Brides Helping Brides ™ - How Much Should be in your Emergency Fund with a House

dgtlsunshine Posted: Jan 15, 2004 05:22 PM

How Much Should be in your Emergency Fund with a House

I am just wondering about how much do you ladies think should be in an emergency fund once you buy a house?

Thanks

Karen H Posted: Jan 15, 2004 07:20 PM

Re: How Much Should be in your Emergency Fund with a House

It's hard to put a dollar amount on that, because everyones expenses and income are different.

Regardless of owning a house, I've heard you should have an amount equal to a minimum 4 months and a better yet, 6 months of your monthly expenses. That doesn't mean it all needs to be liquid assets, but should be able to be liquidated without penalty when needed. You can set up a series of revolving short term CD's to increase interest. Thats just a cushion to help cover you in the case of job loss or illness.

Additionally, I think you need to consider how your income matches to your expenses. If you are able to put away a good amount every month (beyond your retirement savings) then you can feel comfortable about being able to weather unexpected expenses. How long would it take you to save up $2000 - all year, or just a few months? If you unexpectedly have to replace something like a furnace or roof, can you replace your savings quickly?

It's usually not the one-time expense that gets you, but having them pile up month after month if you have a run of bad luck.

MarcellaBella Posted: Jan 16, 2004 09:06 AM

Re: How Much Should be in your Emergency Fund with a House

It truly depends on how much your expenses are..

We were able to save not only for hte wedding, but for the house at the same time, so we had a nice chunk..plus what we got from the wedding was primo.. I would have to agree with Karen 4-6 months of monthly expenses is good... but you should also have a separate savings acct. for other things apart from the emergency, aka 'oh sh!t' fund..

dgtlsunshine Posted: Jan 16, 2004 09:29 AM

Re: How Much Should be in your Emergency Fund with a House

oh sh*t fund that is hilarious.

I am just wondering b/c at times I feel we should have more in our emergeny fund. I guess I feel like what if something dramatic happens. Four to 6 months should be good.

Marcella and then you have a separate account of savings? What is the goal for that account...I mean just fun money or ...etc

We are trying to have the right goals for our money this year.

Thanks for all the help.

MarcellaBella Posted: Jan 16, 2004 10:14 AM

Re: How Much Should be in your Emergency Fund with a House

Posted by dgtlsunshine

oh sh*t fund that is hilarious.

I am just wondering b/c at times I feel we should have more in our emergeny fund. I guess I feel like what if something dramatic happens. Four to 6 months should be good.

Marcella and then you have a separate account of savings? What is the goal for that account...I mean just fun money or ...etc

We are trying to have the right goals for our money this year.

Thanks for all the help.

I am married to Mr. Paranoia! He runs a debt consolidation company, so he deals with people in debt, day in and day out.. we have no cc debt, if we can't afford it, we don't buy it.. everything is paid in cash..

We have a joint savings account for the oh sh!t fund, which we both contribute to every paycheck, as well as another joint savings acct. for stuff like renovations, clothes.. that kind of stuff, and another one that we throw extra money in for long goal term stuff.. like vacations, or anything real expensive, but that we don't need right now but would like to get sometime in the future.. and then we have our own indiv. checking accts. for our bills..

DH actually took home a budget sheet that his guys use on clients at work and we sat down and did one.. you basically list all of your expenses.. right down to dry-cleaning.. and then we subtracted that from our paychecks and then we left ourselves some weekly 'play' money and then the rest gets put into the other accounts..

Sonicstef Posted: Jan 16, 2004 10:16 AM

Re: How Much Should be in your Emergency Fund with a House

I only feel comfortable when I have 9 months of my salary in the 'fund' I feel like if I were to get laid off or something where to happen, 9 months is a reasonable amt of time to find a new job or recover, etc..

Ive heard 6 months but I know too many people who took more than that to find a new job.

Niecey Posted: Jan 16, 2004 10:42 AM

Re: How Much Should be in your Emergency Fund with a House

Marcella - your planning sounds similar to ours! We only buy what we can afford and pay it in cash. Neither of us ever carry balances on our cc's. If we can't pay it off - we don't buy it. We both have separate checking accounts where we pay our bills and mortgage and such and our play money. We have our savings accounts for house projects, children eventually etc. (started as the wedding fund, then house fund, etc.) and we always keep a certain % of that in there - just in case. We both try to contribute a certain % of our monthly salaries to this account. DH also has another savings accounts with a decent savings in - as the just in case fund. We when buying the house we tried to make sure we could pay the mortgage and expenses on one salary - just in case you never know. That would mean a huge lifestyle change but we want to play it safe.

It is hard to say how much should be in that play it safe fund - because everyone's financial situation is different. But as I am learning as a new home owner there is always something new occurring and even if your house isn't a fixer upper - it still feels like a money pit.

MarcellaBella Posted: Jan 16, 2004 11:05 AM

Re: How Much Should be in your Emergency Fund with a House

Posted by Niecey

Marcella - your planning sounds similar to ours! We only buy what we can afford and pay it in cash. Neither of us ever carry balances on our cc's. If we can't pay it off - we don't buy it. We both have separate checking accounts where we pay our bills and mortgage and such and our play money. We have our savings accounts for house projects, children eventually etc. (started as the wedding fund, then house fund, etc.) and we always keep a certain % of that in there - just in case. We both try to contribute a certain % of our monthly salaries to this account. DH also has another savings accounts with a decent savings in - as the just in case fund. We when buying the house we tried to make sure we could pay the mortgage and expenses on one salary - just in case you never know. That would mean a huge lifestyle change but we want to play it safe.

It is hard to say how much should be in that play it safe fund - because everyone's financial situation is different. But as I am learning as a new home owner there is always
something new occurring and even if your house isn't a fixer upper - it still feels like a money pit.

I agree with you 10000000000000000%

and we did the same thing as far as buying a house that we could pay the mortgage and expenses on one salary .. this is VERY big and works as a security blanket for us god forbid something were to happen...

Sonicstef Posted: Jan 16, 2004 11:13 AM

Re: How Much Should be in your Emergency Fund with a House

Im glad Im not the only person who think the one salary rule is a good thing! (My husband thinks Im crazy)

dgtlsunshine Posted: Jan 16, 2004 11:47 AM

Re: How Much Should be in your Emergency Fund with a House

I so agree with you all on that one. That one we were smart enough to do.

In fact a friend of ours made a comment to us that we should of bought more house. This friend and his wife salaries are comparable to ours. They bought a much more expensive house than we did requiring both their salaries to pay.

I said as much people have I have seen get laid off I am just too scared to buy more house than one of us can carry at any given time.

Well forward about six months. His wife got laid off he tells me they should of never bought that expensive house.

Well thanks so much for answering the question honestly. I find when I ask my live friends financial questions I don't get honest answers.

dgtlsunshine Posted: Jan 16, 2004 11:51 AM

Re: How Much Should be in your Emergency Fund with a House

Marcella I don't blame your husband one bit. That is exactly why I am on the ball this year to keep on track with our finances. With all the layoffs I have seen some couples get in serious finanical trouble.

MARCELLA THAT PIC IN YOUR AVATAR IS AMAZING. I LOVE IT

MarcellaBella Posted: Jan 16, 2004 12:04 PM

Re: How Much Should be in your Emergency Fund with a House

Posted by dgtlsunshine

Marcella I don't blame your husband one bit. That is exactly why I am on the ball this year to keep on track with our finances. With all the layoffs I have seen some couples get in serious finanical trouble.

MARCELLA THAT PIC IN YOUR AVATAR IS AMAZING. I LOVE IT

Thanks!!!

and you know what else? We didn't want to work for jsut the house.. we want to enjoy it as well, you know? takes trips, go out .. fun stuff.. there's nothing worse than not being able to have fun adn then you end up resenting your home and hating it..

We could have easily afforded more of a house, but this is soo much better and we can still live our lives and have a home, without cramping our style..

yabbobay Posted: Jan 16, 2004 12:16 PM

Re: How Much Should be in your Emergency Fund with a House

Posted by Sonicstef

I only feel comfortable when I have 9 months of my salary in the 'fund' I feel like if I were to get laid off or something where to happen, 9 months is a reasonable amt of time to find a new job or recover, etc..

Ive heard 6 months but I know too many people who took more than that to find a new job.

I just heard Suze Ormond say that in this volitile economy...she bumped it from 6-8 months salary...