Comments on: Emergency Funds For Different Kinds Of Emergencies

By: Weekly Mashup – Back to the Normal Life | My Life ROI, Getting the Best Return On Life

Wed, 10 Jun 2009 10:08:43 +0000

[...] Frugal Dad – Emergency Funds For Different Kinds Of Emergencies. [...]

By: Kim

Kim — Tue, 09 Jun 2009 13:33:18 +0000

Thanks FD! I can see how that would work.

By: Glenn Fernandes

Glenn Fernandes — Tue, 09 Jun 2009 11:27:03 +0000

Your life is always at a risk. So,emergency funds play a major role. Emergency funds are required during tough times. Savings is a must.

By: Heather

Heather — Mon, 08 Jun 2009 22:18:50 +0000

We’re doing the Dave Ramsey Baby Steps and are actively paying down our debt, but long before we got into debt we had created an emergency fund. We never had an actual emergency, and so used those funds for other purposes, but having one isn’t new to us.

We keep $1000 in a not-easily-accessible money market account for REAL emergencies. We haven’t had to touch it since we started the baby steps. But that’s because we have other savings accounts for those purposes. We’re military living overseas, and are renting out our home stateside. Although we have insurance, we also know that something might come up that needs to be fixed there, and so have created a growing emergency account for that. We also have a cash emergency fund for auto repairs and taxes/insurance, as well as a “general” emergency fund that helps us to cover unexpected expenses that crop up and haven’t specifically been budgeted for.

It’s really helpful for us to be know that if several things were to hit us at once, we wouldn’t just be taking a hit on our one emergency fund, but that rather we’ve prepared for those possibilities ahead of time.

By: Rebecca Rivera

Rebecca Rivera — Mon, 08 Jun 2009 19:11:17 +0000

I think having an emergency fund is a great idea. I have $1,000 in a cd I could cash it at my bank any day of the week (they are open 7 days a week.) I would olnly lose the interest I made off of it if I cashed in early.
Then I have 6 months living expenses in a savings account (I want to put that into a cd as well.)
Also I have about $1000 put away for car repairs in case I need them. But car repairs are not really emergencies, they will be needed at some point. The same goes for home repairs, they will be needed as well. I do not have a home repairs fund as I rent. I do have an account I put money into to buy a house.
Thanks for reminding us that we need to be prepared.
By the way I m a single mom with 2 boys. I make about $25,000 a year including all sources of income & child support, so savings can be done on any budget. We have no debt and could live about a year if I did not work or recieve child support at all. This is all by the grace of God. He has blessed us so much!

By: Frugal Dad

Frugal Dad — Mon, 08 Jun 2009 17:47:18 +0000

@Kim: I would probably prioritize these specialized emergency funds based on the risk in your own life (work in an unstable job, drive a very old car, etc.). Get that $1,000 local emergency fund in place first, as it will handle many of the miscellaneous emergencies mentioned by Craig and Olivia.

From there, you might decide to allocate 50% of your savings contribution to the next highest priority (which for me is a mortgage fund because it is the thing that keeps me up at night). The remaining 50% could be broken up over the remaining funds, with higher prioritized funds getting higher allocation amounts.

By: Craig

Craig — Mon, 08 Jun 2009 16:20:27 +0000

Sounds great in theory but tough to implement. It’s hard for people to build an emergency fund in the first place, much less put money for specific emergencies that could occur. Also, as we all know, other emergencies outside of that realm could happen too.

By: Kim

Kim — Mon, 08 Jun 2009 14:13:20 +0000

I do think this is a good idea, but I’m confused by how much money each of these funds would get each payday in order to bring it up to a decent level. Is there a certain percentage you would recommend?

By: Olivia

Olivia — Mon, 08 Jun 2009 13:22:54 +0000

This is a great idea! I had never considered breaking down the emergency fund into different accounts before, but it really does make sense. I would make sure, though, to have just a “miscellaneous” account for all of those completely unexpected emergencies.

By: Diann

Diann — Mon, 08 Jun 2009 11:59:00 +0000

You pretty much described our breakdown in emergency savings. Our “Local emergency fund” is kept in a savings account that we do not have checks or a debit card for. We found, for us, that we needed limited access to this money. It makes it just enough of an inconvenience to get to the money, however, in an emergency we can go to the bank and withdrawl what we need.
About 4 years ago, we lived the “emergency” situation and were so grateful that we had all our debt paid off at the time and had built up a little emergency money. People honestly don’t realize just how important it is to do this. You really do not get any forwarning to an emergency.