2007-08-02 10:35:18 · 7 answers · asked by royal70741510 1 in Business & Finance ➔ Personal Finance
Imagine you only have $1000, and you lose your job--is that enough to pay all of your expenses for as long as you look for a new job? Unless you're living at home and have zero debt (unlikely), then probably not.
You need to have 3-6 months worth of expenses, not including taxes (b/c you won't be paying taxes if you don't have income). Generally you want that number to be more towards 4-6 since a job search can take a long time. Plus, you'll also want a cushion in case your car breaks down, your furnace blows, you have emergency medical bills, etc...(hence, emergency fund).
Don't get so caught up in building your emergency fund that you cut off all funding of retirement vehicles, savings, and other investments.
2007-08-02 11:23:14 · answer #1 · answered by dlatona7 3 · 2⤊ 0⤋
Most "professionals" recommend 3 to 6 months of EXPENSES. Write down every thing you spend every month. Your emergency fund should be 3 to 6 times the total.
I must disagree with fawkesphoenix. Your emergency fund should NEVER double as ANYTHING. if it does, what happens when she buys the house and then has an emergency the nest week? The emergency fund will be gone, and she will be forced to borrow money at the worst possible time.
The first answer must have dropped out of FPU early. The $1000 is a BABY emergency fund while working you tail off to pay off debt. Dave recommends your 'real' emergency fund be 3 to 6 months expenses.
2007-08-02 12:23:16 · answer #2 · answered by STEVEN F 7 · 0⤊ 0⤋
I coordinated the first Financial Peace University program in Philadelphia.
$1000 is your baby emergency fund. It is to be used instead of using an emergency credit card.
3-6 months expenses is a fully funded emergency fund. This amount should be saved after paying off every debt but the mortgage, and before investing.
2007-08-02 11:02:50 · answer #3 · answered by TruthSeeker 3 · 1⤊ 1⤋
Before I got married I went through a course called financial peace university by Dave Ramsey (look it up on Ebay I am sure you can get a great deal on the kit). He suggests that everyone have $1000 saved up in an emergency fund so that if something does happen you won't have to use a credit card. In the time I have been married I have tried to keep this much on hand and it really has helped out.
Good Luck.
2007-08-02 10:41:55 · answer #4 · answered by Brad H 2 · 0⤊ 1⤋
I keep enough to replace the furnace plus $1500 for car repairs. I figured $1500 because that's about the cost of a new transmission. Replacing a furnace- call around and get prices. I estimate it at $800- $1000.
2007-08-02 10:57:55 · answer #5 · answered by rhubarb 2 · 0⤊ 1⤋
I keep enough to cover 3 months of living expenses. I do that so I am in controll of my future.
2007-08-03 05:59:34 · answer #6 · answered by www.stephaniehardwick.com 2 · 0⤊ 0⤋
Let's see... I'm currently at $4,587.31. Although I'm trying to increase that so it can double as my home down payment fund.
2007-08-02 11:22:52 · answer #7 · answered by Anonymous · 0⤊ 1⤋