I feel like I just keep circling back around to this topic! For a while last year I was wondering if I needed an e-fund at all — after all, I have no dependents to provide for and if financial disaster really struck, I’d be able to give up my housing (which is just a rented room with no lease to break) and move in with friends or family. Everyone shouted me down on that, and I was convinced 🙂 [Side note: at that time, five comments was a huge number on one of my posts. On a day to day basis I don’t feel like I’ve made huge progress at growing the blog, but looking back at those early posts they look so lonely! Thanks for reading and commenting, y’all, every single one of you makes my day.]
All right, anyway: although I did come to realize the importance of having an e-fund, I’ve somersaulted around on how much should be in it. I changed the goal from $3000 to $5000 to $10000 to $6000 and now it’s at $5000, for no real reason other than that’s half of $10000, a number that seemed impossibly huge to me. Although a year ago I was saying things like “I couldn’t possibly get it large enough to really live off for six months or a year” and as a matter of fact I ought to reach six months’ worth by the end of 2015, if not before, so maybe I shouldn’t sell myself too short 🙂
What I was wondering about, was how much six months of expenses really amounted to. I seem to spend around $1100 a month lately if I’m not being overly scrimp-y, but also not randomly buying all sorts of stuff. So $6600 would get me through six months. Realistically, however, if I lost my income suddenly lots of stuff would be up in the air. So, what would I really need for six jobless months? Here’s my best guess:
1) Rent: $800 (that’s two months in my current rented room; if I couldn’t replace my income in that time frame, I’d move in with friends or family.)
2) Food: $1500 (that’s $250 a month, and I’d say that’s a fairly generous allowance; I absolutely could live on less, but let’s leave it there for now.)
3) Car: $900 (insurance at $50 a month, plus much more gas than I normally use since I’m assuming at some point in there I’d be driving halfway across the country to move in with someone)
4) Storage: $0 (quite a bit of my stuff is currently rent-free in a friend’s basement; I’d put anything else that wouldn’t fit in my car down there and it could stay for a couple of years until she finishes her graduate program and moves out)
5) Cell phone: $150 ($25/month)
6) Misc personal care/medical: $250 (I usually allot $100 a month for this but in an emergency situation I’d reduce to bare-bones supplies and avoid doctors’ visits — especially since I wouldn’t have insurance)
7) Misc other spending: $600 ($100 a month to cover whatever else I haven’t thought of)
8) The emergency fund’s emergency fund: $1000 (to cover car repairs or what have you)
Interesting. That adds up to $5200 — I’m writing this post and doing the math “live” so I had no idea when I started that list that the final total was going to work out so close to my random e-fund goal! That’s probably a sign that it’s fate 🙂 It seems to me like the takeaway here is that aiming for $5000 is good for now; if I ever start living/spending like more of a grownup — which frankly is starting to look pretty doubtful to me — I’ll have to look into increasing it.
Do you keep an e-fund that has X months’ expenses, or just aim for a nice round number like $1000, $5000, or $10,000? At what point do you think you have “too much” money in cash and start to think about investing some?