Comments on: Emergency Funds vs. Savings Accounts: Navigating the Grey Area

By: Fabulous Financials » Random Fabulosity: Back on the Bandwagon

Fabulous Financials » Random Fabulosity: Back on the Bandwagon — Sun, 27 Apr 2008 18:59:16 +0000

[...] Emergency Funds vs. Savings Accounts [Ginger @ Girls Just Wanna Have Funds] Ever wonder about that “gray” area? When should I really use my emergency fund and what I should be saving for anyway? Hey - as long as you’re not incurring debt, it’s all good. [...]

By: Movingonup!

Movingonup! — Tue, 22 Apr 2008 18:26:25 +0000

Great Blog! It’s my first time visiting. I agree there’s a difference between a savings and an emergency fund. I need to work on my emergency fund!

Movingonup!’s last blog post..My mom

By: BP

BP — Fri, 18 Apr 2008 18:16:56 +0000

My spouse and I just had this dicussion over lunch. We agree that the emergency fund needs to be large enough to cover all our bills for at least 3 months. Getting there will not be easy. All our savings are being used to attack our credit card debt. We have been paying off the smaller amounts and then using the extra funds to payoff the next credit card. It is working but it is slow and steady.

By: The "Official" DocMont

The "Official" DocMont — Thu, 17 Apr 2008 01:52:26 +0000

The bottom line is that you have to live off of less than you make. Let’s not make Cadillac the number one dealer in America with our foolish spending. It takes persistence and consistency to save and increase your wealth…

By: Zee

Zee — Wed, 16 Apr 2008 02:12:34 +0000

Seems to me that what you pay out of your Emergency fund is going to depend upon where you are in the process of fixing up your finances and getting out of debt. When I first started working diligently at getting out of debt for good, my emergency fund ($1000) was for anything that I couldn’t afford to save money for (because I had so many little niggling debts to pay off): so car repairs, illness, unexpected bills, etc…

Once I paid off several of the smaller debts and freed up some monthly cash, I was able to reallocate some money to saving for expected annual expenses. In my mind, appliance replacement/repair, legal fees, debt reduction, unexpectedly-large tax bills and the like are not emergencies: you know that most of these things are going to happen at some point, so putting some money away into savings every month is a way of planning for them.

I have never had to dip into my emergency fund (touch wood!) but my general rule of thumb is that I will only pull from that if I’ve squeezed every penny from my budget, used the all the cash in my normal savings account and I *still* need more money in order to meet some unexpected expense.

What I’m a bit puzzled for is why debt reduction is considered “saving” at all? I pay as much as I can each month towards my debts out of my normal day-to-day budget. That money never sees either savings account.

By: OnlineSnitch.com » MBN Group Writing Project: Emergency Funds

OnlineSnitch.com » MBN Group Writing Project: Emergency Funds — Tue, 15 Apr 2008 01:04:30 +0000

[...] Girls Just Wanna Have Funds: Emergency Funds vs. Savings Accounts: Navigating the Grey Area [...]

By: MBN Group Writing Project: Emergency Funds : MoneyBlogNetwork

MBN Group Writing Project: Emergency Funds : MoneyBlogNetwork — Mon, 14 Apr 2008 13:36:04 +0000

[...] Girls Just Wanna Have Funds: Emergency Funds vs. Savings Accounts: Navigating the Grey Area [...]

By: Weekend Roundup! | Master Your Card

Weekend Roundup! | Master Your Card — Sun, 13 Apr 2008 00:43:33 +0000

[...] from Girls Just Wanna Have Funds talks about the grey area between emergency funds and savings [...]

By: savvy

savvy — Fri, 11 Apr 2008 14:36:10 +0000

For me, the emergency fund is do not touch unless there’s some catastrophic event (i.e. job loss, serious illness, etc.). I have also general savings (not earmarked for anything in particular) that would be used for large unexpected expenses (like heaven forbid, the roof blew off).

Smaller unexpected expenses (i.e. unexpected bills, small repairs) as well as investments/hobbies/whatever are taken care of out of normal cash flow. Large purchases (i.e. furniture, travel) are planned in advance and saved for.

savvy’s last blog post..Evaluating the Wisdom of a Purchase

By: Rosie

Rosie — Fri, 11 Apr 2008 13:58:31 +0000

First of all, I just have one set of money that I dip into for anything that isn’t a set monthly expense… even hobby purchases if the pool of money is large enough that the purchase doesn’t deplete it.

But in the set of rules you’ve put up there, I would say that instead of having a gray area, you should put debt reduction on the savings account side and all the rest of the gray area stuff on the emergency fund side. Then emergency fund stuff consists of things that may or may not happen (I mean, you can pretty much guarantee that ONE of those things will eventually happen, but each individual thing might never happen), and savings account stuff is stuff that you know you are going to have to pay. If you have debt, you know you are going to have to pay towards debt reduction. If you want to take vacations, you know you are going to have to pay money towards saving for them.

Or alternately, you could just consider the emergency fund as the fist line of defense against unexpected bills, with the savings account being the second line of defense.