Comments on: An Emergency Fund for Every Emergency

By: cathleen

cathleen — Mon, 07 Sep 2009 18:38:44 +0000

Well, as a small business owner this is what I do everyday running my operation.
I plan to the smallest detail that I can anticipate because there will always be those things you can’t anticipate, the Black Swans if you will

So it makes perfect sense for me to approach our personal money in the same way.
People are different, whatever works.

I’m going to open my new ING checking and savings accounts this quarter and I’m really excited about it. Dork

By: DDFD at DivorcedDadFrugalDad

DDFD at DivorcedDadFrugalDad — Mon, 17 Aug 2009 17:02:24 +0000

Targeted emergency and savings funds make good sense– you know when it is fully funded and you can move on to your next goal. There is a lot to be said about the sense of personal pride and satistfaction of meeting even small goals– a real motivator.

By: No Debt Plan

No Debt Plan — Sat, 15 Aug 2009 03:25:54 +0000

Don’t bash it ’till you try it.

Yes if you had $1,000 total to your name and had an expense of $1,000 you are going to use all that money to fix the expense.

But what if you had a $400 expense? Would you be disciplined enough to dip into the same account twice?

Again. Mental or electronic barriers keep you from spending your money. Maybe it isn’t a problem you have. But for a lot of people it is.

By: Jill

Jill — Fri, 14 Aug 2009 19:54:32 +0000

I like the separate accounts idea, and was really diligent about this in college (now granted there wasn’t a lot of money to deal with!). Every year, I would pay for my books using my credit card. A month or so later, I would receive a refund check from scholarships and grants after I had paid my tuition. I put that money in a specific account and used it to pay for my book bill, as well as other ‘invariable’ expenses I knew I would incur. This separate account was harder for me to access on a whim, making it difficult for me to just spend that money at the mall! For me it is really hard to feel like I’m making progress towards a goal if I just lump everything together; I like having things separate so I can see the progress, thus keeping me motivated

By: KellyB

KellyB — Fri, 14 Aug 2009 15:05:57 +0000

I divvied up my emergency fund about 3 years ago, and it was one of the best things I ever did. I have 3 months living expenses (and although I’ve been unemployed for 5 months already, I haven’t touched it yet). Plus I also have sub accounts for car, home, medical, insurances, vacation, Christmas, and various other annual and quarterly expenses. These things used to “surprise” me somehow, even though I should have expected them. Now that I’ve got funds put aside for these specific purposes, it gives me much greater peace of mind when something “unexpcted” comes up.

By: Miranda

Miranda — Fri, 14 Aug 2009 14:37:53 +0000

I think it depends on personal preference. Like Craig, I’m happy with one big emergency fund. But I can see where sub-accounts would be attractive. I have a “cushion” in my checking account (not a huge one, but a couple hundred dollars — I’m not entirely comfortable with a true zero-based budget) to cover what I think of as “small emergencies” like the tire going flat or some such.

By: fern

fern — Fri, 14 Aug 2009 14:34:10 +0000

This just sounds silly to me. If you have $500 in a car repair fund and $500 in a house repair fund and then your clutch goes and you need to replace it for $1,000 (or whatever), obviously, you’re not going to say, gee, guess i can’t fix the clutch becus i only have $500 in the my car repair fund. You’re going to use whatever savings you have, regardless of categories, to take care of the car.

By: No Debt Plan

No Debt Plan — Fri, 14 Aug 2009 14:23:49 +0000

I agree to disagree. Dave Ramsey likes to argue about the psychology of money. I have disagreed with Ramsey in the past, but if someone has a spending problem then physically or electronically creating barriers to accessing the money may help prevent them spending that extra cash.

It’s similar to setting goals. You are much more likely to reach a goal if you set it and track it than if you don’t. So setting a goal of $1000 for home maintenance gives you something to track rather than mixing it all in together.

Are general emergency funds okay? Sure. But going the extra step in certain areas really doesn’t take that much more time.

It all depends on how people define emergency funds. Most people base it off of living expenses (3 months of expenses, etc.). To me that isn’t for all emergencies necessarily — that’s for unemployment specifically.