven't needed an emergency fund doesn't mean you won't need an emergency fund!

Yules
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Re: Have you ever used your emergency fund?

Post by Broken Man 1999 »

We have never had an emergency fund, so never used one.

Today we have our entire portfolio to use for any reason, large expense or small expense.

Many posts list emergencies that are better characterized as replacements/upkeep/maintenance items.

Broken Man 1999
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stoptothink
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Re: Have you ever used your emergency fund?

Post by stoptothink »

H-Town wrote: Mon Aug 01, 2022 3:17 pm However as our net worth grows, we can self-insure pretty much anything. EF is more needed for those who just started out saving. They are susceptible for job loss, accidents, recession, etc.
This. Why would I keep a bunch of cash sitting around losing buying power when I have several tiers of easily accessible funds (in the mid 6-figures) that could be tapped at any point, we are a dual-income (both pretty high income) household, and we have insurance? When I was in my early 20's and didn't have the resource to self-insure an EF was a necessity, but it isn't in our current situation.
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JPH
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Re: Have you ever used your emergency fund?

Post by JPH »

I do maintain an amount in cash. Never had a real emergency that I couldn't cash flow, however. I draw on the cash to make gifts.
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SmileyFace
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Re: Have you ever used your emergency fund?

Post by SmileyFace »

We used ours several times:
- tech startup folded - covered expenses unemployment
- needed a new roof on house
- needed a new pool liner for in ground pool
- bailed out relative who failed to have an EF (they only had real estate investments and got completely hosed in 2008)

Someone in another thread said they never had one but then mentioned paying $10K out of their checking account for a home repair - I would call their checking account an EF for that person that keeps that much in a bank account. I don't understand how you can be a home owner and not have an EF (or whatever you would like to relabel it). Especially if you work in Tech and are apt to laid off at the same time as a stock market crash.
quietseas
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Re: Have you ever used your emergency fund?

Post by quietseas »

We pay cash for cars without selling equities, so I guess that's fungible whether we used our "emergency fund" or not.
UpperNwGuy
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Re: Have you ever used your emergency fund?

Post by UpperNwGuy »

I don't have an emergency fund, but I do have an automobile fund, a vacation fund, and a third fund to cover other irregular expenses. I have used all of those.
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mhc
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Re: Have you ever used your emergency fund?

Post by mhc »

Yes. When I was in college, the transmission went out on my DW car. I have not used my emergency fund since over the last 30 years. I eliminated my EF probably 15 years ago. I can cash flow expenses, emergency or normal. A very large emergency may cause me to sell from brokerage account or sell some stock options.
CletusCaddy
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Re: Have you ever used your emergency fund?

Post by CletusCaddy »

I got laid off last month so you’d think I would have had a need for my emergency fund, but I didn’t consider that layoffs come with severance payments. In my case six months. This is making me reconsider my need for my EF.
Last edited by CletusCaddy on Mon Aug 01, 2022 3:44 pm, edited 1 time in total.
mcblum
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Re: Have you ever used your emergency fund?

Post by mcblum »

I used to call it an EFund but now it is just "Liquidity"
. I put money into it every 1st of the month and use it for those irregular bills such as Home owners Association dues and some annual
insurance payments.Also, sudden car repairs. With monthly deposits, it keeps regular expenses from causing anxiety.
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Re: Have you ever used your emergency fund?

Post by delamer »

While we were working, our emergency fund was designated to replace reduced income in the event of unemployment or temporary disability.

Fortunately, we never used it.

We also had a sinking fund for home/car repairs that was separate.

Now that we are retired, we don’t need an emergency fund or sinking fund.
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Nver2Late
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Re: Have you ever used your emergency fund?

Post by Nver2Late »

For the bulk of my career, I was in a very stable W-2 job and although we had a small EF, we never needed it, until suddenly we did. We've needed the emergency fund twice in the last 5 years. Single income family.

First, 2018, found myself out of a job. I decided to become self-employed and used the emergency fund for startup costs and about 6 months of living expenses until income started rolling in. I literally drained the accounts and was actively looking at leverage and other alternatives. I remember telling a friend that although it was mid-winter, if income didn't come in soon I would have to make a trip to dig up the box buried in the woods. Income did come in that next month, so although it probably meant my emergency fund was sized appropriately, I re-plenished and added more.

Then COVID hit. Covid created more of a liquidity/cash flow issue due to WFH mandates delaying getting ink signatures for contracts and income/accounts receivable delays with some extending out over 240 days. (My normal AR is less than 60 days). This again emptied my business operating capital completely, causing me to forego taking income draws for several months resulting again in draining the EF. I wasn't as concerned here due to having significant AR expected to come in at any time, however, I did need to take some actions both inside the business and personally tapping the EF to span the income gap.

Today, I have a couple projects put on hold or cancelled due to supply chain and inflation (budget) issues. Going into a recession, this has me concerned, but the EF is there to tap again if needed. I just hope it is big enough.

For those retired, or higher income/multiple income families, a large EF is probably not needed. We have all our eggs in one basket, so a little more cushion is warranted.
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JoeRetire
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Re: Have you ever used your emergency fund?

Post by JoeRetire »

4nursebee wrote: Mon Aug 01, 2022 2:42 pm Which brings me to the question, what is the base rate of ever needing an emergency fund? Have you ever needed a dedicated emergency fund that could not have been readily handled by other means?
I was laid off twice. One time, I had a new job within two weeks and didn't need emergency funds. The other time took longer, and the emergency fund meant that I didn't have to cash in any equities or bonds (most of which were tied up in retirement accounts anyway). I also had a friend who was out of work for almost 2 years. Unfortunately, he didn't have much in the way of emergency funds.

Currently, I am retired. Having liquid "emergency" funds means I don't have to sell any shares while they are down.
I'm thinking to not keep so much on hand...
(shrug)

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GerryL
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Re: Have you ever used your emergency fund?

Post by GerryL »

During my working years, I kept a chunk of cash uninvested. I had it designated for things like "Home," "Car," and "Special" but never specifically for emergencies. That cash and regular cash flow meant that I could easily cover emergencies like a skylight cracked from winter ice or a dead refrigerator. When my employment started to look a little tenuous, I would adjust where I put my extra cash -- for example, stopping extra mortgage payments -- to make sure the $$$ would be close at hand in the event of a layoff.

In retirement, I still keep a bunch of cash at hand for splurges and unexpected expenses (e.g., dental implant) that may become more common as I get ever older. But I don't worry about loss of income since SS and tiny pensions cover pretty much all of my basic expenses.

So, to answer your specific question, no, I have not had to use my emergency fund, since I didn't have a designated EF, but my cash stash has been used to cover emergencies.
RetiredAL
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Re: Have you ever used your emergency fund?

Post by RetiredAL »

We never had a designated "emergency fund". Key, IMO, is to have reasonable access to money, not having a designated E-fund. Anything demanding instant payment just gets carded.

To me, an unusual money demand would just come from the Fixed Income side of our money, or alternately from our equities. Our checking account typically has 2x our monthly expenses so lumpy months are pretty well covered. I never was without a job, we always lived within our means, and we have never had a gross surprise event/bill.

When #2 son bought his house, I told him to not drain his taxable investment account to make a bigger down payment, for the express reason that account could cover a lot of month's of house payments if the bovine waste got in the ventilator. That provides his reasonable access.

Worst case I can think of for us -- we are on a car trip 1000 miles from home and the car just became toast. We'd go to the nearest dealer, get something else. Most dealers will give you 7 to 10 days to pay in full, as they know their backup financing will kick in after that, which is more than enough time to move money around. If forced to accept their financing, then when we got home I would figure out whether to continue with the financing or not.
the_wiki
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Re: Have you ever used your emergency fund?

Post by the_wiki »

Sure I use it all the time. Car needs $800 brakes unexpectedly, gets paid from savings. Owe a little extra on taxes - comes from Savings. Get invited on a last minute trip, comes from savings. Water heater dies - comes from savings. In laws just had their water main blow up, $11k fix - good thing they had savings.

When I was younger and had lower income and was less smart with money, these all went on a credit card. I was always working to pay off the last emergency rather than saving for the next one. Now I am always a few ahead and could live for a few months between jobs. It feels pretty good knowing I will still eat if my next paycheck doesn't come or a major appliance dies tonight.

Now I do think some people on here go a little too far, but it's a personal choice as to how much of a buffer people want to keep. I think most should work towards half a year's salary if they can.
MDfan
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Re: Have you ever used your emergency fund?

Post by MDfan »

zag00 wrote: Mon Aug 01, 2022 2:49 pm Thankfully i've been able to cash flow all "emergencies" with the rare occassion of needing an additional $100-500 from the EF.
Same. Never had an emergency fund.
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SmileyFace
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Re: Have you ever used your emergency fund?

Post by SmileyFace »

For those that say they don't have an emergency fund but have cash to cover, uh, emergencies.
Here is the boglehead definition of EF:
An emergency fund is a cash reserve required to meet unanticipated needs for cash, such as medical bills, car or home repair, or job loss.
From:
https://www.bogleheads.org/wiki/Emergency_fund

Not sure but for some reason many folks don't like the term EF - perhaps because once you have planned for every expense it's not really considered an emergency - I don't know.
Nver2Late
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Re: Have you ever used your emergency fund?

Post by Nver2Late »

SmileyFace wrote: Mon Aug 01, 2022 4:45 pm For those that say they don't have an emergency fund but have cash to cover, uh, emergencies.
Here is the boglehead definition of EF:
An emergency fund is a cash reserve required to meet unanticipated needs for cash, such as medical bills, car or home repair, or job loss.
From:
https://www.bogleheads.org/wiki/Emergency_fund

Not sure but for some reason many folks don't like the term EF - perhaps because once you have planned for every expense it's not really considered an emergency - I don't know.
It may very well just be a matter of semantics.

I consider my EF as part of my Fixed Income allocation. When I use it, I don't rebalance by selling equities, but instead prioritize replenishing with new money as it becomes available. Maybe I'm really just cash flowing out of my portfolio like many others noted here, but I just refer to it differently.
cprice4265
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Re: Have you ever used your emergency fund?

Post by cprice4265 »

I'm not as blessed financially as most seem to be on this forum so my EF has been a lifesaver for me multiple times to keep me from pulling money out of my brokerage account to cover periods of unemployment.
I do feel like I had too high of a balance so this year I pulled 10k and funded an Ibond.
stoptothink
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Re: Have you ever used your emergency fund?

Post by stoptothink »

Nver2Late wrote: Mon Aug 01, 2022 5:04 pm
SmileyFace wrote: Mon Aug 01, 2022 4:45 pm For those that say they don't have an emergency fund but have cash to cover, uh, emergencies.
Here is the boglehead definition of EF:
An emergency fund is a cash reserve required to meet unanticipated needs for cash, such as medical bills, car or home repair, or job loss.
From:
https://www.bogleheads.org/wiki/Emergency_fund

Not sure but for some reason many folks don't like the term EF - perhaps because once you have planned for every expense it's not really considered an emergency - I don't know.
It may very well just be a matter of semantics.

I consider my EF as part of my Fixed Income allocation. When I use it, I don't rebalance by selling equities, but instead prioritize replenishing with new money as it becomes available. Maybe I'm really just cash flowing out of my portfolio like many others noted here, but I just refer to it differently.
Ours isn't in cash, it's in our brokerage account, invested in HSA, in i-bonds, in Roth IRAs, in crypto :shock:, in the form of 0% credit cards...We rarely have more than $5k in cash (regardless of what bucket you want to consider it in), which represents about .3% of our liquid assets.
dekecarver
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Re: Have you ever used your emergency fund?

Post by dekecarver »

Always kept the equivalent of current year mortgage payments and health insurance premiums readily available but have never needed to use. I followed that path based on my father telling me that there was no reason to stress out if the "man" told you your services were no longer needed or if you were just tired of the "man" and needed a break in service.
rivercrosser
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Re: Have you ever used your emergency fund?

Post by rivercrosser »

I call mine my cushion account. Around 100K in a MM checking. I keep track of what I take out and gradually put it back from my regular checking account. I've been retired over 5 years now and living off my SS and pension. Haven't had to touch any IRA's or other savings. Last year we put new roofs on house and shop, had to replace the HVAC after a lightning strike, had some door and window upgrades done etc. Nice to have it for the big projects or if need a new vehicle etc.
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asset_chaos
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Re: Have you ever used your emergency fund?

Post by asset_chaos »

In retirement I haven't tapped an emergency fund because I'm well resourced now. But the younger, poorer, not earning much me did have several occasions where an emergency fund was highly useful. I had a car repair for a car I needed to work. For my first job I moved half way across the country; moving expenses were reimbursed, but I had to front a chunk of money to move and rent an apartment before first paycheck came through. Another time a job overseas was unexpectedly delayed due to visa issues; I was suddenly between jobs and needed living expenses for several months.

I suggest that one needs a larger emergency fund when you're living closer to the financial edge, i.e. typically when one is younger, less well paid, less well financially established. I also agree that as one's financial resources increase, the need for a large cash cushion dedicated to unexpected expenses declines. Nonetheless, I still keep a chunk of cash in a savings account that's accessible with a few clicks, just in case.
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DN28
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Re: Have you ever used your emergency fund?

Post by DN28 »

Yes, as a "walk away" fund. I highly recommend having enough liquid assets that walking away from a soul-sucking job isn't more stressful than the job itself.
ronno2018
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Re: Have you ever used your emergency fund?

Post by ronno2018 »

My emergency fund is BND, VTEB, and VCEB currently. But thank you Dad 20 years ago when my job was moved to San Francisco and we had just bought a house and had a 5yo daughter. He sent us $5K unasked. I found a job not long after. Requiescet in pace wonderful DAD (and Mom). Sigh.
brian91480
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Re: Have you ever used your emergency fund?

Post by brian91480 »

cprice4265 wrote: Mon Aug 01, 2022 5:23 pm I do feel like I had too high of a balance so this year I pulled 10k and funded an Ibond.
As of January 2023... almost 100% of my EF will be invested into iBonds.

But if the iBond interest is still set at a high rate, as I expect it will be... I won't be willing to take money out of the iBonds. Hence... I won't have an EF at all anymore.

😬👎

-- Brian
JayB
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Joined: Sat May 28, 2022 9:57 am

Re: Have you ever used your emergency fund?

Post by JayB »

We don't have a separate emergency fund, but (a) use a multi-year schedule to plan for regular replacements of expensive things like computers, appliances, roof, heat pump, etc., (b) have laddered bonds maturing each year that can be applied to unexpected expenses instead of being reinvested, (c) have a detailed plan of what resources to use -- and in what order -- for large unexpected expenses; this basically involves selling bonds approaching maturity, liquidating I bonds as needed, tapping bonds in our Roth IRAs, etc., and (d) have a substantial margin loan capacity for short-term funding needs if we choose not to immediately liquidate some of our bond holdings. We don't own stocks or stock funds.
Normchad
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Joined: Thu Mar 03, 2011 7:20 am

Re: Have you ever used your emergency fund?

Post by Normchad »

DN28 wrote: Mon Aug 01, 2022 7:04 pm Yes, as a "walk away" fund. I highly recommend having enough liquid assets that walking away from a soul-sucking job isn't more stressful than the job itself.
That’s a fantastic way to look at it.
CletusCaddy
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Re: Have you ever used your emergency fund?

Post by CletusCaddy »

JayB wrote: Mon Aug 01, 2022 7:27 pm We don't have a separate emergency fund, but (a) use a multi-year schedule to plan for regular replacements of expensive things like computers, appliances, roof, heat pump, etc., (b) have laddered bonds maturing each year that can be applied to unexpected expenses instead of being reinvested, (c) have a detailed plan of what resources to use -- and in what order -- for large unexpected expenses; this basically involves selling bonds approaching maturity, liquidating I bonds as needed, tapping bonds in our Roth IRAs, etc., and (d) have a substantial margin loan capacity for short-term funding needs if we choose not to immediately liquidate some of our bond holdings. We don't own stocks or stock funds.
You don’t own any stocks? Seriously?
JayB
Posts: 109
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Re: Have you ever used your emergency fund?

Post by JayB »

CletusCaddy wrote: Mon Aug 01, 2022 7:35 pm
JayB wrote: Mon Aug 01, 2022 7:27 pm We don't have a separate emergency fund, but (a) use a multi-year schedule to plan for regular replacements of expensive things like computers, appliances, roof, heat pump, etc., (b) have laddered bonds maturing each year that can be applied to unexpected expenses instead of being reinvested, (c) have a detailed plan of what resources to use -- and in what order -- for large unexpected expenses; this basically involves selling bonds approaching maturity, liquidating I bonds as needed, tapping bonds in our Roth IRAs, etc., and (d) have a substantial margin loan capacity for short-term funding needs if we choose not to immediately liquidate some of our bond holdings. We don't own stocks or stock funds.
You don’t own any stocks? Seriously?
Ditched the last equity 20+ years ago and never looked back. We have enough to live well without stock market risk.
retire2022
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Location: NYC

Re: Have you ever used your emergency fund?

Post by retire2022 »

op

Do you need insurance? when you do you are so glad you did, this is same when you have unexpected expense, then EF is important.

I had a joint checking account with mother, once she passed, and I had retired, a 5% cash withdrawal from 457 became a larger Emergency Fund.

This replaced the cash (joint checking account) used to fund my living expenses before retirement.
Last edited by retire2022 on Mon Aug 01, 2022 8:23 pm, edited 1 time in total.
bltn
Posts: 1504
Joined: Mon Feb 20, 2017 9:32 pm

Re: Have you ever used your emergency fund?

Post by bltn »

JayB wrote: Mon Aug 01, 2022 7:27 pm We don't have a separate emergency fund, but (a) use a multi-year schedule to plan for regular replacements of expensive things like computers, appliances, roof, heat pump, etc., (b) have laddered bonds maturing each year that can be applied to unexpected expenses instead of being reinvested, (c) have a detailed plan of what resources to use -- and in what order -- for large unexpected expenses; this basically involves selling bonds approaching maturity, liquidating I bonds as needed, tapping bonds in our Roth IRAs, etc., and (d) have a substantial margin loan capacity for short-term funding needs if we choose not to immediately liquidate some of our bond holdings. We don't own stocks or stock funds.
No stock investment?

Just one big emergency fund of fixed income. Wow.
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AnnetteLouisan
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Location: New York, NY

Re: Have you ever used your emergency fund?

Post by AnnetteLouisan »

I’m not sure whether to feel jealous of, or sorry for, people who don’t think they need an emergency fund. It’s hard to wrap my mind around.

For people who can self insure in every emergency, or who can rely upon a third party source of funding, it makes sense to me. I also understand the people who say it’s dead weight, not earning enough money, so why not invest it and liquidate if needed?

With respect to those who have never had an emergency, and are just cockeyed optimists that they never will have one or figure they can handle it with a credit card if they do, I feel a little jealous. For those who can’t imagine and haven’t planned for life’s inevitable what-ifs, I feel a little sorry.

I use mine in a sense every day to worry less about daily events. Paradoxically it’s a threat to me because it’s not maintaining its value.
hoffse
Posts: 204
Joined: Wed Aug 03, 2016 7:47 am

Re: Have you ever used your emergency fund?

Post by hoffse »

We don’t have one but we hedge in other ways.

First and foremost, we keep a lot of ready cash on hand, primarily to pay estimated quarterly taxes. I usually put those payments on a CC for points, but it also gives us free float for 30-45 days if an emergency pops up. That’s occasionally useful for cash flow reasons.

We have a $100k heloc we could tap if we needed to. We haven’t needed it, but it’s a good fallback just in case.

For job loss, my husband and I could each support our household independently. It wouldn’t be fun, but we could do it. So we view that as enough of a hedge against job loss so we don’t need to maintain an EF. We are also now both self employed (lawyers) and have some protections in our respective partnership agreements that means we aren’t just getting fired one day without some notice.

Finally, we were in college in 2008 and that had a major impact on our careers. We intentionally picked areas of the law that tend to move opposite each other, depending on what is going on in the economy and business cycle. We wanted to make sure at least one of us was pretty recession proof. My job is very busy during bull markets when deals are being made, which is most of the time (M&A). My work slows down during recessions, but my husband’s work becomes absolutely insane during recessions because he does bankruptcy and creditor’s rights litigation. So the odds of both of us losing our jobs or having our comp really slashed at the same time is really low.
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