Anyone actually spend your emergency fund? (collector, vehicles, savings, medical)

[dmills]

Originally Posted by MPRetired

I don't think the use of the emergency fund was unreasonable in this instance. What was the alternative, take out an interest bearing loan for these projects that needed to be done? [b] You need a dependable mode of transportation and a trouble free house with the arrival of a baby. [\b] Poor use of the emergency fund would have been things like a pre-baby trip to Vegas or something else that was frivolous. I assume in a true 'emergency' you'll have access to HELOC? In any case, I'd certainly advise getting the cash fund replenished as soon as possible.

Let's not kid ourselves. A newborn baby does not require any of this, and millions of people have babies everyday without spending $75k preparing for its arrival. They're certainly not "emergencies." Having said that, I have no problem with the expenditures, if that's what you want to do. It's your money. Just leave the poor innocent baby out of it, and admit those are things you wanted/needed/chose to do. :-)

[Potential_Landlord]

Every time I saved up an emergency fund a lucrative dip in the stock market shows up and then I spent the whole money again While this has proved quite profitable over the years I was just lucky that no emergency struck us. I'm currently trying to save it up... again. This time it's for real, I swear...

[April R]

What emergency fund?

[galaxyhi]

Originally Posted by Chemistry_Guy

I am generally pretty cautious financially, and over the past few years my wife and I saved up an emergency fund equal to roughly six months of salary. We are expecting our first child in December, and we decided that we needed to pull the trigger on some expensive projects a little sooner than expected. We had been drawing up plans for a new kitchen, but we didn't want the dust and disruption associated with the renovation to happen with a baby in the house, so we moved up our renovation timeline to this summer. We also had some roof damage from a storm, and while the insurance claim helped, we wanted some upgrades that only made sense to do in the context of getting a new roof, so we added them. In addition, my wife's little Z3 convertible is great for scooting around the city, but it doesn't exactly have room for a car seat, so we wanted to get a new daily driver for her. Finally, we wanted to do some work to turn a guest room into a nursery, which involved removing part of a wall, replacing some wiring, and expanding a closet, which turned out to be fairly expensive even though I was able to do most of the labor myself. The total bill for the summer was around 65K, which would have depleted our emergency fund if we didn't finance part of the car.

Despite the fact that we are technically more vulnerable financially than before, I have to say that I am less anxious about finances than ever before. We completed two of the most expensive renovations that a house can undergo, we are set on transportation costs for the near future, we don't have any major purchases on the horizon, and our house is more comfortable and my pregnant wife's commute is safer than it has ever been before.

Am I playing with fire or did our needs warrant spending the savings? Anyone else do something similar and get burned?

I/we have depleted the "emergency fund" 3 times in my life- TO AFFORD TO JUST LIVE- when without income due to job loss, NOT for "wanted renovations!" The only thing I see you really needed was a new "baby on board" vehicle. And if you had had a proper car fund you probably wouldn't have had to raid the emergency fund.Even the renovations for the nursery could have waited, any old room that is clean, safe, warm is fine for a baby...the baby isn't going to hold it against you for NOT having the "perfect nursery"!

We are now buying a new house, and while tempting to raid the emergency account-as there ARE changes we'd like to make before moving in- It is far safer to make sure we have the 8 month fund {gross income so a year's net, more if austerity measures are in place}- to make SURE we CAN KEEP the roof over our heads!

No matter HOW "SECURE" you THINK your job/income is, SOMETHING can happen. NO ONE is "indispensable" NO JOB is SECURE forever!
In my/our case: 1} due to economy downturn/layoffs and job elimination, 2} due to health reasons, 3} due to the loss of a job.

Suppose that storm had a tree that fell on you through the roof and injured you and you couldn't work for a year..THEN what? with a baby due no less? WHat if one of you or both want time off to be with the newborn? What if there are "complications" NOT covered by insurance?

Just saying...It has happened to more than one persons!

Best of luck to you, and the spouse, and the new baby.

[redguard57]

I just wouldn't call it an "emergency" fund. It was your medium term goal savings. You have no emergency fund.

I think you're pretty nonchalant about spending in a summer what I make in a year, but it's your money, whatever. What riles me about your list is financing the car. I hate financing cars. You might as well burn some cash for heat, at least it would be of some use instead of the interest and down payment on that car going straight into the finance company's pocket.

[Fedupwiththis]

I'm convinced if you have good credit just about any "emergency" can be funded with a 0% interest credit card for 12-18 months. In my opinion an "emergency fund" should really be called "loss of income fund". If either me OR my wife lost our jobs 1 salary would float our minimum expenses for about as long as we need it to. If BOTH of us lost our jobs we'd have 6 months of unemployment which again would cover our expenses during that time frame. Even still, we like to keep 6 months worth of minimum expenses cash. Sometimes we'll dip into it, right now I believe we're down to about 4.5 months just cause we wanted to pay down some debts. But I think "emergency" vs "loss of income" should be distinguished.

Example:
Lets say you need a major repair like your roof and its going to cost $10,000. Lucky for you, you have $10k in your emergency fund. So you use it.. 1 month later you have built your emergency account back to $500, but you've just been FIRED! You have no $ for backup so you're in very hot water and need a job NOW
Your other option is you open a 0% same as cash credit card and finance that $10,000 over 18 months. Costing you about $560 a month. Next month you get fired. Yes your monthly expenses are $560 higher, but you still have $10,000 to live off of. You gave yourself a 3 month window to find a job before it gets "tight" as the $10,000 cash will cover 3 months of bills.

[Ninotchka P]

Originally Posted by ericp501

IExample:
Lets say you need a major repair like your roof and its going to cost $10,000.

The example you give is that of a homeowner and highlights the point that emergency funds are not one size fits all. Everyone needs to calculate their own "what could happen" projections.

Someone who supports a family needs higher funds than a single person in their 20's, not just because of a linear increase in monthly expenses. A homeowner needs a much higher emergency fund than a renter, as it needs to cover a different set of possible emergencies in addition to job loss.

[2nd trick op]

Anyone actually spend your emergency fund?

Sort of. When the "emergency fund" wasn't needed, I would periodically transfer it into CD's or dividend reinvestment plans. And when I finally stopped working out of town and moved back into a house I'd bought from a relative's estate, those funds enabled me to convert some of it for rentals, and to avoid the expense of another mortgage.

I had some help from the fact that I'm childless. But I know several two-career couples from my undergraduate days who maintained their determination to form some capital, and I have a circle of "people I belong to" whom I hope will benefit when I'm no longer around.

I've forgotten the name of the ancient who said "money makes a good servant and a bad master", but he knew what he was talking about.

[Mr. Zero]

Originally Posted by redguard57

I just wouldn't call it an "emergency" fund. It was your medium term goal savings. You have no emergency fund.

I think you're pretty nonchalant about spending in a summer what I make in a year, but it's your money, whatever. What riles me about your list is financing the car. I hate financing cars. You might as well burn some cash for heat, at least it would be of some use instead of the interest and down payment on that car going straight into the finance company's pocket.

"Medium term goal savings". I like that, it's similar to what we do. We keep a lot of cash sitting around in one bucket for emergencies, short term expenses and medium term goals. We try to set a minimum and maximum cash level, but we'll raise that maximum level if we plan on making a large purchase. For instance, we're planning to buy two cars in the next two years, so we'll increase our max until we decide whether we want to pay cash or finance.

We've had to dip below our minimum once, when quarterly tax estimates were much higher than we expected.

[stan4]

I didn't spend all of it but I did dip into it because I had not figured how much the new taxes were going to affect me. So I had to go into the emergency fund to finish covering them.