Using your emergency fund
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Using your emergency fund
| Sun, 01-09-2005 - 9:02pm |
Many of us have just begun to save in earnest in our emergency funds. Hopefully we will not have to withdraw from them anytime soon, but IF you had to withdraw from it in the future, what 3 types of spending events would you consider an emergency that you would use your fund for?
For example:
Auto repairs?
Overdue Rent/Mortgage?
Medical copay?
Preventing an overdraft?
Home repair?
Emergency trip?
Do you have a separate emegency fund for any special purpose?
Looking forward to your answers, Littlesbigs

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I would use my savings for auto repairs, a medical emergency, and probably an emergency trip.
slojuly
I'm not sure, since we are just starting our emergency fund. We are having difficulty deciding what would count as an emergency. I think it would come down to:
emergency trip (this has happened - his dad ended up in the hospital during a business trip, and we had to head over there to get him and bring him back)
or
medical (we don't have insurance, other than the basic provincial plan, but he needs medicine - we'll both be covered under his by the end of the year)
so long as his payroll doesn't get messed up again, we won't have any problems with rent/overdraft - he's really careful about that.
Wow! You have a great savings! DId you save a certain amt every month or did you also snowflake?
cheers,
slojuly
It's hard for me to answer this.
I just used it this weekend (well, a really big portion of it). I had to make a down payment on my car. I wanted to put enough down so that my payment would be affordable. So now I am back to having a small emergency savings balance (just under $500) and I owe $2,000 more on my credit card (I put $3,000 down on the car). I will pay the credit card off by March/April. That money would have gone toward my other credit card debt, but it is sitting at zero percent interest so it can wait (and I believe I may still be able to pay the 0% card off by the end of the year or at worst it will be by March 2006). I just need to find a few places to cut my budget to fit the car payment in.
I think I would use my emergency fund for any of those things you listed.
I plan to use the increased bonus I will get this quarter to establish my emergency fund of $1000. This will be used for unexpected car repairs, dental work, or home repair - i.e. something that could come up completely unexpectedly. Those are the only things I can think of that are really unexpected, and the idea is to build the fund back up within 2-3 months every time it's used.
I don't see a need to build up a large emergency fund, i.e. 2 months' worth of expenses, which would be about $10,000, because our parents would always help us in that case, and in the current economy and in my current position, I could get another job within 2 months. And, to be blunt, if our parents died, we would inherit so much money from their estates that we would pretty much never need to worry about emergency money again.
Kelly
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