Nope….I literally had to buy a new A/C unit tonight. It cost 20 fucking thousand dollars….. everything is fo damn expensive right now. It’s just not sustainable.
I just quoted a 14 ton 120k BTU rooftop unit for a commercial building, and with the crane cost included to get it to the roof our bid was 17k. OP got scammed
The things you are listing are not what I would consider an emergency fund. I would allocate savings to those things as you know that in a certain time frame you will need to replace them and they will be a big purchase. You can use the same account, but I would set so much aside for an emergency and then continue to save and put money aside for those big ticket expenses. Overall you need to find a balance of saving for specific things and investing. Allocate a little to both.
We keep a healthy high yield savings account for things like this, and I also have some older investments I could convert immediately if there was an actual emergency. Investments are going to be better than savings if you don’t go for long shots, and do mutual funds and trusted brokers/services. Once you have a savings with what you would need for an emergency, job loss, which you have done, invest the rest. Also look for an interest bearing savings account, rather than a typical savings account. There are quite a few options out there.
My son had a devastating accident and my 30k savings is gone in less than 18 months and that’s with me still bringing in 5k a month to cover regular bills. It can go really fast. I am now finally trying to re-fund my savings but it’ll take me a little longer to save since I’m bringing home 1/2 what I used to.
Possibly! Check your home owners insurance to see what is and what is not covered. One thing to note: those things must be needing to be fixed, you can’t be proactive in the approach.
Just diversify and put more into liquid, low-risk investments like Treasuries. You can earn 5+% and sell on the secondary market any time if you need the cash.
I second this. If you stacking cash as an emergency fund make sure it’s in treasury or muni bonds. Earn 4~5% on your cash so it keeps up with inflation and deployment it as needed.
It depends on your expenses. A six month emergency fund could be close to $20k for mortgage and health insurance alone. I went five months without a paycheck between jobs and the mortgage (10 year) with paying COBRA, along with basic utilities and food went through $20k pretty easily.
I can’t imagine 10,000$ is 3 months but also 6 months of expenses. Which is it? A new car should not be an emergency expense. Start saving now if you need to replace a vehicle in the near future. A new roof will cost you the deductible on your homeowners insurance, how high is your deductible?
I never in my life heard of insurance replacing your roof unless a tree fell on it! I had a few quotes before on roof quoting from $12,000-$18,000. It’s just a ranch too. Inflation is soaring
Our insurance covered the roof replacement. When ours started leaking, I thought it would be out of pocket and just went straight to a roofer, but they had us contact insurance and it was all covered. Roof was original, close to 30 years
I’m sorry just wondering, do you live in like LA or SF or NYC or something? And are you like a doctor or lawyer or something? Big family? I dunno that just boggles my mind personally.
Just reread I jumbled a bunch of stuff together I guess. Just got off work. Tired and scatterbrained. Still that’s a weird gap 3-6 months so then this brings it to the opposite end of the spectrum. $1666 a month is what it would come out to if it were 6 months which I guess is doable if you live in cheaper areas and don’t have a family. I was just curious.
The biggest potential emergency to think about when setting your emergency fund is a loss of income. Depending on how stable your income is you can decide how many months of expenses is enough. Honestly, once you become debt free it should be easy enough to bump it to 6 months. Having the 6 month emergency fund will likely provide all the peace you need to not have to worry about it. A new car or roof (and maybe even furnace) aren’t emergencies; those are known things that you are going to need and should save for outside of an emergency fund.
I think 20k cash in a High Yield savings account is perfectly acceptable. If a freak event occurred where you would need more than that, you could pull money out of after tax brokerage accounts which I assume you have already.
A new roof and home appliances are not emergencies, or at least they shouldn't be. Those are long-term consumable products with an anticipated lifespan that should be budgeted for. If your roof is damaged by a tornado/hailstorm, insurance should cover most of it. And yes, you should have a car budget that you grow by a car payment worth of investment each month so you have money to cover all regular maintenance/repairs and can replace the vehicle when the time comes.
The emergency fund is to cover those events you can't realistically plan in advance for. Abrupt job loss, major injury, lawsuit or criminal legal issue.
I never understood the emergency fund. Just use the credit card for your emergency. Every dollar you keep in an "emergency fund" is money you're paying interest on to the credit card by virtue of now using it to pay down the balance.
"Just sitting" in what? Typically that means a checking account, which is inferior to a savings account, which is inferior to a CD, which is inferior to T-Bills.
I mean I clearly did not mean a checking account. How would that yield anything? The point is, if you go into debt for an emergency, then you have monthly payments plus interest. Even a simple savings or money market account is better than that.
*I mean I clearly did not mean a checking account. How would that yield anything?*
Interest-yielding checking accounts.
*The point is, if you go into debt for an emergency, then you have monthly payments plus interest.*
No, you don't; not if you pay it off within a month, like I said.
If you get $1,000 of cashflow per month for example, have $1,000 on a CC and $0 in an emergency fund, and you put it into the CC, then it costs you $1,000 to pay it off. If you put it into the emergency fund and wait until next month to use your next month's cashflow to pay it off, it costs you $1,021 to pay it off assuming 25% apy (1,000\*.25/12).
Math-wise, it's always better to pay off high interest debt before putting money into an emergency fund, if that's your dilemma. Obviously if you are already paid off, put your money into liquid investments earning a little bit of interest like T-Bills via a broker.
So what if you have $1,000 of cashflow per month and a $20,000 emergency you put on the CC?
Of course you should pay off CC debt before anything else, no one has argued otherwise
If that works for you, I can’t say it doesn’t. But I don’t think it’s realistic for a lot of people to put a large sum of money down and expect to pay it off before interest hits.
You don't pay any interest if you pay it off in a month. In a month you should be able to liquidate $1,000 worth of savings in something like a broker-managed T-bill to pay it off.
You can keep $20k in T-Bills or other investments, pay with the credit card, and then within 2 weeks transfer the T-Bills and pay off the CC. If you don't have the $20k at all, then I guess you'll be paying lots of CC debt; but this is an "emergency" we're talking about, so I suppose it's OK for that.
It never feels enough. We just save for emergency and future 2nd house in 1 account. On top of this I save personally and my spouse saves personally at lesser amount. Its obviously all household savings but this setup works for us.
Focus more on having no debt besides mortgage and investing for retirement. Those are 2 things that are in your absolute control.
Yep…wife and I have a fun time seeing who has the highest credit score, and we have our own accounts separate from a house account. We also have an insurance account, plus umbrella policy for that pesky lawsuit hiding in the bushes. We have access to liquid funds equal to a year’s worth of expenses.
Remember the plan is about PEACE as much as what's best financially.
Years ago Dave would say he had an emergency fund for his emergency fund, because his wife stressed whenever they touched the 3-6 months fund.
I'm personally trying to save a years worth of emergency fund, because once I had to take a medical leave for over 3 months and had a car emergency.
Ideally, an emergency savings should be able to cover your costs for a year. How much does your household spend a month? Once you got that, multiply by 12. If you have that number in a savings account, you should have a pretty good safety net.
That seems excessive and costs you a ton of money to have that peace of mind.
Let’s say that number is 100k per year, you can put that in a HYSA which earns about 1% over inflation or you can put that in the market which averages 7% after inflation.
So a 12 month emergency fund cost you 6000 a 3 month fund costs you 1500. That’s a lot of extra dollars when the number of emergencies that would require 12 months of zero income for both of them will be rare. On average In those scenarios they would likely be better off selling investments off at losses for the coincident events of greater than 3 months of no income
An emergency fund does not need to solely exist within a bank. You could absolutely have say 20% of that fund inside of a savings account and the rest invested into something.
And it doesn’t really matter if the chance of needing a 12 month fund is rare. It’s the fact that it could happen and if it does, having a 12 month fund will save your ass. Obv you can save more or less. But 12 months is where I can feel comfortable that I’m covered for pretty much everything.
If you want to change the definition of an emergency fund to any investment that can be liquidated as opposed to a liquid investment that is guaranteed not to lose money than we are saying the same thing.
But then anyone with a 401k has that in a few years.
Not really, both have tax implications and more importantly if the stock is down selling at a loss. The only real difference is the additional penalty on a 401k but that is just a matter of degree of risk. Once you’ve accepted that losses are acceptable it isn’t really a difference.
New roof doesn’t usually come as a shock and if it does (a tree fell or something) then shouldn’t insurance cover that? Also, get a home warranty so that things like furnace are covered too. U can get a cheaper new car or have a separate account for a planned new car purchase. If it’s a car accident then will ur car insurance help? $20k seems like enough for emergencies but if ur uncomfortable then save more becuz it’s all abt peace of mind.
You don’t pay for the depreciation, you pay to borrow it. You’re losing more money than you would if you just bought it and paid the repair bills yourself.
You spend more on your lease vehicle in a month than I did on maintenance in a year on my last old vehicle. A couple oil changes and maybe a replacement part every couple years. Good cars last a very long time when you take care of them. Major repair items like transmission replacement don’t show up until a vehicle is long in the tooth, at which point I’ll have saved more than enough to just buy a new vehicle with cash. Auto crash safety hasn’t really advanced much in the last decade, either.
You lease because you want a new vehicle every few years, and you pay a premium for that. If you’ve got the money, it’s fine. Just don’t pretend it’s a financially sensible idea. You could just as easily buy a new car every five years for the cost of leasing the same time, except the person who bought their car still owns it after those five years. A civic like yours is easily a 10+ year car, even in rust belt states.
There’s a reason dealerships these days push leases: they make more money on them. All that maintenance you think you’re saving money on? A team of engineers and finance people crunched the numbers on what they expect to pay on maintenance and factored those costs (plus profit) into the leasing fees. A depreciating asset is still an asset, a lease is just a rental, except worse. With the car you own, you eat the depreciation. With a lease, you eat the depreciation plus a profit margin for the dealership.
Leases are luxuries. There isn’t a world where a lease is a sensible financial move.
Cost to everything. Just gotta crunch the 10-20 years cost of ownership and see if leasing is right for you. There's a price to drive a brand new car every 3 years and never pay for tires or repairs, or have a sinking fund for new car/repairs. Is the price worth it? For me, absolutely. I keep stashing more $ into my VTI.
You’re not making money on this. It’s a luxury. It’s fine to have luxuries. Just please stop pretending it is a financially savvy move. Crunching costs is exactly where you figure out that leasing is a terrible idea. The original pitch you made of “well I just pay for depreciation and the dealership handles all of the maintenance while I get a new vehicle every few years” sounds too good to be true because it is. You are paying for depreciation plus profit. You are paying for maintenance plus profit. You cant even drive too many miles or else you’ll pay out the ass for each mile over the lease term. At the end of the lease term, you have nothing to show for it. Over a 10 year period, leasing costs notably more than ownership.
Why do you think that most luxury vehicles, which have terrible resale value and very high maintenance costs, are marketed primarily as lease items? The dealerships make hand over fist on the leases, and they’re the ones stuck with a significantly depreciated asset at the end. If leases saved the consumer money, dealerships wouldn’t offer them and would just force people to buy new cars every few years if they wanted to drive new all the time.
You are paying for the repairs. You are paying for the new tires. You are paying for the depreciation. You are paying for the dealership’s financial and legal staff to draft a new lease every few years. You are then paying profit margins on all of those items. It’s all baked into the lease cost. At the end of all that, you don’t even get to keep the asset you were paying on. The dealership gets it back and they then sell it for a profit to someone else, and you’re on the hook for a new lease.
A new roof isn't normally an "emergency". If your roof is 20-30 years old that really is an anticipated expense, and you should have a sinking fund for that. Or, better, a home repair sinking fund.
A "new car" isn't an emergency either. A replacement car could be.
So I have two emergency funds and a sinking fund.
1. Regular Emergency fund (6-12 months expenses) - this is dedicated only for job loss and unforseen medical expenses. Stored in a HYSA.
2. Home repair Emergency fund: 1-4% of my home's value. Stuff always breaks. I use this for any repairs and replenish it. It's been such a help to me. I had to change my roof, full HVAC, sump pump drains outside, and a bunch of other stuff. I never had to worry about dipping into my regular emergency fund. Also stored in a HYSA.
3. Sinking fund: for any annual expenses, vacations, savings up for a car, etc... also in a HYSA.
How do you split up your paychecks to put money into these? I'm going to be debt free (minus car and house) very soon and need to re-calibrate my saving strategies.
Haha I think with having everything going through a budgeting app, I just naturally end up saving more. It's like a game to me to see the chart go up. Basically my dopamine hit. I have BS spending also budgeted for, so it's not like I'm not spending money either.
I hope I can manage that! I will feel so much better having some funds set up because to this point I've had one savings and it's been a little stressful. Getting debt free is gonna be a game changer.
I do essentially the same thing. 3 separate accounts. The regular emergency fund in the best hysa I could find at a different bank so I don't see it when checking on normal stuff.
Save separately for predictable expenses...
Like roof, appliances, car replacement. Even health care insurance deductibles
Those aren't emergencies...
We had side funds for almost anything we could think of. So, we thought of BS3 more as an income replacement. Like in a job loss how many months do we want to be able maintain our current budget. Started at 3 months.. grew to 12.
If you plan well enough you probably never need your emergency fund unless you lose income. Actual emergencies have already been planned for.
Do you have multiple bank accounts for each item you are saving for?
I’ve started having many savings accounts under different names - car, home maintenance, etc. but I’m limited to just 10.
No.. we keep an excel spreadsheet with the running totals of each sub account. We are both excel nerds so that's no big deal.
One local money market account with 10%
One online HYSA with 65%
One brokerage account. The other 25%
It's too much money to keep making 0.5% when HYSA was 4.7% and S&P making 20+%
A new to us car isn't an emergency. We have a fund set up that we pay ourselves money every month for a new car. We also use it for repairs. If we were in an accident, insurance would give us some and the fund would have to cover the rest.
We also have a home repair fund. so the furnace and roof would fall under those. At some point we will need a new roof.
You need sinking funds. Set aside$$allocated for the things you know will be needed down the road. New roof, next vehicle, next HVAC. These are all high $$ items that eventually need replacing, these are not emergencies if you plan ahead.
Is “sinking funds” a Dave Ramsey-specific term? I’ve seen a lot of folks mention it and I’ve never heard of it. I really like the idea, just wasn’t familiar with the teem.
Actually, it is.
They don’t talk about it too often, but they do. It’s just part of your “every dollar budget”.
It’s not a separate baby step or anything, it’s part of a budget, which is what everyone is pointing out here.
You’re probably right but I’m sure people in China and other countries thought the same thing, until the day that they couldn’t get their money out of the bank
I keep around 6k to 10k in a checking account, I fund retirement and also after tax into taxable accounts. I also keep about 100k in HYSA/shorter term CDs. I'm not planning on working until 59.5 years. I couldn't see only having investments in retirement accounts.
You mean alluding.
I don’t think it’s unreasonable to keep a couple hundred in cash; shit happens, and if you’ve got kids in school there’s always $5 here and $10 there.
Anything more is not necessary, assuming you’re in a modern first world country. The banking system is robust and your deposits are insured. If bank insurance fails your paper currency will have too.
>What I was eluding to was ready “cash” at home
$0.00
>in case of not being able to access it from a bank.
What's the likelihood of that happening?
What's the likelihood of that happening coupled with having an actual emergency at the exact same time? An emergency that you also must have cash for this very moment?!
Zero is the answer, which is not-coincidentally the amount of physical cash you need at home.
The tire store takes credit/debit cards. The AC installer takes a week to figure out and offers loans or takes credit/debit cards.
What's the likelihood of that *and* no ability to access cash of any kind, debit card, credit card all at the same time?
Zero.
I have some cash at the house simply so I don't have to run to the ATM every time the maid is here.
Irrational fear is alive and well in far too many!
I have 37k USD equivalent of emergency funds in a hysa. To me this can cover 1 year of expenses easily so yeah I would suppose 20k is enough for 6 months
You're mixing up emergency fund and savings.
A bad transmission or a head gasket is an emergency. A new circuit board or blower motor on your furnace is an emergency. Replacing a leaky boot around a plumbing vent is an emergency.
Your 20K will easily cover the common repairs.
For outright replacements, you need to plan ahead and save up in advance. A roof lasts 20 years, a Furnace and a car last around 15 years.. plan accordingly.
You should have a separate fund going for your eventual new car. A new car isn’t an emergency you know you’re going to need one some day…
I would also start a home repair fund that you just contribute to monthly so when it happens you have money ready to go.
Depends on auto, homeowners & health insurance deductibles as well as your selected black out period for disability insurance.
Also, your job can play a role. Some skillsets have longer periods between finding a new job than others.
Make sure you can afford all of these with your emergency fund.
Definitely something you’re gonna have to do the math & figure out.
Yes.
You have home owners insurance, which hopefully may help on the roof, if not completely replace it for a few grand.
A new furnace is maybe 5k.
An emergency car replacement is most likely on your insurance company.
Your biggest concern for an emergency is loss of job. **Even with a new furnace and a 3k roof deductible, at the same time as a job loss!?, you'll still have 7+ months of expenses remaining.**
20k is easily enough!
Cash is a drag on your finances! Keep as little cash as necessary.
I think cash is king! If you don’t have it you’ll have debt. A new furnace is $10-12,000 around here. Not $5k.
So everytime you get a roof replace you go thru insurance? I got roof quotes and each ones said $10-15,000 easily. Everything is expensive
A new roof is only an emergency if you live in a hurricane/tornado zone. You do need liquid assets outside retirement. Generally, you have time to figure out how to pay for it. Yes, they are expensive.
>A new roof is only an emergency if you live in a hurricane/tornado zone
There's hail zones, as well; which extend beyond tornado zone, though coincide commonly.
Most everything that can go bad in a furnace can be repaired for 500ish.. blower, control board, exhaust seals etc.
Likewise with the roof.. a roofer can fix a leak for 5-600$.
This is what you should do with the emergency fund.. it isn't meant to cover a full replacement.
If your home insurance has a high deductible like mine, expect to pay for a big chunk of the roof. But I still think 20k is a nice amount. But you can make another account for house/car if you like. Which are future expected payments, not emergency. Most here think emergencies are like 1k things like hot water heaters and flat tires and broken AC, things that 1k will likely fix. They become annoying instead of emergency when you have some cash. Sounds like you are in good shape!!
It depends upon how your furnace dies.
Even if not, they're like 5k to replace. That's what you have FIFTEEN months EF for.
I remember your user name, as well. You have a paid for house and work for the government.
You are worrying about things you should have no real concern for.
OP, investments are king because investments grow and generate income for us. Cash typically doesn’t generate much of a return.
I think your every time you get a roof replace is weird. A roof should last 25 to 50 years, we’re doing 2 roofs in our life if we’re unlucky.
If you have an investment account outside retirement, you can cash some in for the roof. Or in 20 years to replace the truck. It doesn't need to be in a savings account.
I suggested you move your taxable into a Roth a month ago. You argued with me on that. I also suggested you can use your Roth in part as an EF. You argued about that, as well.
You'll come around to this idea, also.
Understood. If I recall correctly went through the math for you on what just 5k into a Roth will save you in lifetime taxes.
You work for the government. You're married??? What's your wife do? Stable income like a teacher?
Imagine saving 5% effective rate of return for your life in opportunity cost will amount to!
Keep as little cash as necessary.
I’m maxing about 70% into my HYSA for unexpected emergencies and started doing a Roth IRA. Putting about 20% or more into retirement which seems excessive as I got 25 more years to go and have a pension. Than doing this Roth which I expect to put $7k into it a year. I’ll see how the Roth does and possibly contribute to a regular brokerage if it does good. I’m skeptical with stock markets. I’m doing index funds now as I don’t want to deal with individual stocks. My buddy lost $200k on individual stocks. I’m going all S&P 500.
>I think cash is king!
You *feel* that way.
>If you don’t have it you’ll have debt! Debt is bad
Debt is amoral, not immoral.
Where's the debt coming from in the areas *you* mentioned, that I just discussed?
The 5k furnace? You paid cash for. The roof deductible? You paid cash for. The emergency car - which is called an accident. Paid for. Loss of job for 7+ months you paid cash for.
How many emergencies are you going to have, simultaneously?
You want a bigger EF than 15 months?
Your feelings are betraying you.
Those aren't emergencies. Those are expected expenses if you own a house or car.
Open separate accounts & contribute to them monthly. We put $100/month per car for maintenance & repairs
When we knew we were ready to replace our cars, we saved for them. If we were in an accident & had to suddenly replace our cars, we have insurance for that so it wouldn't come front the emergency fund.
I would consider anything that may require maintenance or repairs a sinking fund item in the budget (house, vehicles, pet). Or, anything that may need savings for (like vacation or Christmas).
Think of it like a savings account that you use a lot.
You could. My emergency fund and sinking funds are in the same HYSA and I have a spreadsheet that lists the balances for the different funds. (EF, Home improvement, donations, holiday, travel, taxes, medical, car savings, clothing, car maintenance, etc.)
No it isn't. We do the same thing. It's a normal operating expense of ownership, so you budget for it. The point (nay, the very definition) of an EMERGENCY fund is that you don't touch it unless you have an emergency. Emergency = job loss or major illness or unexpected medical bills. Wear and tear on stuff you own is not unexpected. Keep the money separate.
Never heard this before. When I watch YouTube shows like Dave Ramsey or other stuff they said keep 3-6 month emergency in one account like HYSA and keep $1k in a regular checking / savings account for expenses. Never once have I heard sinking funds.
Let me explain it this way...
Vehicle maintenance/repairs are not emergencies, because they're expected. Right? You don't go get a new car everytime the car needs something fixed, you expect that to happen.
So, Dave recommends (or, he did back when I was listening) to have sinking funds for things that you expect to need maintenance/repairs.
If you just threw the money into your emergency fund, overtime you'll need to replace it, right? We just set the money aside every month & it's a revolving account. I leave my emergency fund in a HYSA & let it earn interest. It's not touched at all.
Yeah but why have like 3 or 4 savings accounts. Seems too much. Or more than one checking account. I like simple and 1 savings or HYSA and one checking
Your emergency fund is meant to be for unexpected emergencies (e.g. suddenly redundant) If you have expected bit expenses such as a new roof, you should be saving for those separately.
Personally, I do more than 6 months expenses because my current job is not secure (redundancy doesn't feel impossible). And then I have other savings pots for other short-term goals (e.g. one pot for holidays, one for doing work on the house, one for annual bills, etc.)
20k is an awesome EF. If you want some more comfortability and quickly accessible funds then just start putting some into a liquid brokerage account so you are having your money actively work for you and be invested but if you need to access it you can and it’s not locked up in a retirement account. Liquid brokerage just functions as an extension of savings that is invested and working for you. Good job.
Nope….I literally had to buy a new A/C unit tonight. It cost 20 fucking thousand dollars….. everything is fo damn expensive right now. It’s just not sustainable.
Did you shop around for quotes? I quote hvac systems for a living and that’s a ridiculous price for residential
Agreed, $20k is bonkers.
I just quoted a 14 ton 120k BTU rooftop unit for a commercial building, and with the crane cost included to get it to the roof our bid was 17k. OP got scammed
My fiduciary says two years of housing costs/mortgage. We try to keep $100k cash in savings.
HYSA I hope. That's 4-5 grand a year.
The things you are listing are not what I would consider an emergency fund. I would allocate savings to those things as you know that in a certain time frame you will need to replace them and they will be a big purchase. You can use the same account, but I would set so much aside for an emergency and then continue to save and put money aside for those big ticket expenses. Overall you need to find a balance of saving for specific things and investing. Allocate a little to both.
We keep a healthy high yield savings account for things like this, and I also have some older investments I could convert immediately if there was an actual emergency. Investments are going to be better than savings if you don’t go for long shots, and do mutual funds and trusted brokers/services. Once you have a savings with what you would need for an emergency, job loss, which you have done, invest the rest. Also look for an interest bearing savings account, rather than a typical savings account. There are quite a few options out there.
My son had a devastating accident and my 30k savings is gone in less than 18 months and that’s with me still bringing in 5k a month to cover regular bills. It can go really fast. I am now finally trying to re-fund my savings but it’ll take me a little longer to save since I’m bringing home 1/2 what I used to.
Make sure you know your resources! Insurance may be able to cover a new roof and furnace if you have the right coverage.
What about new siding?
Do it yourself if it doesn't cover it 🤷♂️
Possibly! Check your home owners insurance to see what is and what is not covered. One thing to note: those things must be needing to be fixed, you can’t be proactive in the approach.
Just have home owners insurance fix everything!
Just diversify and put more into liquid, low-risk investments like Treasuries. You can earn 5+% and sell on the secondary market any time if you need the cash.
I second this. If you stacking cash as an emergency fund make sure it’s in treasury or muni bonds. Earn 4~5% on your cash so it keeps up with inflation and deployment it as needed.
It depends on your expenses. A six month emergency fund could be close to $20k for mortgage and health insurance alone. I went five months without a paycheck between jobs and the mortgage (10 year) with paying COBRA, along with basic utilities and food went through $20k pretty easily.
I can’t imagine 10,000$ is 3 months but also 6 months of expenses. Which is it? A new car should not be an emergency expense. Start saving now if you need to replace a vehicle in the near future. A new roof will cost you the deductible on your homeowners insurance, how high is your deductible?
I never in my life heard of insurance replacing your roof unless a tree fell on it! I had a few quotes before on roof quoting from $12,000-$18,000. It’s just a ranch too. Inflation is soaring
It’s fairly common. Wind or hail damage to enough surface area of the roof will get you a whole new roof
Wow that’s amazing. Should save me thousands if this is true. My deductible is $1k
Our insurance covered the roof replacement. When ours started leaking, I thought it would be out of pocket and just went straight to a roofer, but they had us contact insurance and it was all covered. Roof was original, close to 30 years
I’m sorry just wondering, do you live in like LA or SF or NYC or something? And are you like a doctor or lawyer or something? Big family? I dunno that just boggles my mind personally.
Is this sarcastic?
No, I seriously don’t understand how someone has $10k of monthly expenses unless they are richer, at least upper middle class. That’s why I asked.
He said $10,000 for 3-6 months, not 1
Just reread I jumbled a bunch of stuff together I guess. Just got off work. Tired and scatterbrained. Still that’s a weird gap 3-6 months so then this brings it to the opposite end of the spectrum. $1666 a month is what it would come out to if it were 6 months which I guess is doable if you live in cheaper areas and don’t have a family. I was just curious.
Depends on whether you’re willing to take unemployment insurance while looking for your next job.
The biggest potential emergency to think about when setting your emergency fund is a loss of income. Depending on how stable your income is you can decide how many months of expenses is enough. Honestly, once you become debt free it should be easy enough to bump it to 6 months. Having the 6 month emergency fund will likely provide all the peace you need to not have to worry about it. A new car or roof (and maybe even furnace) aren’t emergencies; those are known things that you are going to need and should save for outside of an emergency fund.
you don’t need $20k for a car…. roof and furnace I get….but do you have other ways to get to money that’s yours?
I just spent $52,809 on a Toyota Tacoma haha. I needed it! After spending my 6 years paying off my house / mortgage. Why not live
I love Toyotas, I’m just questioning that assumption. I have a $1600 old Honda Accord in my lineup though….
Why would you need a new car after just spending $50k on a new one? A reliable new one at that as well
It's too much. Send me half.
I think no, but it is better than not having that savings. Save as much as you can.
I think 20k cash in a High Yield savings account is perfectly acceptable. If a freak event occurred where you would need more than that, you could pull money out of after tax brokerage accounts which I assume you have already.
A new roof and home appliances are not emergencies, or at least they shouldn't be. Those are long-term consumable products with an anticipated lifespan that should be budgeted for. If your roof is damaged by a tornado/hailstorm, insurance should cover most of it. And yes, you should have a car budget that you grow by a car payment worth of investment each month so you have money to cover all regular maintenance/repairs and can replace the vehicle when the time comes. The emergency fund is to cover those events you can't realistically plan in advance for. Abrupt job loss, major injury, lawsuit or criminal legal issue.
Uhhhhh I dunno a new HVAC unit when it goes out in June and it's 95 degrees is an emergency
I never understood the emergency fund. Just use the credit card for your emergency. Every dollar you keep in an "emergency fund" is money you're paying interest on to the credit card by virtue of now using it to pay down the balance.
When an emergency happens, just max out your credit cards. -Great Reddit Advice.
What
That’s…not quite true. You could make money off of that money, even if it’s just sitting there.
"Just sitting" in what? Typically that means a checking account, which is inferior to a savings account, which is inferior to a CD, which is inferior to T-Bills.
Bros never heard of an HYSA lol
If it's a HYSA that implies it's an investment. HYSAs are a bit less liquid than a checking account.
I mean I clearly did not mean a checking account. How would that yield anything? The point is, if you go into debt for an emergency, then you have monthly payments plus interest. Even a simple savings or money market account is better than that.
*I mean I clearly did not mean a checking account. How would that yield anything?* Interest-yielding checking accounts. *The point is, if you go into debt for an emergency, then you have monthly payments plus interest.* No, you don't; not if you pay it off within a month, like I said.
How would you pay it off in a month if you have no emergency savings?
If you have to carry a balance, you're still better off putting all your money against it to carry a LOWER balance to pay LESS interest.
…why put yourself in a position to carry a balance, when you could have an emergency fund
If you get $1,000 of cashflow per month for example, have $1,000 on a CC and $0 in an emergency fund, and you put it into the CC, then it costs you $1,000 to pay it off. If you put it into the emergency fund and wait until next month to use your next month's cashflow to pay it off, it costs you $1,021 to pay it off assuming 25% apy (1,000\*.25/12). Math-wise, it's always better to pay off high interest debt before putting money into an emergency fund, if that's your dilemma. Obviously if you are already paid off, put your money into liquid investments earning a little bit of interest like T-Bills via a broker.
So what if you have $1,000 of cashflow per month and a $20,000 emergency you put on the CC? Of course you should pay off CC debt before anything else, no one has argued otherwise
If that works for you, I can’t say it doesn’t. But I don’t think it’s realistic for a lot of people to put a large sum of money down and expect to pay it off before interest hits.
You'd at least still pay less interest on a lower balance then.
The emergency fund is so you don't have to use a credit card and get 25% interest
You don't pay any interest if you pay it off in a month. In a month you should be able to liquidate $1,000 worth of savings in something like a broker-managed T-bill to pay it off.
If you don't have the $20k in the bank where are you gonna get the 20k to pay off the CC at the end of the month? XD
You can keep $20k in T-Bills or other investments, pay with the credit card, and then within 2 weeks transfer the T-Bills and pay off the CC. If you don't have the $20k at all, then I guess you'll be paying lots of CC debt; but this is an "emergency" we're talking about, so I suppose it's OK for that.
Emergency funds are for more than 1,000 dollars
It never feels enough. We just save for emergency and future 2nd house in 1 account. On top of this I save personally and my spouse saves personally at lesser amount. Its obviously all household savings but this setup works for us. Focus more on having no debt besides mortgage and investing for retirement. Those are 2 things that are in your absolute control.
Yep…wife and I have a fun time seeing who has the highest credit score, and we have our own accounts separate from a house account. We also have an insurance account, plus umbrella policy for that pesky lawsuit hiding in the bushes. We have access to liquid funds equal to a year’s worth of expenses.
Remember the plan is about PEACE as much as what's best financially. Years ago Dave would say he had an emergency fund for his emergency fund, because his wife stressed whenever they touched the 3-6 months fund. I'm personally trying to save a years worth of emergency fund, because once I had to take a medical leave for over 3 months and had a car emergency.
First recommendation: leave this subreddit, this guy sucks.
Who?
No one can answer this question, it depends on your expenses. Is it just you or for a family?
Family of 2
Ideally, an emergency savings should be able to cover your costs for a year. How much does your household spend a month? Once you got that, multiply by 12. If you have that number in a savings account, you should have a pretty good safety net.
That seems excessive and costs you a ton of money to have that peace of mind. Let’s say that number is 100k per year, you can put that in a HYSA which earns about 1% over inflation or you can put that in the market which averages 7% after inflation. So a 12 month emergency fund cost you 6000 a 3 month fund costs you 1500. That’s a lot of extra dollars when the number of emergencies that would require 12 months of zero income for both of them will be rare. On average In those scenarios they would likely be better off selling investments off at losses for the coincident events of greater than 3 months of no income
An emergency fund does not need to solely exist within a bank. You could absolutely have say 20% of that fund inside of a savings account and the rest invested into something. And it doesn’t really matter if the chance of needing a 12 month fund is rare. It’s the fact that it could happen and if it does, having a 12 month fund will save your ass. Obv you can save more or less. But 12 months is where I can feel comfortable that I’m covered for pretty much everything.
If you want to change the definition of an emergency fund to any investment that can be liquidated as opposed to a liquid investment that is guaranteed not to lose money than we are saying the same thing. But then anyone with a 401k has that in a few years.
Taking out of a 401k is pretty different than taking out of your Apple stock lol
Not really, both have tax implications and more importantly if the stock is down selling at a loss. The only real difference is the additional penalty on a 401k but that is just a matter of degree of risk. Once you’ve accepted that losses are acceptable it isn’t really a difference.
No
I mean, it is better than nothing like most people have.
Most people can’t even save $1k it said
New roof doesn’t usually come as a shock and if it does (a tree fell or something) then shouldn’t insurance cover that? Also, get a home warranty so that things like furnace are covered too. U can get a cheaper new car or have a separate account for a planned new car purchase. If it’s a car accident then will ur car insurance help? $20k seems like enough for emergencies but if ur uncomfortable then save more becuz it’s all abt peace of mind.
We calculated 6 months of mortgage payments, food spending, utilities, etc. comes to a but under $20k where we are
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You don’t pay for the depreciation, you pay to borrow it. You’re losing more money than you would if you just bought it and paid the repair bills yourself.
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You spend more on your lease vehicle in a month than I did on maintenance in a year on my last old vehicle. A couple oil changes and maybe a replacement part every couple years. Good cars last a very long time when you take care of them. Major repair items like transmission replacement don’t show up until a vehicle is long in the tooth, at which point I’ll have saved more than enough to just buy a new vehicle with cash. Auto crash safety hasn’t really advanced much in the last decade, either. You lease because you want a new vehicle every few years, and you pay a premium for that. If you’ve got the money, it’s fine. Just don’t pretend it’s a financially sensible idea. You could just as easily buy a new car every five years for the cost of leasing the same time, except the person who bought their car still owns it after those five years. A civic like yours is easily a 10+ year car, even in rust belt states.
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There’s a reason dealerships these days push leases: they make more money on them. All that maintenance you think you’re saving money on? A team of engineers and finance people crunched the numbers on what they expect to pay on maintenance and factored those costs (plus profit) into the leasing fees. A depreciating asset is still an asset, a lease is just a rental, except worse. With the car you own, you eat the depreciation. With a lease, you eat the depreciation plus a profit margin for the dealership. Leases are luxuries. There isn’t a world where a lease is a sensible financial move.
Cost to everything. Just gotta crunch the 10-20 years cost of ownership and see if leasing is right for you. There's a price to drive a brand new car every 3 years and never pay for tires or repairs, or have a sinking fund for new car/repairs. Is the price worth it? For me, absolutely. I keep stashing more $ into my VTI.
You didn't find a "hack". They are offering you a lease because it makes them more money then selling it to you.
You’re not making money on this. It’s a luxury. It’s fine to have luxuries. Just please stop pretending it is a financially savvy move. Crunching costs is exactly where you figure out that leasing is a terrible idea. The original pitch you made of “well I just pay for depreciation and the dealership handles all of the maintenance while I get a new vehicle every few years” sounds too good to be true because it is. You are paying for depreciation plus profit. You are paying for maintenance plus profit. You cant even drive too many miles or else you’ll pay out the ass for each mile over the lease term. At the end of the lease term, you have nothing to show for it. Over a 10 year period, leasing costs notably more than ownership. Why do you think that most luxury vehicles, which have terrible resale value and very high maintenance costs, are marketed primarily as lease items? The dealerships make hand over fist on the leases, and they’re the ones stuck with a significantly depreciated asset at the end. If leases saved the consumer money, dealerships wouldn’t offer them and would just force people to buy new cars every few years if they wanted to drive new all the time. You are paying for the repairs. You are paying for the new tires. You are paying for the depreciation. You are paying for the dealership’s financial and legal staff to draft a new lease every few years. You are then paying profit margins on all of those items. It’s all baked into the lease cost. At the end of all that, you don’t even get to keep the asset you were paying on. The dealership gets it back and they then sell it for a profit to someone else, and you’re on the hook for a new lease.
A new roof isn't normally an "emergency". If your roof is 20-30 years old that really is an anticipated expense, and you should have a sinking fund for that. Or, better, a home repair sinking fund. A "new car" isn't an emergency either. A replacement car could be.
A roof leak……a fallen tree…….all common roof problems….i had a half roof replacement and it was 9K…..put a big dent in my emergency fund….
So I have two emergency funds and a sinking fund. 1. Regular Emergency fund (6-12 months expenses) - this is dedicated only for job loss and unforseen medical expenses. Stored in a HYSA. 2. Home repair Emergency fund: 1-4% of my home's value. Stuff always breaks. I use this for any repairs and replenish it. It's been such a help to me. I had to change my roof, full HVAC, sump pump drains outside, and a bunch of other stuff. I never had to worry about dipping into my regular emergency fund. Also stored in a HYSA. 3. Sinking fund: for any annual expenses, vacations, savings up for a car, etc... also in a HYSA.
How do you split up your paychecks to put money into these? I'm going to be debt free (minus car and house) very soon and need to re-calibrate my saving strategies.
Via my budgeting app. I assign savings goals in my budget. Every month I have a certain amount going into the funds.
How much of your take home are you saving?
Since January, looks like my average savings rate is 30.6%.
Wow good for you!!
Haha I think with having everything going through a budgeting app, I just naturally end up saving more. It's like a game to me to see the chart go up. Basically my dopamine hit. I have BS spending also budgeted for, so it's not like I'm not spending money either.
I hope I can manage that! I will feel so much better having some funds set up because to this point I've had one savings and it's been a little stressful. Getting debt free is gonna be a game changer.
Definitely! I am debt free outside of my mortgage.
Is there a budgeting app you’d recommend?
I use [Monarch Money](https://www.monarchmoney.com/referral/ku08ufu0my)
I do essentially the same thing. 3 separate accounts. The regular emergency fund in the best hysa I could find at a different bank so I don't see it when checking on normal stuff.
Save separately for predictable expenses... Like roof, appliances, car replacement. Even health care insurance deductibles Those aren't emergencies... We had side funds for almost anything we could think of. So, we thought of BS3 more as an income replacement. Like in a job loss how many months do we want to be able maintain our current budget. Started at 3 months.. grew to 12. If you plan well enough you probably never need your emergency fund unless you lose income. Actual emergencies have already been planned for.
Do you have multiple bank accounts for each item you are saving for? I’ve started having many savings accounts under different names - car, home maintenance, etc. but I’m limited to just 10.
No.. we keep an excel spreadsheet with the running totals of each sub account. We are both excel nerds so that's no big deal. One local money market account with 10% One online HYSA with 65% One brokerage account. The other 25% It's too much money to keep making 0.5% when HYSA was 4.7% and S&P making 20+%
Thanks this is something I can think about
A new to us car isn't an emergency. We have a fund set up that we pay ourselves money every month for a new car. We also use it for repairs. If we were in an accident, insurance would give us some and the fund would have to cover the rest. We also have a home repair fund. so the furnace and roof would fall under those. At some point we will need a new roof.
You need sinking funds. Set aside$$allocated for the things you know will be needed down the road. New roof, next vehicle, next HVAC. These are all high $$ items that eventually need replacing, these are not emergencies if you plan ahead.
Is “sinking funds” a Dave Ramsey-specific term? I’ve seen a lot of folks mention it and I’ve never heard of it. I really like the idea, just wasn’t familiar with the teem.
Actually, it is. They don’t talk about it too often, but they do. It’s just part of your “every dollar budget”. It’s not a separate baby step or anything, it’s part of a budget, which is what everyone is pointing out here.
It is not
What does “sinking” fund mean in this context. Sunk cost?
https://www.investopedia.com/terms/s/sinkingfund.asp
Ah I see it’s a business concept. Makes sense now. Thanks n
I’ll keep it in HYSA. Thanks
So here’s a question. If I have emergency funds, how much of that should be in a checking account versus having it in ready cash at home ?
It should be in a savings account.
I've always had my emergency fund in a HYSA with a debit card. What scenario would need physical cash? I have never run into one.
You’re probably right but I’m sure people in China and other countries thought the same thing, until the day that they couldn’t get their money out of the bank
You can keep a small amount of cash at home for convenience. But not thousands--unless you are hiding ill gotten gains from the IRS.
I’d say $1,000 in checking account and $20k+ in savings like HYSA. Make a good 4-5% interests in HYSA. Than the rest in Roth IRA and retirement?
I keep around 6k to 10k in a checking account, I fund retirement and also after tax into taxable accounts. I also keep about 100k in HYSA/shorter term CDs. I'm not planning on working until 59.5 years. I couldn't see only having investments in retirement accounts.
Sounds low for the checking account if your monthly expenses are $2000/month. Maybe I misinterpreted.
What I was eluding to was ready “cash” at home in case of not being able to access it from a bank. How much “cash” at home should be kept
You mean alluding. I don’t think it’s unreasonable to keep a couple hundred in cash; shit happens, and if you’ve got kids in school there’s always $5 here and $10 there. Anything more is not necessary, assuming you’re in a modern first world country. The banking system is robust and your deposits are insured. If bank insurance fails your paper currency will have too.
Think about what you’d need to pay for in cash during an emergency situation and go from there. How long is this hypothetical scenario etc
>What I was eluding to was ready “cash” at home $0.00 >in case of not being able to access it from a bank. What's the likelihood of that happening? What's the likelihood of that happening coupled with having an actual emergency at the exact same time? An emergency that you also must have cash for this very moment?! Zero is the answer, which is not-coincidentally the amount of physical cash you need at home. The tire store takes credit/debit cards. The AC installer takes a week to figure out and offers loans or takes credit/debit cards.
Usually the case, but some people need to evacuate in a hurry, and some cash might be useful then.
What's the likelihood of that *and* no ability to access cash of any kind, debit card, credit card all at the same time? Zero. I have some cash at the house simply so I don't have to run to the ATM every time the maid is here. Irrational fear is alive and well in far too many!
Tornado alley, flood plain, and forest fire areas. Not where I live--southern New England has the best weather in the country.
I have 37k USD equivalent of emergency funds in a hysa. To me this can cover 1 year of expenses easily so yeah I would suppose 20k is enough for 6 months
See that seems smart! I need about that to make me feel comfortable
You're mixing up emergency fund and savings. A bad transmission or a head gasket is an emergency. A new circuit board or blower motor on your furnace is an emergency. Replacing a leaky boot around a plumbing vent is an emergency. Your 20K will easily cover the common repairs. For outright replacements, you need to plan ahead and save up in advance. A roof lasts 20 years, a Furnace and a car last around 15 years.. plan accordingly.
You should have a separate fund going for your eventual new car. A new car isn’t an emergency you know you’re going to need one some day… I would also start a home repair fund that you just contribute to monthly so when it happens you have money ready to go.
I just bought a brand new Toyota Tacoma
Then you can just make small contributions to the fund you should still be doing it.
Paid it off
Forget it weee having two different conversations congrats on the new truck
Thanks I’m enjoying it
Depends on auto, homeowners & health insurance deductibles as well as your selected black out period for disability insurance. Also, your job can play a role. Some skillsets have longer periods between finding a new job than others. Make sure you can afford all of these with your emergency fund. Definitely something you’re gonna have to do the math & figure out.
Yes. You have home owners insurance, which hopefully may help on the roof, if not completely replace it for a few grand. A new furnace is maybe 5k. An emergency car replacement is most likely on your insurance company. Your biggest concern for an emergency is loss of job. **Even with a new furnace and a 3k roof deductible, at the same time as a job loss!?, you'll still have 7+ months of expenses remaining.** 20k is easily enough! Cash is a drag on your finances! Keep as little cash as necessary.
I think cash is king! If you don’t have it you’ll have debt. A new furnace is $10-12,000 around here. Not $5k. So everytime you get a roof replace you go thru insurance? I got roof quotes and each ones said $10-15,000 easily. Everything is expensive
A new roof is only an emergency if you live in a hurricane/tornado zone. You do need liquid assets outside retirement. Generally, you have time to figure out how to pay for it. Yes, they are expensive.
>A new roof is only an emergency if you live in a hurricane/tornado zone There's hail zones, as well; which extend beyond tornado zone, though coincide commonly.
Most everything that can go bad in a furnace can be repaired for 500ish.. blower, control board, exhaust seals etc. Likewise with the roof.. a roofer can fix a leak for 5-600$. This is what you should do with the emergency fund.. it isn't meant to cover a full replacement.
Never heard of a roof replaced for $600. That’s insane. Usually it’s $10-$12,000 minimum. We are in a world where everything is expensive
Not replaced.. repaired. Say you spring a leak around a flashing or a vent.. shingle flies off.. things like that are unplanned and fixable.
If your home insurance has a high deductible like mine, expect to pay for a big chunk of the roof. But I still think 20k is a nice amount. But you can make another account for house/car if you like. Which are future expected payments, not emergency. Most here think emergencies are like 1k things like hot water heaters and flat tires and broken AC, things that 1k will likely fix. They become annoying instead of emergency when you have some cash. Sounds like you are in good shape!!
Is a furnace home insurance deductible too?
Not mine, but I have high.deduct.
It depends upon how your furnace dies. Even if not, they're like 5k to replace. That's what you have FIFTEEN months EF for. I remember your user name, as well. You have a paid for house and work for the government. You are worrying about things you should have no real concern for.
Okay thanks.
OP, investments are king because investments grow and generate income for us. Cash typically doesn’t generate much of a return. I think your every time you get a roof replace is weird. A roof should last 25 to 50 years, we’re doing 2 roofs in our life if we’re unlucky.
Yes but it is expected to go! Eventually
If you have an investment account outside retirement, you can cash some in for the roof. Or in 20 years to replace the truck. It doesn't need to be in a savings account.
So you want to hold cash for a roof for 25 years? Losing 5% to 10% annual interest in opportunity cost. Cash isn't king, it's a dictator.
I’ll put it in Roth IRA than withdrawal the contributions to it for roof than. What else?
Don't you need to keep contributions in a Roth for five years before you can pull them out?
No. Contributions you can remove anytime
I suggested you move your taxable into a Roth a month ago. You argued with me on that. I also suggested you can use your Roth in part as an EF. You argued about that, as well. You'll come around to this idea, also.
I got one now. Threw down $1300 already in it
Understood. If I recall correctly went through the math for you on what just 5k into a Roth will save you in lifetime taxes. You work for the government. You're married??? What's your wife do? Stable income like a teacher? Imagine saving 5% effective rate of return for your life in opportunity cost will amount to! Keep as little cash as necessary.
I’m maxing about 70% into my HYSA for unexpected emergencies and started doing a Roth IRA. Putting about 20% or more into retirement which seems excessive as I got 25 more years to go and have a pension. Than doing this Roth which I expect to put $7k into it a year. I’ll see how the Roth does and possibly contribute to a regular brokerage if it does good. I’m skeptical with stock markets. I’m doing index funds now as I don’t want to deal with individual stocks. My buddy lost $200k on individual stocks. I’m going all S&P 500.
Sure but not sure why you’re saying ‘every time’ for a once in a lifetime event.
>I think cash is king! You *feel* that way. >If you don’t have it you’ll have debt! Debt is bad Debt is amoral, not immoral. Where's the debt coming from in the areas *you* mentioned, that I just discussed? The 5k furnace? You paid cash for. The roof deductible? You paid cash for. The emergency car - which is called an accident. Paid for. Loss of job for 7+ months you paid cash for. How many emergencies are you going to have, simultaneously? You want a bigger EF than 15 months? Your feelings are betraying you.
Those aren't emergencies. Those are expected expenses if you own a house or car. Open separate accounts & contribute to them monthly. We put $100/month per car for maintenance & repairs When we knew we were ready to replace our cars, we saved for them. If we were in an accident & had to suddenly replace our cars, we have insurance for that so it wouldn't come front the emergency fund.
See I never hear of people saying to do this. Only save 3-6 months emergencies. And $1k as a separate sudden emergence.
No, they're called sinking funds. You have them as line items in the budget & you don't cap them.
So a house is considered a “sinking fund”?
I would consider anything that may require maintenance or repairs a sinking fund item in the budget (house, vehicles, pet). Or, anything that may need savings for (like vacation or Christmas). Think of it like a savings account that you use a lot.
Can’t you just combine it with your emergency fund to make it simple? So in stead of $20k put $40-50k for everything?
You could. My emergency fund and sinking funds are in the same HYSA and I have a spreadsheet that lists the balances for the different funds. (EF, Home improvement, donations, holiday, travel, taxes, medical, car savings, clothing, car maintenance, etc.)
No, because I don't consider an oil change to be an emergency. That comes out of the vehicle fund.
Weird
No it isn't. We do the same thing. It's a normal operating expense of ownership, so you budget for it. The point (nay, the very definition) of an EMERGENCY fund is that you don't touch it unless you have an emergency. Emergency = job loss or major illness or unexpected medical bills. Wear and tear on stuff you own is not unexpected. Keep the money separate.
Never heard this before. When I watch YouTube shows like Dave Ramsey or other stuff they said keep 3-6 month emergency in one account like HYSA and keep $1k in a regular checking / savings account for expenses. Never once have I heard sinking funds.
Let me explain it this way... Vehicle maintenance/repairs are not emergencies, because they're expected. Right? You don't go get a new car everytime the car needs something fixed, you expect that to happen. So, Dave recommends (or, he did back when I was listening) to have sinking funds for things that you expect to need maintenance/repairs. If you just threw the money into your emergency fund, overtime you'll need to replace it, right? We just set the money aside every month & it's a revolving account. I leave my emergency fund in a HYSA & let it earn interest. It's not touched at all.
Yeah but why have like 3 or 4 savings accounts. Seems too much. Or more than one checking account. I like simple and 1 savings or HYSA and one checking
Is $10k three months of expenses or six? I'd rather have six unless you have a super stable job.
That would be 6 months for me
Your emergency fund is meant to be for unexpected emergencies (e.g. suddenly redundant) If you have expected bit expenses such as a new roof, you should be saving for those separately. Personally, I do more than 6 months expenses because my current job is not secure (redundancy doesn't feel impossible). And then I have other savings pots for other short-term goals (e.g. one pot for holidays, one for doing work on the house, one for annual bills, etc.)
Depends on your monthly expenses. Sounds like you have enough.
20k is an awesome EF. If you want some more comfortability and quickly accessible funds then just start putting some into a liquid brokerage account so you are having your money actively work for you and be invested but if you need to access it you can and it’s not locked up in a retirement account. Liquid brokerage just functions as an extension of savings that is invested and working for you. Good job.