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Realistic emergency fund

September 1st, 2011 at 06:17 pm

Running the numbers got thinking that just cutting out all the "extras" in an emergency may not be possible, and one should try to be as realistic as possible.

For example:

Eating out
if you are spending hours in a hospital every day with a loved one, your will eat out. You'll be exhausted, sleep deprived and worried and planning meals may be the last thing on your mind.
Having lunch with a group of friends who can be a job lead is another example.
so setting this expense to $0 may not be realistic

Grooming
If you are job hunting, getting haircuts is still necessary.
a freshly dry-cleaned suit as well.

Cable, data plan...
You know yourself, will you really cancel cable on day one in an event of an emergency? If not, it needs to be in there.

2 Responses to “Realistic emergency fund”

  1. HousingCounselor Says:
    1314903501

    Maybe you can do a little allocating for the groceries such as using some of your grocery budget to eat out so you won't have to spend that much extra. I probably would cut cable but I think data could be a must for some households. For example. Using the internet for email and for job hunting. Applications and resume submissions. I believe grooming is important in the case of a job hunt in fact I believe all of them are.

    However, if your emergency is due a hospital stay, car repair, or other unexpected expense. I could see cutting some of those things completely out or at least cutting back until they're paid.

  2. ceejay74 Says:
    1314909416

    If all three of us lost our jobs and had no unemployment or other income and had to live strictly off our EF, heck yes I would cancel cable/internet the very first day! And anyone who was insensitive enough to ask me out to eat and expect me to pay knowing I had no income coming in whatsoever would not be someone I'd go to lunch with me.

    OK, I'm being silly. But that's how I calculate the money needed for MY emergency fund--if no one had any income at all, what's the bare minimum we could live on and not starve or lose our home or die of a curable disease?

    So I took out internet (I could look for jobs at the library) but kept cell phones (I'd need it for emergencies re: my baby, and for fielding employment-related calls). I kept a small amount for grooming (would not want any of us to look disreputable when applying for jobs, and none of us knows how to cut hair). I added a big line item: health insurance. I cut student loans that could go into deferment, but kept the private ones. I kept bus passes because we don't have a car and would need them for getting around. (Though, could I cut them now that we have bikes? Interesting question. Probably not once we have another infant in the house; we'd need the bus to get him/her to the pediatrician.)

    I doubt there would ever be a true emergency where all forms of income were immediately cut off. In a more realistic situation, we wouldn't all lose our jobs simultaneously, and those who did would have unemployment coming in, so obviously I wouldn't cut everything in the budget to the bone, just the more frivolous expenses such as housecleaning and travel. I would probably keep cable/internet; they're relatively cheap sources of information and forms of entertainment that would keep me from wanting to spend more money elsewhere. But for the purposes of calculating the EF, I figure out the bare minimum we'd need per month to survive with no income whatsoever. Then make sure I have at least 3x that set aside.

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