Thats’ right! My emergency fund is, for the moment, fully funded at a comfortable $2,500. I know that doesn’t sound like much to some of you (and maybe it sounds like a lot to others), but that’s the most financial stability I’ve had, pretty much ever. Now I know that I can at least weather the storm of unexpected expenses, car repairs and the like.
Why Isn’t It More?
My original plan at the beginning of this year was to make automatic contributions to my emergency fund indefinitely, until it was maxed at 10k. However, then I got engaged, and the necessity of saving for a wedding trumped the need to have an emergency fund. Just saying those words sounds a bit blasphemous. What could be more important than preparing for potentially devastating emergencies? In fact, I’m pretty comfortable with my current emergency fund, and I’m ok with shelving it for awhile. Here’s why:
I’m Comfortable with a Small Emergency Fund
- Our budget as it stands (without the extra saving and debt repayment) can be fully funded on less than my income alone. So, even if something sinister were to befall my fiancée (he is self-employed), I could still pay the bills.
- If something happened where I could not work, than the majority of my debt payments would be suspended, further lowering our monthly expenses and making it even easier to live off my fiancée’s income.
These facts make it easier for me to sleep at night, even while knowing that I don’t have six months living expenses socked away in some dark corner of my bank accounts.
As much as I would love to continue to fund my emergency fund, save for my wedding, AND pay off debt (let’s throw prepare for retirement in there too since we’re wishing for things), the reality is, I’m a woman of finite resources. I just graduated from University, I don’t make a lot of cash, and this is just another example of the tough decisions that have to be made when paying down debt is the number one priority in life. I fully intend on resuming contributions to my emergency fund once my wedding fund is 100% full. (Possibly sooner if I can increase my overall income this year) So I’m not permanently leaving my emergency fund at $2500, I’m just shelving it for approximately a year and a half.
Now I’m very curious to know how other people handle their emergency fund. Do you walk on the wild side with $1000 saved while you throw everything else at your debt? Do you have six to twelve months of living expenses saved up? Is this the first time you’ve heard about emergency funds? I want to know!