How do you pay back your emergency fund? (rate, transfer, credit)
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There is $28k left in the emergency savings. I really want more there (my goal is $55k-- a little more than a year's expenses). Without running down each expense, I save about 34% including retirement and this short term, easy access emergency account. I put $700 a month into the emergency fund. I have about $200 per month in fun money (what I spend on eating out with friends, movies, books, etc). I could cut back on that to save more. Maybe save half of it for $800 per month. But that will still take 3 years to resave the $3600.
That's a good plan. But if another $100 feels punishing then make it $50. Or of course find ways to get the same books etc cheaper.
As was said it's an emergency fund and you used it for emergency. Whether I cut back more and replenish depends partly on whether it was used for what it was meant for or something unexpected.
For instance I have x dollars set aside each month for Vet bills. Expected or unexpected so when I have a Vet bill I don't replenish. It's already built into my budget and transferred into savings each month.
If the critters will stay healthy for a long time, there will be an overage to compensate elsewhere.
We pretty much threw our entire EF at a mortgage pay off about a year ago. Outside of getting a company match on a 401k we stopped investments until we built ours back up: no 529's, no IRAs, no taxable... We paid if off in the spring which wasn't the greatest of seasons since the kids were home and bored just a few short months later. We could have rebuilt it in 4 months (we fund one year's expenses), but it took us more like 6 or 7 months to fully build it up because of travel and some employment issues (we did fully restart the 401k contributions after about the third month).
I was just reading an interesting blog post about EF from this morning:
[url=http://freedomisgroovy.com/emergency-fund-beyond-5000-overkill/]Is An Emergency Fund Beyond $5,000 Overkill?[/url]
My advice is to create a plan that YOU are comfortable with. Create the plan, live with it, see if you follow it and if not, try a new plan.
There is $28k left in the emergency savings. I really want more there (my goal is $55k-- a little more than a year's expenses). Without running down each expense, I save about 34% including retirement and this short term, easy access emergency account. I put $700 a month into the emergency fund. I have about $200 per month in fun money (what I spend on eating out with friends, movies, books, etc). I could cut back on that to save more. Maybe save half of it for $800 per month. But that will still take 3 years to resave the $3600.
Like you I am "addicted to savings" more than spending.
Your doing pretty damn good, I don't think it'll hurt to either "keep putting it back" or increase your savings....
Your choice.
Me, I'd put it back more quickly.
It would be a lot different if you weren't solidly into 5 figures.
Let me bring up one more thing:
For me there's less "emergencies" as "incorrect timing"
I've gone through nearly every damn thing I can.
Appliances
Well pump
Auto repair/replacement
Phone replacement
Clothing
Etc
And allocated monthly monies based on life expectancy.
Last week I totaled my truck.
Now it's fully insured, and I'm going to salvage it and keep driving it.
But if I had to replace it (ahead of schedule) I could "borrow" from my housing repair fund, appliance fund, etc
I ALSO save "extra" every month. (Not counting investments etc)
Sure it's "possible" to exceed these boundary markers....
But "It ain't likely!"
Lumping less into the "Emergency fund" catagory drastically decreases your draw upon it.
When you pull money from an emergency fund, how, or do you pay it back?
"Well, kids... it looks like we'll be going camping this summer rather than 2 weeks at the beach"
Well, hon... it looks like we'll be living with that paid for car for another 6 months before trading up"
Well, folks... it looks like we won't be able to host the family reunion this year"
etc
this is why a discretionary budget item (like travel)...
should be linked with a non-discretionary budget item (like OOP medical).
There is $28k left in the emergency savings. I really want more there (my goal is $55k-- a little more than a year's expenses). Without running down each expense, I save about 34% including retirement and this short term, easy access emergency account. I put $700 a month into the emergency fund. I have about $200 per month in fun money (what I spend on eating out with friends, movies, books, etc). I could cut back on that to save more. Maybe save half of it for $800 per month. But that will still take 3 years to resave the $3600.
I'm confused by your math. First you said you pulled out $2500. But here you say $3600. And you say you save $700/month in your emergency fund, and it would take 3 years to save $3600 at that rate. $3600/$700 = a little more than 5 months. I'm not sure I understand where you are getting 3 years.
Are you saying that at an extra $100 a month, it would take 3 years to get you back on track for where you were before? That much is true, if you really did spend $3600 instead of $2500. But you can't always expect to jump right back on track. You can get back to where you were before in less than 6 months, and continue on from there. If you can catch up with where you would have been without the emergency eventually by making a few lifestyle changes, then good for you. Most people can't. An actual emergency usually sets you back on your goals.
At what point does your "savings" account get saturated...
with the excess (presumably) being shifted to investment accounts?
It depends on your perception of your unemployment risk. The older I get, the bigger the number. When I was 25, thirty days was plenty. Now at age 58? 3 years.
I'm confused by your math. First you said you pulled out $2500. But here you say $3600. And you say you save $700/month in your emergency fund, and it would take 3 years to save $3600 at that rate. $3600/$700 = a little more than 5 months. I'm not sure I understand where you are getting 3 years.
Are you saying that at an extra $100 a month, it would take 3 years to get you back on track for where you were before? That much is true, if you really did spend $3600 instead of $2500. But you can't always expect to jump right back on track. You can get back to where you were before in less than 6 months, and continue on from there. If you can catch up with where you would have been without the emergency eventually by making a few lifestyle changes, then good for you. Most people can't. An actual emergency usually sets you back on your goals.
You are confused because somewhere I came up with $3600 and then proceeded to divide by that number. I am blaming it on all the numbing from the dentist's office, lol. (in all honestly, I think I just had a brain hiccup, local anesthesia and ibuprofen really isn't a valid excuse)
It was definitely $2500 ($2506 to be exact).
I already save $700 a month. So if I want to make up that $2500, I will need to increase that. I was thinking an extra $100 more a month (for $800 a month) for 25 months to pay myself back (so not three years, just a little over two years... again, sorry for the bad info).
I really don't think I want to make much of a lifestyle change to save more. I save $700 in that emergency fund, $458 per month in my Roth, and then whatever it is that is taken out of my paycheck for the 401k . I spend $200 a month on "fun" stuff and that's where I would be cutting to make up the savings. My problem is I want the number in my savings back where it was. I'm just going to have to accept it and try to stop being obsessive about it. That's what I'm saving for after all: to use the money in case of emergency.
So I had to tap into my emergency fund today for the first time. Little more than $2500 Now I'm trying to figure out how (or even if) I will pay myself back. Save more each month (or just keep saving what I always do and forget about it). I'd have to make some significant lifestyle cuts to pay back quickly.
So I'm just curious what others do/have done. When you pull money from an emergency fund, how, or do you pay it back?
I would incorporate the loan payments into my regular budget. For instance, starting next month, I would repay my EF account $500 and would continue until the money has been fully repaid.
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