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When you people suggest your SAVINGS (x# of months of living expenses) what are you basing that number on? Your actual monthly income? Monthly bills + food and basic living (if scaled back)?
Are you factoring in unemployment payments for 30 weeks (think that is what it is up to now)?
Just wondering...
A good idea is to track EVERY expense you make for an entire month. Then you'll know exactly what your normal living expenses are on a monthly basis. Of course, the more months you can do this across, the more accurate your average number will be, because there are always ups and downs throughout the year. But you should be able to get a rough idea monthly expenses even from just one month. (As I said, that includes everything, from mortgage to car/student/creditcard loans, to food, electricity, heat ... everything you spend money on in a given month; to be really smart and plan for post-layoff expenses, find out what COBRA health insurance would cost you from your HR person, and add that in as an expense too.)
Of course, then you can look for ways you can realistically trim expenses from your monthly number. Obvious ways are cut out all eating out, stuff like that. You can probably shave the number down further if you tighten your belt, but only you know what number you're comfortable with.
You could also subtract your expected monthly unemployment check (NY and NJ differ, but NY is around 400 max per month, I believe), but remember to account for taxes you'll need to pay on that unemployment income, so probably a good idea to multiply your monthly unemployment by 0.75. Also, I don't think unemployment lasts a full year (maybe it does these days?) but you have to consider how long will that last, and whether it's appropriate to stretch it out for 12 or 24 months like your emergency fund. Personally, I discount completely the amount of unemployment I would receive, so that if/when it does come to that, the unemployment will be a nice little surprise, not something I'm relying on.
Then, work on saving up first 3 months, then 6 months, then 12 months of expense in an FDIC insured savings account. Wiley's suggestion of 24 months is even better. Basically, it's hard to have too much savings in this market.
After a point though, it's a good time to look to invest that money in something other than a savings account, once you're beyond a certain minimum amount of savings you feel comfortable with (for me it's 12 months).
A good idea is to track EVERY expense you make for an entire month. Then you'll know exactly what your normal living expenses are on a monthly basis. Of course, the more months you can do this across, the more accurate your average number will be, because there are always ups and downs throughout the year. But you should be able to get a rough idea monthly expenses even from just one month. (As I said, that includes everything, from mortgage to car/student/creditcard loans, to food, electricity, heat ... everything you spend money on in a given month; to be really smart and plan for post-layoff expenses, find out what COBRA health insurance would cost you from your HR person, and add that in as an expense too.)
Of course, then you can look for ways you can realistically trim expenses from your monthly number. Obvious ways are cut out all eating out, stuff like that. You can probably shave the number down further if you tighten your belt, but only you know what number you're comfortable with.
You could also subtract your expected monthly unemployment check (NY and NJ differ, but NY is around 400 max per month, I believe), but remember to account for taxes you'll need to pay on that unemployment income, so probably a good idea to multiply your monthly unemployment by 0.75. Also, I don't think unemployment lasts a full year (maybe it does these days?) but you have to consider how long will that last, and whether it's appropriate to stretch it out for 12 or 24 months like your emergency fund. Personally, I discount completely the amount of unemployment I would receive, so that if/when it does come to that, the unemployment will be a nice little surprise, not something I'm relying on.
Then, work on saving up first 3 months, then 6 months, then 12 months of expense in an FDIC insured savings account. Wiley's suggestion of 24 months is even better. Basically, it's hard to have too much savings in this market.
After a point though, it's a good time to look to invest that money in something other than a savings account, once you're beyond a certain minimum amount of savings you feel comfortable with (for me it's 12 months).
Right now I have 4+ years maybe more in savings.
But I am on the fringe of buying a house which will knock that 48+ month buffer to around 12-18 month buffer. (Probably 24 if you add in unemployment)
So I am in a good spot overall. And think my job is fairly secure as well as wifes. As best you can think...
I was just wondering what people were basing that "savings" number around.
While having a big savings account is the responsible thing to do, the government is actively involved in robbing everyone's savings account without them even knowing it through inflationary policies. Anyone with a large pool of savings should consider protecting some of those savings from the US government's printing press. If you protect some of those savings by investing in inflation hedges such as physical gold, physical silver, oil, and maybe a few good foreign companies, you can avoid the negative aspects of inflation. In every other financial crisis, you could have just stuffed your money under your mattress and kept your pocket change in a big jar because your money was as good as gold (literally, it was backed by it) and your pocket change was composed of 90% silver. You are in a time when the US government's money is not backed by a single tangible asset and is literally counterfeited on a daily basis by the government itself.
We all know it is the Democrats who are in charge now and it is their fault the economy is tanking. It used to be the Republicans fault of the failing economy but they are not in control any longer so we can't keep blaming them.
Obama has been in office all of 6 weeks and hasn't dug us out of the tremendous hole Bushes 8 years of failed economic policies put us in ......so now this mess is all Obamas fault ??? Are you serious ?????
Obama has been in office all of 6 weeks and hasn't dug us out of the tremendous hole Bushes 8 years of failed economic policies put us in ......so now this mess is all Obamas fault ??? Are you serious ?????
Considering Obama voted along with Bush in October and has continued and actually expanded the Bush policy of government borrowing and spending, I would argue he's no better.
Good point, Oakman. You can consider TIPS (inflation protected) as a hedge against inflation.
yeah, you could, but I don't like to put my faith in the government. TIPS rely on the CPI, which is a statistic that has been manipulated by the government to purposely underreport inflation. Case in point, the CPI claimed we were at an annual rate of inflation of 3% while the price of oil went up 100% and food went up about 50%. TIPS do give you a better yield, but at the end of the day, I feel they are still designed to fleece the holder through manipulation.
You mentioned several times quite strongly how wrong it is to place blame yet your opening sentence did just that very forcefully. If it is answers you want a good start would be to abolish the 2 party system. 3 party system in NJ since the Teachers Union is more a powerfull political party then the other 2.
Like Todd just said, how can anyone spend when 44 million workers are sitting home not earning money. That 8% national unemployment rate is pure hogwash. Anything your govt tells you is designed to keep panic to a minimum. You could double that 8% and in the construction industry the unemployment rate is over 80%. Self employed are not eligable for unemploymnt, many others their benifits have expired, others yet have given up hope and dont even look for work anymore. There are so many factors that if added in would show the true situation we are in.
Your govt only just publicly admitted in October that we are in a recession. The recession started a year and a half ago. We are well into a depression now but you will never hear your govt admit that.
Everything is the governments fault. Cut the fat. Why do they need 280 people gettng paid very high 6 figures just to vote bills? Bills we dont need? 75% of all govt...city/state/fed that can be canned right now and this country would run 1000% more efficient. And as a bonus we might improve our freedom ranking which we have been also faltering in. We are now ranked the 16th most free country. That is not really too free is it?
I agree on all points.
Why place blame on the democrats? It's a two party system. Clinton left us with a surplus and Bush managed to put us back in debt. Obama is trying the best he can from lessons he learned from past recessions/depressions. You must spend to stimulate the economy...
The unemployment rate is easily in the double digit figures now. In my family, 3 out of 6 of my siblings are out of work. We are all white collar workers... I'm sure everyone knows a few people close to them who are also out of work.
Not counted are those who:
- just graduated and haven't found a job
- workers who exhausted their unemployment benefits
- self-employed and lost their business
- part time or migrant workers who don't qualify for unemployment benefits
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Nice work, Natas! You must sleep well at night.
