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View Poll Results: How many months should I save for in my EF?
3 months of expenses 10 10.20%
6 months of expenses 39 39.80%
9 months of expenses 8 8.16%
12 months of expenses 32 32.65%
Other amount (please elaborate) 9 9.18%
Voters: 98. You may not vote on this poll

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Old 10-01-2017, 09:02 AM
 
Location: Atlanta
3,055 posts, read 2,976,848 times
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Yes, I know...this is a personal decision and it depends on what helps to make 'me' comfortable/able to sleep at night and varies from person to person, etc. etc. etc. etc...


But I'm still interested in knowing how many months' worth of expenses people on the board would recommend I strive to achieve as an emergency fund goal.


For me, I define an emergency as a job loss. That is my primary concern as the main thing I'd need to save for in my EF at the moment.


I'm 38 and a single woman currently renting working full time in the pharma industry. I think on the fast side I could get another job in 1-3ish months and on the more average side it could take more like 3-6 months. That is my guess. Any questions, feel free to ask.


So what do you think...? 3 months? 6? A year? What's realistic to aim for do you think? I've also added a poll FYI.
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Old 10-01-2017, 10:08 AM
 
Location: The Triad (NC)
26,831 posts, read 57,830,396 times
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Quote:
Originally Posted by southkakkatlantan View Post
....how many months' worth of expenses .... I strive to achieve as an emergency fund goal.
If you lost your job tomorrow...
how long would it take to find another similar (good?) job that pays at least as much?
That's your target for an emergency fund goal.

It used to be that a job search required one month per $10,000 of income.
$60,000 income target = six months having to pay bills otherwise.

The key is in what OTHER skills you have to find some other way to earn some of those expenses
so you only have to dip into the reserve for PART of those expenses until you can get hired into the good job.

Quote:
So what do you think...? 3 months? 6? A year? What's realistic...?
No less than three for anyone ...regardless of anything else going on.
No less than six for most.

But if you have a family and dependents and a mortgage... a year would be prudent.
These folks should have that much even without the job loss risks.
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Old 10-01-2017, 01:01 PM
 
16,476 posts, read 17,501,756 times
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6 months would be prudent
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Old 10-03-2017, 08:58 AM
 
Location: Atlanta
3,055 posts, read 2,976,848 times
Reputation: 1876
Not many votes but so far it's 63% saying 6 months and 37% saying 12 months.


I think right now I'll aim for 6 months fully funded. I will have to turn my attention back over to retirement funds after funding the 6 month EF as I don't think I can afford the money I'd lose trying to add another 6 months to the EF fund while not contributing the max toward retirement accounts.


So right now my plan is:
1-get 6 month EF fully funded
2-max ROTH IRA, then max 401k along with it
3-with whatever is left over, slowly build the 6 month to a 9 month, then re-evaluate and see if building to a 12 month makes sense
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Old 10-03-2017, 09:01 AM
 
Location: Atlanta
3,055 posts, read 2,976,848 times
Reputation: 1876
Quote:
Originally Posted by MrRational View Post
If you lost your job tomorrow...
how long would it take to find another similar (good?) job that pays at least as much?
That's your target for an emergency fund goal.

It used to be that a job search required one month per $10,000 of income.
$60,000 income target = six months having to pay bills otherwise.

The key is in what OTHER skills you have to find some other way to earn some of those expenses
so you only have to dip into the reserve for PART of those expenses until you can get hired into the good job.


No less than three for anyone ...regardless of anything else going on.
No less than six for most.

But if you have a family and dependents and a mortgage... a year would be prudent.
These folks should have that much even without the job loss risks.
I'm single with no dependents. Good question in terms of what other skills I have...I need to work on this so that if indeed something happened with my current job, I'd have 'some' sort of other way of generating income. Thanks for reminding me of the importance of this.
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Old 10-03-2017, 09:32 AM
 
844 posts, read 358,558 times
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Quote:
Originally Posted by MrRational View Post
If you lost your job tomorrow...
It used to be that a job search required one month per $10,000 of income.
$60,000 income target = six months having to pay bills otherwise.
This is the formula I always followed.
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Old 10-03-2017, 09:42 AM
 
Location: Atlanta
3,055 posts, read 2,976,848 times
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Quote:
Originally Posted by SuiteLiving View Post
This is the formula I always followed.

I'd actually never heard of this guideline before.


But it would put me needing more than 6 months.
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Old 10-03-2017, 10:06 AM
 
844 posts, read 358,558 times
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Quote:
Originally Posted by southkakkatlantan View Post
I'd actually never heard of this guideline before.


But it would put me needing more than 6 months.
It was a proxy for the estimated time it would take to find a job. The more money you make, the less jobs available to you so it takes longer. May need adjusting since I've heard this metric for the last 20 - 25 years, may be $15k/month now for the number of months to find a job. But it was a way of thinking about the time you'll need to find the new income source.

Last edited by SuiteLiving; 10-03-2017 at 10:19 AM..
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Old 10-03-2017, 10:48 AM
 
11,299 posts, read 5,834,479 times
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Quote:
Originally Posted by southkakkatlantan View Post
I'm 38 and a single woman currently renting working full time in the pharma industry. I think on the fast side I could get another job in 1-3ish months and on the more average side it could take more like 3-6 months. That is my guess. Any questions, feel free to ask.
At age 38, single, and renting where you think you could find a good replacement job in 3 to 6 months as a worst case, I think 3 months expenses is plenty assuming you have a good credit rating and available credit.

I'm 59. There's no telling how long it would take to replace my job and I might not find a replacement. My emergency fund is 3 years.
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Old 10-03-2017, 10:53 AM
 
11,299 posts, read 5,834,479 times
Reputation: 20925
Quote:
Originally Posted by MrRational View Post
It used to be that a job search required one month per $10,000 of income.
$60,000 income target = six months having to pay bills otherwise.

No less than three for anyone ...regardless of anything else going on.
No less than six for most.

But if you have a family and dependents and a mortgage... a year would be prudent.
These folks should have that much even without the job loss risks.
You have to factor age into this. At age 30, I could get another job in a few weeks. At age 59, there's no telling how long it would take. Some of that is the 1 month per $10K rule of thumb. Age discrimination is a bigger factor.
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