Babnik

If you got fired tomorrow, how long could you continue paying all your bills?

In my case I could go about 8 months. At that point I would have to sell my car and buy some old POS for $1000.

doopstr

Don't forget to include the unemployment check.

e30cabrio

iTrader: (6)

2 years without cutting back. I would however immediately suspend all nonessential expenditures (adios HBO, 20mb cable, Netflix etc) thereby extending that timeframe considerably.

agranado

a few months w/o cashing in what little ive saved in my 401k and stock

moeronn

Not long enough. but I've been working on that recently.

Ken1997TL

I don't owe anyone a dime. I have enough saved up to start a new life from scratch and be ok.

subbuzz

I waste ALOT of money on stuff I don't need, trying to cut back. I'd be lucky to keep my head above water for 3 month's if I got fired tomorrow......

noshow_nogo

2 years? damn start a new life from scratch? damn.

impressive.

I currently have 3 months which I think is okay for a single person, but I'm working on growing that soon to 6 months.

Devil Dog 21

Bumping an old thread to re-phrase the question.

For a married couple each with solid earnings how much cash is an appropriate amount to save for emergencies?

Right now, my wife and I have a 9 month old, and our only debts are the mortgage and student loans. Based on my currently spending habits we could both lose our jobs today, not change a thing about our lifestyles and live for 3 months without unemployment checks. I'm very confident that by cutting back our spending and receiving unemployment if we BOTH lost our jobs we could go for 6 months or longer.

In your opinions is that enough cash to have set aside or should I put aside more?

On top of our cash savings we both have 401k's and IRA's which could be accessed as a last resort and are not included in the above scenarios.

justnspace

iTrader: (1)

is 6 months enough time to find another J?
if not, keep saving.

Devil Dog 21

I'm in sales and can typically work anywhere for anyone, and my wife is a healthcare provider so I don't imagine either of us would have too much of an issue. I've just always heard the 6 month rule but that seems like a lot of cash just to have sitting around.

Maybe I'll but a couple months worth of expenses in gold and keep it in my safe deposit box.

ChodTheWacko

Then I assume you are okay, knowing what I know. Which is very little.
What I think isn't that important, it's how you and your family think.

Emergency fund is what it is - funds to allow you to get by in the event of a financial emergency without having to go crazy with credit cards or whatever.
"get by" doesn't mean comfortable, but it does mean you aren't stressing out every day.

For most people, worst case scenario is losing their job, so the question is how long will you be jobless. With two incomes you have much more of a safety net.

I don't have a hardcore emergency fund - I have just general savings. I'll be starting to invest a chunk of my savings, (conservatively - using stock indexes). As my investments grow, in theory I don't need as much liquid cash (since I can just sell investments) but we'll see.

Dan

Glad there others in the boat with me!

BeezleTL85

Ken1997TL

I'd say you're 'ok' and certainly free from immediate worry.

It never hurts to have some sort of long-term disability figured out though. Unfortunately anything can happen and very suddenly.

YeuEmMaiMai

I can go 3 months without getting an unemployment check, if collecting unemployment, I could make that last the entire time if I had to.

Devil Dog 21

Thanks for the responses guys.

I've loved watching my cash number go up and my debt number go down over the last several years, although cash that's not earning anything and actually losing value because of inflation has been weighing on me. Looks like it's time to get super aggressive with the student loans and knock those out within the next couple years.

TzarChasm

Inflation has been less than 2% and declining over the last few years so I wouldn't lose any sleep over that.

3 Months is a pretty good amount to have saved, I believe that's what most financial planners recommend.

As for me, with zero additional income, I could go for about a year, assuming I stopped most of my optional activities. With unemployment, I could continue to save money even without curbing activities. That does not include using any 401K money. If I took out all my 401K money, I could go roughly 100 years.

It's not that I have a whole ton of money saved, it's that I have really low monthly expenses if I stop all the extras.

Devil Dog 21

Cutting expenses =

I forgot that I could cut out daycare costs of $300 a week since my wife and I would both be home in this situation. One job searches, and does interviews while the other watches the little one.

Hapa DC5

A lot of my money is tied up in deferred comp and CALpers. I even added an IRA as well.

However, if we're talking just straight savings and availability to cash? I managed to save six months worth of my pre-tax income. My wife is tied down with her student loans and is about 50% of the way there so I decided to bite the bullet and be the "frugal" one.

So in theory we should be fine and not cash poor either, but the Prius is a new payment we took on along with a mortgage in the not so cheap Bay Area. The good news is my Infiniti will be paid for this year.

I am told by numerous people to invest it since it's a lot of cash just sitting, but with my money diversified the way it is it's just nice to see a large number there while your debts go down.

You guys are on the right path.

NSXNEXT

iTrader: (2)

Let's put it this way...

It's Whisker-sized. (And no I'm not talking about his junk which we all know is newborn baby sized).

With 3 kids and a wife I gotta be prepared for anything.

Hapa DC5

^ I like that.

Let me put it this way.. I'm a Jewish Asian.

AZuser

Want to adopt me? I'll even wear one of these Corgi costumes

Brock79

Having 6 months of cash saved up is a good idea. I only see people mentioning having the savings for their typical monthly expenses. What about the need for a new furnace, boiler or whatever else might go bad. Does anyone else take that into consideration?

doopstr

Yes, I dip into the emergency fund for that and then replenish.

Whiskers

What?

Devil Dog 21

Same here, any surprise expenses either get paid for out of checking, or just pulled from savings and replenished.

Hapa DC5

goes on AMEX for me then I build up my rewards and pay it off

subinf

Probably a couple years. I can revert back to being frugal fairly easily. Then I sell the mustang.

BeezleTL85

We have 9 months in our emergency fund. Never considered unemployment but with that and if we sold a few things then we could go 5 years or more.

Wouldn't some of y'all just want to retire early? i know if i could go 100 years off of my 401k i certainly would, today.

Devil Dog 21

I absolutely want to retire early, which is why I asked the question. I already pay extra on my mortgage and student loans, but figuring out what point to decrease savings allotments and increase debt repayment is important to retiring with no debt.

Devil Dog 21

Yep. Chase points have paid for Christmas every year for the last 4 years and a major vacation 2 years ago.

TzarChasm

I plan on retiring early. However, I want to be able to enjoy the retirement. Could I go for 100 years now? Maybe, but it would be making some pretty big assumptions, like my car wouldn't break down for the next 100 years.

My monthly mandatory expenses right now are significantly less than $1K a month. I could throw in food, gas, phone and maybe a couple other things and still stay under $1K a month, but that doesn't mean I WANT to live like that. Nor does that take into account any other major expenditures. I want to be able to travel, buy stuff, and fix stuff when it breaks. That's why I have to keep working, probably for another 20 years or so...

ChodTheWacko

Well, there are lots of factors here:
1) Define 'could go 100 years'. I could go a long time off my savings if I went bare bones. However, I have zero desire to live a long boring retirement at home. I'd rather work longer, and have money to travel, etc.
2) I think I'll keep working as I get older, perhaps part time at jobs I enjoy. Having the option to retire and get by on savings means I can stop working just for money, and start doing jobs I just enjoy.
3) Don't forget about the tax penalty for withdrawing money early, which cuts down on the "could go" time.
4) You have to factor in that as you get older, medical bills become more frequent and more expensive. So it's not that safe to just use 'last year's expenses' and then just multiply that by 40 to guesstimate your total need.
It's kind of like maintenance if you keep the same car for the rest of your life.

Side note - I was reading about 401k withdrawals. If you start a job, do a 401k, then start another job, then do a new 401k, there's an interesting perk.
You can withdraw from an old job's 401K if you turn 65, but not necessarily from a 401K at the company you currently work for.

subinf

I want to enjoy retirement and maintain pretty much the same quality of life (or improve) so there is no reason to stop working now and live on the cheap.

Rapture

I probably have enough put away to cover expenses for 3 or 4 years, if I were to live off my savings solely -- no additional income. That doesn't include anything I have put away for retirement.

Which is exactly why I need to start investing

MySoCalLife

That actually happened to me once. My old job got sold to corporation, and new management were total assholes. I quit without even giving 2 weeks notice, I was paying $600 in rent every months .I applied for unemployment and didnt qualify for it for some reason. While I was jobless i enjoy not going to work, and continue to pay rent without a job for 18 months, and then realizing my money is running dry. and then got hook up with a job at Costco. The pay was good, but I cant stand some of the customers, but it pays the bill.

LaCostaRacer

^Good points. I wonder how many are quoting their savings in terms of living a 'normal life style' and not taking undo risks like foregoing medical insurance or draconian cutbacks like eating beans & franks every day. The other big factor some of you need to be aware of is inflation- how well will your savings last if we have some 1970's style inflation in the future?

From a practical matter, I think anyone with a minimum of 3 months savings (net income for mandatory expenses + % of discretionary expenses) is a good starting goal.

There are lots of people that can't meet this initial goal let alone last a year or more. This means somebody making 100k/year would need about 17k in cash or equivalent assets to meet the 3 month goal (assuming that 10k year went into a 401k and you were actually living on 90k of taxable income and have a 30% total tax rate). The big unknown for me is how Obamacare helps you when you have no income. You might be able to get by with 15.5k if Obamacare kicks in and you don't have any medical expenses having no income.

Devil Dog 21

My estimate of 3 months includes health care and maintaining my current spending habits, as well as day care which is a very significant expense that would be among the first things cut. I agree though, that healthcare is probably something that most forget about. Fortunately/unfortunately the massive amount in student loans we pay each month is so that my wife can practice medicine which does reduce our healthcare costs since I rarely have any issues she can't diagnose and fix.

CUNextTuesday

I have almost no safety net.. there's no one who depends on me for survival though, otherwise I'd be more inclined to change that. I'm guaranteed (whatever that means) a job for the next 2 years and I don't see that changing unless I go to work drunk or have sex with a bunch of students (literally a bunch, just one is not a fireable offense). In the event of an apocalypse or any other unforeseen event, I have MacGuyver as a roommate and I think we'd be better off than most.