DISQUS

Craig · 4 months ago

I had a recent car issue that cost me almost $700. I have a vacation/emergency fund set up that I would love to separate at some point if I earned more money. For now though I had to dip into it and scratch off some vacation money for the repair. I was happy I had it available.

Ray · 4 months ago

I have a small "unexpected" section in budgeting and always carry it forward from one month to the next month, the purpose of it is to cover some unexpected smaller expenses such as car repair etc....so far worked well havent had to use it too much so building up pretty well.

Matt Jabs · 4 months ago

My favorite way to make money is to reduce my expenses. I am saving at least a $1,000 every month compared to the time before I started cutting back.

I'm afraid a lot of people treat their Emergency Funds as savings accounts to dip into for whatever. DON'T DO IT!! Save it for when you loose your job, or loose a limb!

Flexo · 4 months ago

Matt: I certainly agree that emergency funds should always be used for true emergencies, and that the definition of "emergency" can be somewhat malleable but not much. Job loss: yes. Medical emergencies: most of the time, yes. New computer: almost always no. Vacation: no. You may even want to "hide" your emergency fund (such as hiding the account from Quicken reports or putting it in a bank you don't check online very often) to resist spending temptation.

jason · 4 months ago

So if we all cut our expenses so much that we would all be saving $1,000, wouldnt that mean other jobs lost. When we spend someone else makes money and uses it to purchase other things, and so on...?

Sarah · 4 months ago

I have two savings accounts: One for emergencies, the other for budgetary oversights and smallish things that come up.

An emergency is an emergency. I don't touch this money, and with luck, I never will.

I give myself permission to touch the budget account, and even treat myself when it gets big enough. If I ever took money from my emergency account, i don't know if I could stop.

ctreit · 4 months ago

I would call any unplanned expense that hits you out of the blue an emergency. You can plan for all others. That includes your example, an oil change, or our car insurance which we pay annually. When the insurance bill comes it is big, but it is not an emergency. We always have enough cash on hand to pay it in one swoop. Not only do we avoid paying higher premiums if we pay for our car insurance monthly or quarterly, but we also have the benefit of interest income while the money accumulates in our savings account from which we draw it when we need it to pay the insurance premium.

Jeff · 4 months ago

@ ctreit - That's a good way to look at it, if you're really good at looking ahead and planning for expenses you might run into. Hopefully I can get to that point someday. For now I've just got to use some of these other ideas and make sure to lock down my emergency fund and find the extra where I can.