Congratulations! You have finally built up the emergency fund that you have always planned on creating. Whether it was $5,000 or some other figure, you set your goal and saved up the amount you wanted and now it is stashed away accruing a nice 1.87% in an online savings account. Might I suggest ING? (Contact me if you need one!)
Sweet. Cool. Awesome. Now when there is an emergency, you have enough funds to cover the situation and not feel any hiccups in your normal monthly budget. But if something non-emergency comes along, do you tap the emergency funds for it? I compare the situation to the people who apply for government bailout money who, under normal circumstances, have no business applying for such funds at all.
I experienced a great deal of auto repairs over the last few weeks, totalling up to almost $1,400. I have an engagement party coming up in August in which I have to pay for the caterer’s. I have known ahead of time these things are coming up, I have just done a very poor job of preparing to finance them. One thing I do not want to do, is finance them (i.e. Credit Cards).
Budgeting for the unexpected things in life is not an exact science, it is more like creating that buffer zone every month that you can use if you need it. If you do not actually need it, then it can be deposited into a savings engine that can build up over time. That is what budget aficionados do when they have a good grasp on their personal finances. Again, a category I have not fallen in and am currently missing the target with this year. I can blame it on budgeting, but then I would be lying to myself. It all comes down to but purchasing decisions on my part.
With marriage on the horizon, I need to kick myself in the ass and really get rid of my bad habits. Hooray for me for building up my emergency fund. But the celebration seems like it will be short lived since I have a few things to pay for in the very near future.
How do determine what to use your emergency fund on?
2 Comments
I have the same questions about my emergency fund…I have really set it up for in case I lose my job – it can cover my monthly expenses for about a year. But, what if a real emergency comes along? Like (God forbid) someone in my family is sick or I'm sick, etc…do you need two emergency funds? Sometimes we can plan and plan and plan and it still isn't enough. Oh well, hope for the best I suppose!
@Carrie – Exactly, most people set up the fund for 6 months worth of living expenses in case they are out of work. I guess our thinking should be more along the lines that build it up as much as you can afford to right? with unexpected costs always coming from every direction, we need such a lump sum to cushion the blow. Thanks for your comment!
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