Twitter Emergency Fund Poll

by Kevin on August 18, 2008

Ramit Sethi tweeted this:

“Why do pundits still suggest saving up for an emergency fund? Nobody does it. Stop beating a dead horse and come up with another suggestion.”

I was stunned. Am I the only person on the planet with an emergency fund?

I decided to throw out the question to whoever was following me on Twitter:

@hank_MiB – 3 months saved up here. ate a big chunk of it for landscaping though…

@willandbeyond – Grad student stipend’s don’t really give much room to save for an emergency fund unfortunately…

@ericyng – I had about 8 months of income saved up, but decided to use it to pay off my car (6.5%). Now I’m working on saving again

@bripblap – I have an emergency fund covering about 2 months’ expenses now. Last year, 10 mos.,we decided that was too much cash on hand.

@brucethetaxguy – 6 months

@Green_Panda – 3 months in EF in an ING account

So there are at least a handful of people with emergency funds out there.

Me? We’ve got 3 months in an ING savings account earning 3%.

What about you? Do you have an emergency fund?

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Get Rich Or Die Trying » Blog Archive » Posts Of Interest
August 19, 2008 at 9:01 am
8-17-08 Weekly Roundup and Carnivals | LivingAlmostLarge
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the taxguy » Passing the week. . .
August 24, 2008 at 6:27 am

{ 18 comments }

JLS August 18, 2008 at 8:20 pm

Oh, about 1 month saved so far.
Not enough, for sure, but a start.

Texas Girl August 18, 2008 at 10:43 pm

We had 3 months expenses in savings last year and no debt other than a small mortgage. Good thing, too, because my young, healthy husband unexpectedly had west nile virus and almost died, and couldn’t walk, talk, or work for 4 months, as if he’d had a stroke. We’re a 1-income family. Even living off that $$ in savings we accumulated $13,000 in debt during that time which thankfully is paid back now. We are all ONE MOSQUITO BITE AWAY from disaster. My advice will always be to have that emergency fund and live well beneath your means.

hank August 18, 2008 at 11:03 pm

Anymore really a “credit card” is an emergency fund in a REAL emergency. Most “emergencies” don’t really expect cash on hand to pay for, but you should be able to pay back that emergency in short time…

M August 19, 2008 at 7:38 am

I have a small emergency fund and definitely think it’s a good idea to have something. A credit card or ING account won’t help if the power goes out and you can’t get to a bank, so some cash on hand is good too.

As for your homeowner’s insurance (since you can’t leave comments there for some reason?!), check the amount the company says your home is worth vs. what your taxes/assessed value is. Determine if you want the house replaced in-kind (have you made any recent upgrades that might raise the value beyond their 6% increase) and see what that’s worth… and know that building costs have gone up a LOT recently with raw material cost increases PLUS the cost to ship them with the rising gasoline prices. Might also not hurt to shop around with other insurance places if you haven’t done so recently or ask if you are entitled to a discount for having things like deadbolt locks, smoke detectors, fire extinguishers, etc. Currently not enough information to determine if a 13% increase in rate is desirable for you at this time.

JB August 19, 2008 at 8:02 am

I have the Dave Ramsey recommended $1000… but I don’t feel it’s quite enough and am actively working on building it. $1000 wouldn’t even cover half of a month of expenses.

Livingalmostlarge August 19, 2008 at 9:30 am

Not a typical one. One month checking buffer, 2-3 months in cash it varies, 2-3 months in stocks. Again it varies based on the market. So it’s a fluctuating amount.

Ashley @ Wide Open Wallet August 19, 2008 at 10:40 am

We have 4 months of expenses in savings. If we were really in an emergency it could probably stretch to 5 since we wouldn’t be eating out and stuff. I really want to get it up to a solid 6 months at the least.

DJ August 19, 2008 at 11:51 am

Working on it. Stacked in the first $1000 in emergency savings after college, then went after the credit cards. Now I’m back to building the emergency fund up to four months, then on to the checking buffer. One at a time, and it’s all coming together.

Kacie August 19, 2008 at 4:58 pm

We’re a few hundred bucks away from having a six-month emergency fund. Woo hoo!

We’ll keep 90 percent of it in ING and 10 percent in my brick & mortar bank so I can physically write checks from it, if I need to.

We’re not big on cash at all, but I wonder if it would be a good idea to have a few hundred in $20s or smaller in a safe place in the house, “just in case.”

NH Mom of 3 August 19, 2008 at 8:50 pm

We had a starter emergency fund, but as I have been in a job search since April…plus we closed on our house as planned in May…we no longer have much of any cushion. Very difficult. Goal #1 is to build back at least $1000 in the credit union account to start our emergency fund again. As we have been living on just one salary (for the most part), we will continue to be frugal and really toss some serious bucks at the credit card debt before adding more to emergency fund.

So I’d say we are in the camp that thinks it is still important to have an EF, but also in a financial crunch and have had to deplete that fund without replenishing it right away. I’m confident that in 6-12 months from now things will be back on track.

Alison @ This Wasn't In The Plan August 19, 2008 at 10:39 pm

We have about 2 1/2 months worth saved up. I’d like to have six though. For me it’s worth the peace of mind because life has brought me enough suprises already and I’d like to be as prepared as I can for the future ones!

Scott @ The Passive Dad August 20, 2008 at 1:27 am

Just starting an emergency account is a big step for many people. It took me a long time to get that first $1k saved, as something always seemed to come up unexpectedly. The recommended 3-6 months really let’s you sleep better at night. We have 6 months+ and I feel we need more.

The bigger issue is how does a student or single parent get started on an emergency account? If you are making minimum wage or have large expenses, you probably feel like you’ll never get ahead. Just start somewhere, even if it’s $10 a month.

Stephanie PTY August 20, 2008 at 11:31 am

I have a small, but growing, emergency fund. I think the key for me is to find an erratic source of income that feeds right into it, so I’m not used to receiving that money, and I don’t miss it. For me, it’s my ING referrals.

Bruce August 20, 2008 at 5:26 pm

Now they respond. Where was everyone on Sunday?

Start-Up August 21, 2008 at 10:14 am

I currently have no emergency fund because all of my money is going towards a down payment on a condo that’s scheduled for October 3rd. At that time I will try to save up a 3 month emergency fund, and then re-evaluate to determine if I need more, such as a 6 month emergency fund.

The key is to make sure you find some sort of account with a high interest rate. Those random ultra high yield checking accounts seem like it might be worth checking out.

Kevin August 21, 2008 at 8:26 pm

@Everyone: Thanks for all of the responses. Very interesting to see!

@Start-Up: Depends on what you mean by high interest rates and random ultra high yield accounts. I prefer stable, safe accounts that still yield well — like ING Direct. They recently introduced CDs in the 3.5-3.7%.

Start-Up August 21, 2008 at 11:43 pm

The random ultra high checking accounts I mentioned can be found through either http://www.checkingfinder.com or http://www.highyieldcheckingdeals.com where you can get between 5 and 7% APY. They’re checking accounts that cap the account at $25,000 for the high rate and you have to have one ACH transaction per month, 10 debits per month and receive paper statements. I’m fairly confident in my ability to meet the requirements so I might check it out, but if I decide to go the safe route I will probably ladder my funds through ING or a comparable account.

Kevin August 27, 2008 at 7:17 pm

@Start-up: Thanks for the links. I understand some people are willing to take the risk to get that extra rate — and heck at 7% it would definitely be worth it — but I’m sticking with ING for now. It doesn’t disrupt our current system.

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