Emergency fund?

[Russ]

What is your definition of an emergency fund? Don't give me DR's or Suze' definition. Give me yours.

Reason I ask is this...
We dodged a bullet this week by my wife not getting laid off. That does not, I repeat NOT make us safe. We both work in Automotive and everyone knows how bad it is.
We have 7k+ in a savings acct and add about 1K to it per month.
We have our mortgage 1350/month not including taxes (10years out of 15 left)
vehicle payment $505 27k left - 0%
Heloc (we pay $500) although we only have to pay interest each month. (about $130)

Wife and I are not on the same page when it comes to paying more towards debt. She wants that EF at 15K before hitting the debt due to the economy. (I know greebo, the GDP is up)
I say hit it a little harder. Maybe up the HELOC to 1k instead of 500.

So should the EF be so high? Whats too high?

just to add... there are not a lot of jobs in my wifes line of work right now.

[itsahumanzoo]

An EF is really important, but I feel like I can't add so much to it when we have so much debt hanging around. I try to add $100 here and there when I can, but most of our money goes to fighting off our debt. 7K is a great savings, and if I were you, I would start attacking your debt the way you are adding to savings.

[Gabe]

Russ,

Sorry to hear about the stressful times.
I can't give you much advice but just wanted to say I hear you.

What does your spouse do?

[Russ]

quality engineer. The stress on her is killing me.

[Gabe]

http://www.careerbuilder.com/JobSeek...267558020-JR-5 Temp job. Might be permanent. Might be good to plant a few seeds just in case.

[frugalfriend]

7K is a great savings, and if I were you, I would start attacking your debt the way you are adding to savings.

I would pay down the debt as fast as you can.

[familyof3]

I would up the emergency fund. Ideally, you need 3-6 months $$ available. If your personal situation is risky (and it sounds like it is right now), I would aim for the 6 months or more if you can swing it.

If things get quiet on the job front, you can always throw some of the EF to the debt later on.

You can't eat the equity in your home. If one of you is out of work, cash is necessary.

[earthymom]

If you pay down debt, the EF will last longer because your monthly expenses will be lower. I would attack the debt and put as much additional as possible (at the same time) toward EF. Just your car payment and mortgage would wipe out the EF in 3 months.

I feel for you and hope everthing works out for the best.
Good luck.

[suki]

I had over a year's worth of expenses in savings... when a crisis hit, it wasn't enough. The minimum I like to have is 3 months, but in this current economy, I'd recommend 6 months... that way you've got some help while on unemployment and if you still don't have a job when unemployment runs out. As for debt, I don't know... I only had my mortgage to consider and made sure I included it in my expenses. Personally, I agree with boosting up that EF for a short-term financial crisis. For long-term outlook, pay the debt off and save the interest. It really matters a lot on your personal goals and situation. Knowing that your income may take a hit... I'd have to agree with your wife, time to look at the short-term situation vs. the long-term savings.

[suki]

You can't eat the equity in your home. If one of you is out of work, cash is necessary.

Yep, that's my thought.

[Moonblossom]

I believe DR says everyones security gland is different regarding EF I personally have a large one and have 5k in ours atm. I am in a field though that makes it easy for me to find another job anywhere anytime. I have found I build mine up to almost 10k then pay off something then build it up again.

[nuisance26]

~Emergencies. ;-) Insurance deductibles, income replacement in unemployment or injury, medical payments.~

[Jenna]

Yikes. IMHO, your car payment seems high.

I would find a more affordable car, and continue to boost the efund since you're both in the same industry. I would save 6 months living expenses in an efund.

If I owned a home, my efund would cover the mortgage/utilities/taxes/insurance, plus groceries, gas & all the other "needs" for 6 months.

Since I don't own a home, I consider my c/c's to be my efund.
ie. Just had a flat tire, bought the new tire with a c/c -> PIF c/c by the end of the month.

I'm working on saving $1k to help cover my bills if I lose my main job -- I work 1 FT, and 1 PT job.

[Jellybeanz]

I agree with your wife that having that emergency fund at 15 k is important with the job looking iffy.

Long term, yea, it's important to pay the debts off as quick as you can, but the thing is, if the worst happens, your house payment will still be there, so will your car, so will all those other things you will still need to come up with the same amounts each month. It just seems wise to focus on having a big EF in your circumstances.

Once you get to an amount your wife feels comfortable with, then start attacking the debt again.

I have had times when I had no saving, times when I had built up a lot and used it all or part of, and I gotta tell you, when something hits, you feel more empowered with the cold hard cash availalbe then to feed the little monsters ( debt!!)

And I do think it's a security gland issue. I * think* Dave says in his book that women tend to have more of a need for security. So if your wife feels this way and you are already worried about her being stressed, maybe indulge her this ?

Even if she manages to hold on to her job, you'll both probably feel more relaxed just knowing that money is sitting there in case you need it.

Best of Luck!

[IntlMom]

I just wanted to say that we have about a years average salary socked away in differnt places with liquid monies....
Seems to me that qualifies as an emergency fund