7 thoughts on “Emergency Fund: Commitment to Savings”

  1. Good article Eric, and something that has been on my mind as of late, so I thought I would comment. All of our situations are different, so we might have different views but this is my perspective given my situation and long term goals.

    I currently have $12K in pure savings (split between COF360 & my local bank) and I am pushing to get that to $20K. Aside from that, I have about $500 in cash-on-hand and I am pushing to get that to $1,000. I am doing this a little at a time as you have outlined and once I get to the $20K/$1K mark- if I am still maximizing my tax deferred and taxable investments- I wouldn’t hesitate to go for $30K/$2K.

    Right now, I am contributing $75 per paycheck to the $12K savings and -if after a nice weekend- I have an extra $20 in my pocket, I add that to my cash-on-hand account in my safe.

    At these contribution rates, I figure it will take me quite a while to get to my next goal of $20K/$1K, and a really long time to get to $30K/2K. That’s ok by me as long as I keep putting the bulk of my savings in investments that earn real income.

    Amazing the stats about America’s savings.

    1. Looks like you are spot-on on the right track Mike. Awesome!

      Have you considered moving a portion of that $20k/$30k goal into an investment account instead of savings? You might be able to earn quite a bit more, but of course having emergency situations covered is the first priority.

      1. Well I have an investment account with Scottrade that I contribute to building out an income account, but I want that money liquid and accessible. From time to time I hear of some folks getting some higher interest at a small CU or something but I have never found anything where I can put that money and gain decent interest and still have it liquid. Any ideas?

        1. I don’t know of anything where you don’t lose some liquidity. I figure if I ever need more than $10,000 at once, I can sell something and have the cash in three days when it settles.

          1. Yeah, I hear you. I guess it just makes me feel better having cash. I have rental property that currently pays for itself, but you never know. I could find myself paying two mortgages for a while and I wouldn’t want to sell any of my investments to do that.

  2. It definitely sucks when emergencies happen. I try to keep a liquid buffer in my savings account for small emergencies and the rest invested. I made the mistake of sitting on too much cash in my 20s. Now I try to only keep what I need for day to day expenses and a small buffer for unexpected extras in cash.

    1. Finding the right balance between cash and investments can be tough. I always have a credit card in case of a serious emergency, and enough cash in savings to pay off anything I put on the cards before the end of the month.

      Having credit for liquidity and cash on standby has been a great way for me to bridge the gap.

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