emergency fund

Everyone should have some amount of cash on hand in case of emergencies. Dave Ramsey says $1000 is sufficient start to an emergency fund. After you’re debt-free (except for a mortgage if you have one), the fund should be beefed up to a few months of living expenses.

(my piggy bank from here)

We are not debt-free yet, but have more than $1000 in savings.  Chunking the excess towards my student loans scares me a bit, though. We both would like more of a cushion, although, logically, I don’t think we need it. Here’s why:

-We have a credit card with a $10,000 limit. Of course, financial experts would not recommend using credit as an emergency fund, but if we truly needed the “cash”, there’s a pile of it.
-We both have extremely supportive families that would be able and willing to help out if a true emergency arose. Again, you shouldn’t bank on borrowing from family (or friends), but it’s nice to know that safety net is there.
-I have untapped income potential. Even though I am not working right now (well, I’m still employed and should work every few weeks or so), if our family needed the income, I would work again in a heartbeat. Full-time, part-time, whatever. Even if I could not find a pharmacist job quickly, I’d like to believe I would take another job to prevent my family from going further into debt.
-We could reduce our monthly expenses if needed. We are by no means living bare-bones, although, once again, some would recommend it since we owe money. Things we could live without: phones, internet, cable, security system, charitable contributions, eating out, etc, etc. Heck, we could go back to being a one-car family! 😉

After we file our taxes and see how much we owe or are getting refunded, I’m sure Mark and I will sit and discuss loan repayment and savings. I’m honestly pretty clueless on how our tax filing will turn out because Mark was unemployed for six months, I had 10 weeks of unpaid maternity leave, and a whole host of other things. I know it’s ideal to just break even, but I wouldn’t mind a return this year. 🙂

We do need other savings besides an emergency fund, because we do have anticipated expenses this year that are not part of our monthly budget.

The first is medical expenses. I think it’s a good idea to have your max-out-of-pocket amount (determined by your insurance coverage) on-hand. This is a great idea for us, because our little girl will be having open-heart surgery before the year is over, and we will surely incur some bills.

The second is travel. Some personal finance views are that if you’re in debt, you shouldn’t travel or have other superfluous expenses. However, we like to travel and we will. In May we’re going out-of-state for a few days to attend a wedding and visit several family members. And sometime in the fall, we hope to go to Washington, D.C. Last night we began estimating how much those trips will cost and decided that any “extra” money Mark makes from OT or his extra shifts at his side job should go into a vacation fund. I’ll set up bi-monthly goal amounts to save to ensure we have the trips funded before we take them.

All right. Now it’s time for me to update our spending for the month so far, do some math, and basically put the ‘fun’ in funding. 😀


About maggie

thirty-something. working on life.
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