How much do I need in emergency fund with diversified income?

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Bwlonge
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Joined: Wed Nov 22, 2017 6:36 am

How much do I need in emergency fund with diversified income?

Post by Bwlonge » Wed Feb 12, 2020 8:58 pm

I'm trying to figure out how much I should be keeping in a savings account so I can put the rest toward investments.

Secure job (public sector and I'm a skilled worker in a small LCOL area)
3k/mo rental income pre federal tax
5k/mo W2 income pre federal tax
4000/mo expenses, including paying fed. tax
Maxing retirement accounts

A big risk people hold efunds for is job loss. Not only is that not really a risk for me, but my rental income, fully rented and factoring for expenses/vacancy, makes it so I only need to make an additional 1k/mo. to stay afloat. So keeping between 6k-12k sets me up to coast for a year if I lost my job, not factoring in any new health insurance costs.

Is that enough or should I hold more? 21k would be for 6 months of job loss AND vacancy, together extremely unlikely, and in such an event I wouldn't even be mad about taking the 10% hit from dipping into my retirement accounts.

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Nate79
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Location: Delaware

Re: How much do I need in emergency fund with diversified income?

Post by Nate79 » Wed Feb 12, 2020 9:12 pm

There are many potential risks that have nothing to do with a job loss. Even though the generally recommended e fund is related to months of expenses this is just a guidance.

Potential risks -
Car issues
Roof replacement
HVAC issues
Health max out of pocket in one accident

Etc, etc, etc.

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Jerry55
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Joined: Tue Jan 27, 2015 1:56 am
Location: That Toddlin' Town

Re: How much do I need in emergency fund with diversified income?

Post by Jerry55 » Wed Feb 12, 2020 9:23 pm

i agree with Nate79...unforeseen circumstances can make things go off the rail without notice, bar none.
I can tell you what I do, but we're different people with different ideas and options.

Obviously, you're aware of the "Standard Protocol", but, what do you think YOU Need, and where do you think you need to put it.
For what reasons ? Safety ? Liquidity ? Fast retrieval ?
I'm fortunate enough to have a pension with no issues whatsoever, but I still keep probably 2+ years of expenses in an online savings account.
That's MY comfort level. What is yours ???
Retired CSRS on 12/19/2012 @ age 57 w/39 years | Good Bye Tension, Hello Pension !!!

JGoneRiding
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Joined: Tue Jul 15, 2014 3:26 pm

Re: How much do I need in emergency fund with diversified income?

Post by JGoneRiding » Thu Feb 13, 2020 10:18 am

With rentals i try to keep 3 months of mortgage payments and enough capital for likely repairs. Add3 to 6 months of mortgage payments for your primary plus basic costs like food, heat, gas and I think you are good.

I have my ef as tiers. If I have to take some out of taxable in a down month that is a known and accepted risk. So you could have 6 months in super accessible online savings and then build up a taxable account for the rest.

It has been my belief that once you have 100k in your taxable normal income people dont need a lot of cash accounts except for convenience.

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