Continuing My Emergency Fund into 2009
If you enjoyed this post,
I have to admit that I have some personal concerns about funding my emergency fund beyond 2008 but I think it is more due to anxiety than anything else. I mean 2009 is still 7 months away so why am I nervous?
- 2008 - $4,000+
- 2009 - $7,000+
- 2010 - $10,000+
If I keep adding 3K a year to my emergency fund, it continues to grow along with the power of compound interest (yes, even with a low interest rate).
Even looking at these numbers, while knowing at the end of each year, my emergency fund will be bigger than the previous year, I still have to admit I am not entirely comfortable knowing my emergency fund is this small.
Granted, it is in the mind of the beholder what exactly a small emergency fund is. For a single person, it might be a few thousand dollars. For a married couple, it might be 30 thousand dollars.
As Ralph mentioned in his comment here on Defining Your Emergency Fund,
The amount of money that my wife needs on hand to feel secure. I say my wife because if it were up to me alone, I would keep alot less, but my sentiment would be the same.
With that in mind, security to me means that it would be enough money for me to reasonably assume that she and/or I would find employment before that money would run out. So, I guess I tie our emergency fund entirely into our cost of living as based on our current jobs.
I have to admit that security is a big part of having an emergency fund because it provides a peace of mind knowing there is a cash reserve to draw upon from should my income streams disappear.
I think Ralph nailed it on the head here by tying in the emergency fund into the cost of living.
Single or married, it seems the comfort zone for an emergency fund really reflects the cost of living and your confidence level regarding how quickly you can make up the loss of an income stream. I think part of my anxiety right now is because of my upcoming relocation to York, PA where basically I will be starting a new “cost of living” and several factors are still unknown.
- Do you have anxiety about your emergency fund?
- If you do, what is causing your anxiety?
- If not anymore, how did you deal with it?
- When did you reach your comfort zone?
Comment by Dividends4Life on 21 May 2008:
Great post. Ultimately, the emergency fund is there for security physically and emotionally!
Best Wishes,
D4L
Comment by Lulugal11 on 22 May 2008:
I am anxious about my emergency fund because right now it is so tiny it cannot stand up to a real emergency like I had last time.
I had to have surgery and it really was an emergency because I almost died last year…..but then the money in my fund was not even enough to cover the bills and I had to rely on credit cards again and then pay them off.
I am praying that I do not have another emergency like that again…but it just makes me think that if something did happen where would I get the money from.
Lulugal11’s last blog post..Saving Money Snowflakes
Comment by Ralph on 25 May 2008:
First, I am flattered that my comment ended up in one of your posts Mark. Thank you for the mention.
My question to you now would be: Are ou capable of adding more money to your emergency fund in a shorter timeline than you have planned in this post? Is so, what is holding you back? At what point does your anxiety need to be addressed with action?
Ralph’s last blog post..Great post about Personal Finance Basics - Budgeting!
Comment by Spendthrift on 25 May 2008:
I literally drained my emergency funds two months ago, I thought that the amount I had ($6000) was sufficent to cover almost anything. Then hard times followed. Ask yourself if the worst happened, would this amount cover me for a solid time period?
Spendthrift’s last blog post..How we are saving for our wedding.