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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.
Thanks for the input.
I think 6 months is a start...I remember you stating in one of my threads that you had 3 years saved up.
I think once I start it I will need to slowly still contribute to it, just not at the sacrifice of my retirement funds. I think I'll have to still slowly contribute because as I age my likelihood of replacing my job quickly will start to go down at some point in the not too distant future since I'm nearing 40.
ETA: How does access to credit play a role? I have access to credit cards only and would hate to have to put anything on them during a job loss as they'd still have to be paid in full each month or otherwise I'd accrue interest.
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
If the 401k is employer matched, make sure the matched portion is funded before the ROTH IRA. For me this would be first on my list, even before a 6 month EF.
I also like cash, so my checking and MM accounts would be sufficient until my demise.
Do you own a home? If you do, I'd look into a HELOC. If you don't use it, you don't pay. Although there may be a small yearly fee. Then -- with that safety net in play, you don't have to sacrifice your total money plan to get your E fund built. You can save in both pots to keep your growth.
That's what we did. And in the 10 years we kept the HELOC? No emergencies happened where we had to tap into the HELOC.
If the 401k is employer matched, make sure the matched portion is funded before the ROTH IRA. For me this would be first on my list, even before a 6 month EF.
I also like cash, so my checking and MM accounts would be sufficient until my demise.
The match portion is already currently funded of course fyi (don't want to be leaving free money on the table)....
But only contributing minimum up to match while the EF is being built. Hope to complete it by end of 4th quarter '17 or 1st quarter' 18.
Do you own a home? If you do, I'd look into a HELOC. If you don't use it, you don't pay. Although there may be a small yearly fee. Then -- with that safety net in play, you don't have to sacrifice your total money plan to get your E fund built. You can save in both pots to keep your growth.
That's what we did. And in the 10 years we kept the HELOC? No emergencies happened where we had to tap into the HELOC.
ETA: How does access to credit play a role? I have access to credit cards only and would hate to have to put anything on them during a job loss as they'd still have to be paid in full each month or otherwise I'd accrue interest.
One of my friend was jobless for a year and her only access is her good credit and credit cards. She used them as revolving money; take one card to pay the other, take out cash to pay her rent while still maintaining her good credit status. Yes interests accrue but she got to do what she got to do while job hunting.
She paid them off in 3 years after she got a good job and do loan consolidation. Maintaining good credit is crucial system in this country, it can bail you out.
I voted "other amount" - we have 2+ years of household expenses in our "emergency" (cash) fund. Have 1 young elementary-school age dependent and in our late 40s. Having 2+ years emergency fund may be an overkill, but with a young child I'd prefer this level peace of mind.
Since you're single with no dependents and rent, I think 6 months is sufficient. 3 months may be too risky: what if you take 3+ months to get another job? Do you want the stress of worrying about finances when you want to be focused on securing a new job?
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