Comments on: Justifying 3-6 Months of Expenses in Savings http://masteryourcard.com/blog/2008/05/26/justifying-3-6-months-of-expenses-in-savings/ The best Credit Card Debt Blog online Thu, 02 Feb 2012 13:31:13 +1100 http://wordpress.org/?v=abc hourly 1 By: justified http://masteryourcard.com/blog/2008/05/26/justifying-3-6-months-of-expenses-in-savings/comment-page-1/#comment-4129 justified Fri, 25 Jul 2008 08:51:30 +0000 http://masteryourcard.com/blog/2008/05/26/justifying-3-6-months-of-expenses-in-savings/#comment-4129 [...] [...] [...] [...]

]]> By: 16th Carnival of Money Hacks — Daily Money Hack http://masteryourcard.com/blog/2008/05/26/justifying-3-6-months-of-expenses-in-savings/comment-page-1/#comment-2491 16th Carnival of Money Hacks — Daily Money Hack Mon, 09 Jun 2008 02:57:11 +0000 http://masteryourcard.com/blog/2008/05/26/justifying-3-6-months-of-expenses-in-savings/#comment-2491 [...] Your Card presents Justifying 3-6 Months of Expenses in Savings posted at Master Your [...] [...] Your Card presents Justifying 3-6 Months of Expenses in Savings posted at Master Your [...]

]]> By: Dawn http://masteryourcard.com/blog/2008/05/26/justifying-3-6-months-of-expenses-in-savings/comment-page-1/#comment-2356 Dawn Thu, 29 May 2008 16:34:39 +0000 http://masteryourcard.com/blog/2008/05/26/justifying-3-6-months-of-expenses-in-savings/#comment-2356 I'm kind of with SK and Kristy - I think the goal is a good one, but that you have to take other financial goals into consideration. I only have a month of income in my emergency funds right now, but I have other huge financial goals that I am also trying to take on - so, I need to balance everything. I’m kind of with SK and Kristy –

I think the goal is a good one, but that you have to take other financial goals into consideration. I only have a month of income in my emergency funds right now, but I have other huge financial goals that I am also trying to take on – so, I need to balance everything.

]]> By: Livingalmostlarge http://masteryourcard.com/blog/2008/05/26/justifying-3-6-months-of-expenses-in-savings/comment-page-1/#comment-2343 Livingalmostlarge Wed, 28 May 2008 19:13:53 +0000 http://masteryourcard.com/blog/2008/05/26/justifying-3-6-months-of-expenses-in-savings/#comment-2343 3-6 months of expenses is crazy. You can invest all the money, if you lose your job you'll be liquidating it anyway. Personally if you are debt free and truly saving and building wealth, then investing the money is not a huge deal. You'll have 1+ years of income in a taxable account. And you won't liquidate it all at once. So having an EF isn't a huge deal. My DH explains it all as a large pot of money. Right now we're not quite at that point of having enough in taxable accounts, so I can't say that we are fully invested. But in the next 5 years I am pretty certain we'll have 1-2 years invested in a taxable account. So it won't really matter. 3-6 months of expenses is crazy. You can invest all the money, if you lose your job you’ll be liquidating it anyway.

Personally if you are debt free and truly saving and building wealth, then investing the money is not a huge deal. You’ll have 1+ years of income in a taxable account. And you won’t liquidate it all at once.

So having an EF isn’t a huge deal. My DH explains it all as a large pot of money. Right now we’re not quite at that point of having enough in taxable accounts, so I can’t say that we are fully invested.

But in the next 5 years I am pretty certain we’ll have 1-2 years invested in a taxable account. So it won’t really matter.

]]> By: Emergency Funds » JoeTaxpayer http://masteryourcard.com/blog/2008/05/26/justifying-3-6-months-of-expenses-in-savings/comment-page-1/#comment-2334 Emergency Funds » JoeTaxpayer Wed, 28 May 2008 12:02:43 +0000 http://masteryourcard.com/blog/2008/05/26/justifying-3-6-months-of-expenses-in-savings/#comment-2334 [...] “rule of thumb”, it would seem this is a hot topic among financial concerns. At Master Your Card, Kristy on Monday discussed the importance of the emergency fund, and while I agree with her that [...] [...] “rule of thumb”, it would seem this is a hot topic among financial concerns. At Master Your Card, Kristy on Monday discussed the importance of the emergency fund, and while I agree with her that [...]

]]> By: Kristy http://masteryourcard.com/blog/2008/05/26/justifying-3-6-months-of-expenses-in-savings/comment-page-1/#comment-2332 Kristy Wed, 28 May 2008 05:18:12 +0000 http://masteryourcard.com/blog/2008/05/26/justifying-3-6-months-of-expenses-in-savings/#comment-2332 Yikes! Thanks for catching that! That is what I get for multi-tasking and talking about finances at the same time. But yes, I meant 50/25/25. By the way, you should always nitpick when it comes to finances! ;) Yikes! Thanks for catching that! That is what I get for multi-tasking and talking about finances at the same time. But yes, I meant 50/25/25.

By the way, you should always nitpick when it comes to finances! ;)

]]> By: p00t http://masteryourcard.com/blog/2008/05/26/justifying-3-6-months-of-expenses-in-savings/comment-page-1/#comment-2331 p00t Wed, 28 May 2008 03:46:38 +0000 http://masteryourcard.com/blog/2008/05/26/justifying-3-6-months-of-expenses-in-savings/#comment-2331 "That is, I took 50% of my disposable income and applied it to debt, 30% to savings, and 30% to investments" Just to nitpick, I assume you mean 50/25/25? The other version adds to 110% “That is, I took 50% of my disposable income and applied it to debt, 30% to savings, and 30% to investments”

Just to nitpick, I assume you mean 50/25/25? The other version adds to 110%

]]> By: Kristy http://masteryourcard.com/blog/2008/05/26/justifying-3-6-months-of-expenses-in-savings/comment-page-1/#comment-2323 Kristy Tue, 27 May 2008 19:06:36 +0000 http://masteryourcard.com/blog/2008/05/26/justifying-3-6-months-of-expenses-in-savings/#comment-2323 You raise an interesting point, SK. The idea isn't to just focus on one asset at a time, though. We need to have a savings account in place, this is true, but we also need to be investing in our retirement. I'm not suggesting that one should take precedent over the other, because in my mind they are equally important. I think the object should be a to find a healthy balance of what you can contribute to each one. When I was building my savings account I took a 50/30/30 ratio. That is, I took 50% of my disposable income and applied it to debt, 30% to savings, and 30% to investments. This specific ratio worked well for me. You raise an interesting point, SK. The idea isn’t to just focus on one asset at a time, though. We need to have a savings account in place, this is true, but we also need to be investing in our retirement. I’m not suggesting that one should take precedent over the other, because in my mind they are equally important. I think the object should be a to find a healthy balance of what you can contribute to each one. When I was building my savings account I took a 50/30/30 ratio. That is, I took 50% of my disposable income and applied it to debt, 30% to savings, and 30% to investments. This specific ratio worked well for me.

]]> By: SK http://masteryourcard.com/blog/2008/05/26/justifying-3-6-months-of-expenses-in-savings/comment-page-1/#comment-2311 SK Tue, 27 May 2008 06:36:01 +0000 http://masteryourcard.com/blog/2008/05/26/justifying-3-6-months-of-expenses-in-savings/#comment-2311 Having 6 months in savings is a great goal but with all things it is important to take into consideration all your financial goals. Time is your greatest asset and delaying just 6 years to begin investing can have a devastating impact on the funs you have available when you finally retire. For example $200 dollars a month with an average of a 12% return for 35 years will return ~ 1.3 million if you wait 6 years that is further reduced to a little over 600K. if your a more conservative investor and your investments 200 a month over 35 years returned on average 8% you would have ~458k and delaying 6 years would leave a little over 270k Of course losing your job would affect this plan as well but there is always the example of the person that put 2000 a year for 6 years and stopped and the other person that waited 6 years and continued to put more money in for the rest of their working life and still ended up with less money than the person that stared sooner. It all depends on where you are and what you want your life to look like and how much time you have to work with before you can determine if it is justified or not. Having 6 months in savings is a great goal but with all things it is important to take into consideration all your financial goals. Time is your greatest asset and delaying just 6 years to begin investing can have a devastating impact on the funs you have available when you finally retire.

For example $200 dollars a month with an average of a 12% return for 35 years will return ~ 1.3 million if you wait 6 years that is further reduced to a little over 600K.

if your a more conservative investor and your investments 200 a month over 35 years returned on average 8% you would have ~458k and delaying 6 years would leave a little over 270k

Of course losing your job would affect this plan as well but there is always the example of the person that put 2000 a year for 6 years and stopped and the other person that waited 6 years and continued to put more money in for the rest of their working life and still ended up with less money than the person that stared sooner.

It all depends on where you are and what you want your life to look like and how much time you have to work with before you can determine if it is justified or not.

]]> By: P L http://masteryourcard.com/blog/2008/05/26/justifying-3-6-months-of-expenses-in-savings/comment-page-1/#comment-2305 P L Mon, 26 May 2008 23:39:57 +0000 http://masteryourcard.com/blog/2008/05/26/justifying-3-6-months-of-expenses-in-savings/#comment-2305 Couldn't you combine the ladder CD approach with a savings account so that you have 1 - 2 months immediately liquid and the remaining 4 - 5 coming into liquidity every other month? For me I'm not sure it would be worth the hassle but if your concerned about maximizing interest while maintaining the security it seems like you could do something along those lines. Couldn’t you combine the ladder CD approach with a savings account so that you have 1 – 2 months immediately liquid and the remaining 4 – 5 coming into liquidity every other month? For me I’m not sure it would be worth the hassle but if your concerned about maximizing interest while maintaining the security it seems like you could do something along those lines.

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