Time to Rethink Our Emergency Fund

After paying off the houses and contacting the insurance companies to get the bank taken off the binder, I was wondering about the next steps.

I called and increased the umbrella insurance policy but that may need to be revisited.

Other than that, the next thing that came to mind was the emergency fund. I’m a huge proponent of having $1000 in cash at home. That the true emergency money. I live in an area where ice storms have taken out power for a week. No ATMs, no internet connection, etc. Having cash was the only way to do transactions and if you didn’t have cash prior to the event, you were going to have a tough time getting it during.

But that’s not what I’m referring to here.

I’m talking about the cash we have (or at least you should have) sitting in an account somewhere in case of a job loss or other unforeseen circumstance.

The rule of thumb there is 3 to 6 months of your current expenses. The idea being if you were to lose your job, this fund will give you a buffer allowing you time to find a new job.

It is also a buffer for those untimely car repairs – flat tire, odd engine knocking… Maybe a trip to the emergency room due to strep throat or twisted ankle. If you have a pet, those bills are immediate and need to be paid before you leave.

This winter I had my furnace go out and that set us back 10k on the savings!

So now that I no longer have a mortgage, I ponder how much emergency money do I need? Do I need any?

We have money in an easily accessible brokerage account and I have access to enough to cover just about anything. The issue is selling stock/funds creates a taxable event. I’d rather not have to pay an extra 20% just to cover a new furnace, so this means I need something in cash.

It becomes better financial stewardship, not emergency funding.

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