Beefing Up My E-Fund
You may have noticed the new “Beefed Up E-Fund” goal meter that replaced the Vanguard fund. I changed it this weekend because I achieved my non-retirement investment goal last month. But you know me, when one goal is complete, I must create another. Actually, I always have 2 or 3 goals tucked away in the back of my mind, but I’ve decided to keep at least one goal visible on the blog at all times. Hopefully, this will motivate me to continue the “no shopping” strike and anything else I’ve promised not to do.
The reason I chose to beef up my e-fund is to prepare for the rough(er) times that may lie ahead. Some market analyst believe the worst is yet to come. What do you think about that? I don’t know if it’s true or not, but I do think we’re in for a LONG recession. Although I will never be fully prepared for the unknown, I can plan ahead as much as humanly possible. By increasing my e-fund to $25k, I will have just enough to cover 1 year of my basic necessities. If I lose my job or have a family emergency, a year’s reserve will reduce the stress so I can manage the issue effectively.
Are you making any changes to your savings?
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On the personal front – No the only change I made was stop contributing an extra amount to my savings aligned with my weight loss. With all the issues I’ve had medically, I couldn’t afford to do it anymore..
Family front – I reallocated funds from the kids 529 to their coverdell.. After the lost they took in their 529’s I had to make sure they had something left
I already increased my e-fund, but I’m still saving, just for my house. Thing is, I’m holding off on getting the house until my income is more stable. So technically, between my e-fund and house fund, I already have a year’s worth of basic necessities saved up. (Oooh, that felt nice to say!) For me, that number is $16,000. Right now I have about $19,000 saved. I just hope I won’t have to use my house money for emergencies instead of on a house.
In the long run, I would like to increase my e-fund account to a year’s worth of basic necessities, like you’re doing now. I would probably keep half of it in laddered CDs and the rest in cash.
It’s nice to not have to think, “If worse comes to worst, I’ll just have to use credit cards.”
my dh and i also made the decision to beef up our efund. i was going to aggressively tackle a student debt that is not too bad and i could probably pay off in less than 2 yrs, but now i would rather have the efund bigger and concentrate on that debt later.
i just want to say i love your blog, you along with some of your links have renewed my interest in ACTIVELY managing my finances not just setting and forgetting.
thanks.
I’m thinking of going up to 25 or even 30k since I want to make some major life changes, and not having a sizeable cushion would make that road much tougher to travel.
To achieve that, I’ll make small changes to my savings allocations, but not too much because they made a lot of sense when I first developed them.
I think you’re exactly right to beef up that emergency fund as much as you possibly can: things are getting realer than real in terms of how much this economy is affecting people. A few months ago, I knew people who like you were cutting back on the amount of money they spend, but weren’t worried about their jobs. Now, I know two people who just got laid off TODAY.
I don’t see any real hope that things turn around any time soon. Retail is going to be dismal in the fourth quarter because no one is doing Christmas big. All those billions the government has put into banks hasn’t loosened credit at all, so businesses or consumers can’t borrow, and forget about housing anytime soon. It’s depressing.
I review my e-fund at least annually to ensure that I still have 9 – 12 months of living expenses. If I only include true necessities then I currently have a little over 12 months saved; if I incude true necessities plus a little quality of life, I have anywhere between 9 – 11 months saved (depending on the QOL items I include). At this point I’m not planning to increase my e-fund. Sistah Ant said it best, “It’s nice to not have to think, ‘If worse comes to worst, I’ll just have to use credit cards.’”
Yes, we are beefing our savings account. Plus I’ve joined you SM – no shopping for me for the next 120 days.
I had close to $7K saved up but used $6K of that to pay off my credit card debt. When the whole economic crisis started I was torn between savings and paying the minimum on my debt or paying off my debt and then saving. I saw it better to pay off debt and then save because, which all the finances charges I was accruing each month, I was basically flushing money down the toilet. What are you thoughts on that? Should paying off debt (revolving mainly) take priority over aggressive saving? Especially in a time like this?
Based on my calculations and plans, I will be credit card debt free by the beginning of February 09. This will free up around $500 a month which will allow me to save more aggressively (about $2000/month). Depending on how much I will have to dish out when I purchase my 1st home, I may be able to save around $10,000 by July of 2009 which will equal about 3-4 months of living expenses.
In regards to investments, I allocated all my investment accounts to mutual/stable funds. After losing $4,000 since the August, I am not willing to let loose what little I have to the mercy of the markets.