8/14/09 : 6-Month Emergency Fund Update
Usually, I’ll only be posting this emergency fund update once every two weeks when our paychecks come, but I posted the last one pretty late. Today when the paychecks came in, we found ourselves sitting at 68% of the way to our 6-month emergency fund, a rise of 6% from the 62% I reported last time.
I expect the gains to this fund to be mostly dormant for this month and next month. We’ve gained so quickly over the summer, but we had to pay about $160 for our car tags this month, we’ve got some medical bills to pay soon that will be upwards of $550, I had to pay about $200 for books for my classes, and we’ve got about $550 worth of auto/motorcycle insurance to pay for in September. Thankfully, we won’t have to withdraw out of our emergency fund for any of these expenses (woohoo!), but it will limit the amount of money that we’re able to put in.
What money is counted in the emergency fund for these updates?
I figured now would be a good time to explain what is and what is not counted in these updates. I have a series of high yield savings accounts with E*Trade with the following names:
- Emergency Savings
- Vacation Savings
- Gift Savings
- Miscellaneous Savings
Currently, all of our savings is going towards the emergency fund with the exception of $100 per month that we send to our gift savings account for Christmas. Our vacation savings account and miscellaneous savings accounts are currently empty until the 6-month emergency fund is filled.
In addition to this, we keep a “cushion” in our checking account to cover unexpected expenses as well as, well, things like the annual car/motorcycle insurance bill. The cushion that we keep is generally anywhere from $1,000-$1,500 depending on the month. Obviously after all the bills we have coming up, that cushion will be smaller temporarily.
The only money that is counted in these updates is the money in the emergency savings account at E*Trade and the money in our checking account. The money in the gift savings account is not counted, primarily because that account will be liquidated in November-December for Christmas. However, if there were an actual emergency and we needed the money, we would certainly use it.
The Reward for getting there….
An accomplishment like filling up a 6-month savings account deserves a reward. Ashley and I have decided that when we reach our 6-month emergency savings goal, we’re going to save up and go to Disney World again next year! At the rate we’re going, we should be at our goal by the end of January, and hopefully planning our trip to Disney next December!
Hi there,
I think its awesome how committed you are to filling up your emergency fund, I know it can be tough! I wanted to bring up another point about calculating your emergency fund for something people may not always think about – insurance!
I work for State Farm, and often recommend that our policy holders integrate insurance considerations into their overall budget plan and emergency fund planning, especially now more than ever as the economy continues to fluctuate.
As people think about how to establish their emergency fund, we urge our customers to incorporate the cost of potential insurance deductibles – auto, home, health, and others – in the event of a claim – as you never know when an emergency will arise.
Hope this helps – happy budgeting!
Marty,
That is a very good point. I’ve been working on a blog entry about things to keep in mind when you’re developing an emergency fund, and I will be sure to include insurance deductibles. I will be posting that up soon.
Thanks for the comment!
Zac