My current emergency fund is very small. I have more than the $1000 baby emergency fund suggested by Dave Ramsey, but not by much. I’m starting to feel very anxious about it. We do have a little more money, but it is all earmarked for certain things like our daughters schooling and a tax bill do in early October. Our actual emergency fun is only about $2000.
Our daughter wants to be a personal trainer. She has decided not to attend college and to take a nationally accepted certificate program to become a trainer. As our contribution to her, we paid for her course. We finally purchased it over Labor Day. (It has been a planned expense and we have been funding our “kids” and “education” envelopes until she was ready to begin the course. All along we had planned to use money from our savings account to pay the difference. We had $600 in cash and needed to use $1000 from savings. (The $2000 we still have in the bank is independent from the money to pay for her course.)
Luckily September is a three-paycheck month, so we are splitting the third paycheck between savings and debt. After September we should have about $2700 in savings, but that still doesn’t make me feel comfortable. $2700 could cover most true emergencies but being a parent and a homeowner means the next emergency is always around the corner. I like to have a minimum of $5000 in our savings. We are trying to work back to that while continuing to pay down debt.
We could quickly replenish our savings account back up to $5000 in just a couple of months if we slowed our debt payoff. However, we are finally making some progress, so we don’t really want to do that.
We do have an entire regular month’s worth of cash at home that could be stretched into two months of bare bones expenses (that includes our sinking funds and some other cash we have on hand) if needed.
I’m very anxious over the small size of our emergency fund right now because I feel like we are just starting to get real traction in our debt payoff. I will continue to stay the course and hope that the money we currently do have in our emergency fund will be enough for any future emergencies. We will also continue to add a little bit each month to our savings account. Right now, we are adding about $400 a month to savings. Hopefully we can get our savings built back up and pay off debt at the same time.
September 21st, 2023 at 07:47 pm 1695325627
- Is there anything you can sell?
- Are you over withholding on taxes?
- Can you pick up some kind of side gig to earn some quick cash?
- Do you have subscriptions you can cancel?
- Can you shop around for car and property insurance, cable or cell rates?
- Do you have ‘instant on’ features on electronics that you can unplug?
- Are there ways you can lower heating/cooling costs by closing off rooms, sealing doors and windows, changing light bulbs to be more energy efficient?
- Are you making the best use of your food dollars? Eliminate waste, purchase lower cost food, eliminate high cost snacks and drinks?
If you are funding all possible sinking funds, your Emergency fund should be for true unplanned Emergencies - job loss, serious illness, natural disasters.
Car repair and replacement and medical deductibles should be covered by sinking funds.
If you feel like you can’t fund them yet, at least put them as line items in your budget so that you have them in line to be funded when your debt is repaid.
If you are spending on ‘wants’ instead of ‘needs’, that is a choice, but at least be aware that you are making that choice.
September 22nd, 2023 at 05:54 pm 1695405281
Also I agree with lots of ideas. It's hard but line items for sink funds for me it's insurance life, long term care, car, home are a sink fund. We also pay some kid activities 2x a year to the tune of $3k twice a year. So I have a sink fund down to $9k now for property taxes and it goes high but it's already been earmarked. I also started to pay $1000 a month to our trips in the next year so cash flow purposes we are saving and paying.
September 23rd, 2023 at 05:45 pm 1695491126
September 25th, 2023 at 12:40 am 1695602444
I say add a little to the EF and throw more at the debt
Good luck