Comments on: Money Question – Can You Save Too Much in an Emergency Fund?

By: Money Smart Life » Everything You Ever Wanted to Know About Emergency Funds

Money Smart Life » Everything You Ever Wanted to Know About Emergency Funds — Wed, 08 Aug 2007 05:40:57 +0000

[...] – Money Question – Can You Save Too Much in an Emergency Fund? – Can You Be Too Conservative with Your Emergency Fund? – Emergency Fund Investment Options [...]

By: Money Question: What Do You Look For In An Online Bank Account?

Money Question: What Do You Look For In An Online Bank Account? — Thu, 03 May 2007 17:55:30 +0000

[...] Looks like I’m fielding the money question for this week. This week’s question is related to last week’s question regarding emergency fund accounts. A lot of people recommend a money market account for their emergency funds. The best rates for money market accounts are often found in online bank accounts. [...]

By: moom

moom — Fri, 27 Apr 2007 18:40:00 +0000

“On the subject of using a HELOC as an emergency fund – I think that’s probably not wise considering that in the event that the ‘emergency’ is a loss of one’s job/income, dipping into a HELOC will increase the monthly payments during a time when there is no income. ”

That’s a good point that I didn’t think about, not being a homeowner. Margin loans that I discuss on my website have the advantage of the interest being capitalized. There are no “payments”. That’s not the case for most real estate loans.

By: Can You Save Too Much In An Emergency Fund? What Do You Think?

Can You Save Too Much In An Emergency Fund? What Do You Think? — Fri, 27 Apr 2007 16:30:41 +0000

[...] Recently, Ben @ Money Smart Life ran a series of posts on “Can You Save Too Much In An Emergency Fund“. The purpose of the series was to answer this question posed by a reader: “Is there such thing as saving too much money in an emergency fund? What’s the best place to keep the money you do save so it still earns you something while just sitting there?” [...]

By: silverbax

silverbax — Fri, 27 Apr 2007 12:20:25 +0000

On the subject of using a HELOC as an emergency fund – I think that’s probably not wise considering that in the event that the ‘emergency’ is a loss of one’s job/income, dipping into a HELOC will increase the monthly payments during a time when there is no income. Ideally, I look at having three months in high-interest savings/money market, and then another 3 months to 1 year in mutual funds that can be liquidated if needed. Therefore I get long term growth on 75% of my one-year emergency fund. My thinking is that in the even of job loss, I have enough on hand to last three months, and I can get more easily if needed, but hopefully most emergencies will require less than three months of pay.

By: Steve

Steve — Fri, 27 Apr 2007 00:16:39 +0000

As someone who’s currently “between projects” as a consultant, I can tell you that the peace of mind I’ve got with a nice 6 month emergency fund is priceless. I don’t just have 6 months of bare minimum expenses, but 6 months of no-changes-from-today so really it’s much more if I scale back (and I have no debt other than my mortgage). It has to be liquid, it has to be non-debt increasing (i.e. no HELOC) and it has to be truly mentally ‘set aside’ to be effective. I can’t begin to say how much it’s worth for me to be able to shrug off a few weeks of unemployment without worrying. Sure, it’s making 2% after inflation, but it’s worth every single last penny of lost opportunity cost. Without doubt.

By: pfodyssey

pfodyssey — Thu, 26 Apr 2007 17:46:15 +0000

I think the answer depends on the vehicle(s) you are using to create your “emergency fund”. Like Lazy, I think you have to be mindful of lost opportunity costs. Also, I think you have to strongly consider the vehicles you are using to fund your “emergency fund” in the first place.

Typically, most people think of an emergency as “cash” that is safe / secure and readily available. I encourage everyone to get “out of the box” about what constitutes and “emergency fund” and consider other alternatives that may make more sense for you:

http://pfodyssey.wordpress.com/2007/03/29/emergency-funds-an-alternative-approach-part-i/

http://pfodyssey.wordpress.com/2007/04/05/%e2%80%9cemergency%e2%80%9d-funds-an-alternative-approach-part-2/

By: Where I Put Our Emergency Money | The Sun’s Financial Diary | A Personal Finance Blog on Saving and Investing

Thu, 26 Apr 2007 14:38:48 +0000

[...] Several other bloggers have weighed in on this issue with their own opinions. You can find all the discussions by following this and this link. Ben also provided a nice summary that covers everything you want to know about emergency fund. [...]

By: Can You Save Too Much In An Emergency Fund?

Can You Save Too Much In An Emergency Fund? — Thu, 26 Apr 2007 13:56:12 +0000

[...] Ben at Money Smart Life has brought together a few different bloggers to answer the question “Can You Save Too Much In An Emergency Fund?” I was one of the bloggers responding. For me, an emergency fund of $1 is too much lost in opportunity costs. [...]

By: Money Smart Life » Everything You Ever Wanted to Know About Emergency Funds

Money Smart Life » Everything You Ever Wanted to Know About Emergency Funds — Thu, 26 Apr 2007 13:16:33 +0000

[...] Can You Save Too Much in an Emergency Fund? [...]