I Can Smell The Fiscal Responsibility

Set backs be damned - we now have a 6 month emergency fund!

It's taken a long time to get here, but we finally made it and it feels awesome. We now have enough cash in the bank to make it through 6 extremely lean months of living if we lost our jobs or to pay for any other emergency situations that may come calling.

As I look back at my blog though I realize that I haven't posted much about the "Why" or "How" we made it happen so here goes.

Why 6 months?

Frankly, because pretty much everyone out there recommends it. It's true, it's a fairly arbitrary figure. After all, an emergency is an emergency mostly because you can't predict it - so who knows if 6 months is overkill or just enough money to have? In our case though, I think 6 months is a great starting off point. Our jobs are fairly stable, but since I'm the primary wage earner of the household and my job is less stable than my husband's, I'm more comfortable with having more money in the bank. And even though I actually think I'm highly marketable and live in a great area to continue my career, my salary will start to work against me. The general rule is that the more you make, the longer it takes to find a job. Therefore, gotta have bank in the bank.

Plus, how much would it just plain suck to be stressed about money when you're already stressed about finding a new job? A lot. I don't want to deal with it.

PLUS, Murphy's law comes into play here too. I like to think that because we have this fund, we won't need it. Although by saying that I think I just jinxed myself...

How we did it:

We worked on our emergency fund in two ways: slowly but surely and like crazy money ninja maniacs.

On the slowly but surely front, we just set up automatic contributions to our ING account. Each payday a certain amount of money came straight out of our account and into our emergency fund. We never even knew we had the money to begin with. A few years ago we started with just $25 at a time and just kept increasing it as we went.

On the crazy money ninja maniacs front, well, this was less fun. Each time we came into a large amount of money the first thing we did was move a majority of it into our emergency fund. No ifs, ands, or buts. It happened. We did it with our escrow overpayment, our tax refund, and even money from side jobs (which is how we've been able to finish it off this time). Having lots of money in hand first, and then moving it to a separate fund is definitely harder, but it's also definitely worthwhile.

My blog has only been around for about a year, so I haven't posted about it much, but it's taken us a looooooooooong time to get here. As great as it feels now, there have been some slow periods where we didn't add much and set backs when we've actually taken big chunks of money out. Today though, it feels great to see those dollars in the bank. I can't predict the future, but I'm sure we'll be happy to have such peace of mind.

That doesn't mean we're going to derail this money train though - now we're moving towards 9 months of expenses. Six months is more than enough for most people, but my job is just a little less secure than I'd like, so we're upping the ante. This is an incredibly personal decision and isn't necessary for most people. While 3-6 months is pretty widely accepted, 9 is usually seen as overkill. In our case though, I think it's warranted. To each their own.

If you're interested in additional financial reading you can always check out my blogroll in the sidebar (there are a bunch of great personal finance blogs in there) or some of these great articles on emergency funds:

Figuring the Size of Your Emergency Fund @ WiseBread
How To Start An Emergency Fund @ Get Rich Slowly
Why You Need An Emergency Fund @ Kiplinger
Tips For Building An Emergency Fund @ Bank Rate
Set Up An Emergency Fund @ MSN Money


And yeah, you can pretty much imagine me jumping up and down right now, because that's what I'm doing. Yay!