Comments on: 7 Deadly Sins of Personal Finance: Skipping Emergency Funds

By: pj

pj — Sat, 29 Nov 2008 03:22:32 +0000

In the worst of times, the emergency fund is the difference between overdraft fees and staying in the black thanks to silly expenses like wanting gas and groceries in the same week.

By: Charles

Charles — Sun, 23 Nov 2008 04:26:30 +0000

This is a great article. God bless you.
This is going to help me inprove my finacial skills.

By: Anonymous

Anonymous — Sun, 16 Nov 2008 14:50:18 +0000

I just nearly fell off my chair, looking at the post from The Digerati Life. “The usual calculation of 120 – our age to determine how much — percentage-wise — we’d put in the stock market. The rest goes into safe, liquid assets, including our emergency fund.” If you’re aged, say, 40, who puts 80% of their assets in the stock market? Believe me, whoever gave you that “120 minus your age” guff is wildly optimistic about the relevance of volatile (and, in a bear market, frequently-illiquid) stocks to personal asset management, and I don’t care how “usual” that calculation may be. I’d suggest getting a credible financial adviser – quick as you can.

By: Bruce weaver

Bruce weaver — Sat, 04 Oct 2008 16:12:57 +0000

I notice on these sites when talking about insurance, no one talks about the advantages of driving an older car. I buy cars when I can know most or all the history of said vehicle. I have an honest, certified indepent mechanic. In my state we have serious winters, so a garage is a must. My ‘91 riviera w/145k cost me $28 ayear to register, and $125 every 6 months to insure for 50/1oo liability, with un-insured medical, and roadside assistance. My ‘89 chevy truck w/123k is $35 to register and & $110 to insure. I can’t afford to SELL these vehicles. If I wreck at my fault, I am prepared to walk away from my investment. I’dont worry about salt or parking lot dings. I still keep them clean and in excellent repair…and best of all no stress! I keep a 10+ yr old car at least another 5 years.

By: Nathan Pralle

Nathan Pralle — Wed, 01 Oct 2008 16:15:46 +0000

I wish! Saving up that sort of money would take me years and years, and as Abby said, would leave me lingering in debt for ages. I don’t deny how nice it’d be to have such a fund, but my god — that’s a lot of money sitting around. A small fund, sure, but 6 months? Maybe if someone starts paying me $150K/year or something, but…not on a single income with a kid in this economy.

I’d say this is nice…but a pipe dream for all but the upper class.

By: Abby

Abby — Sat, 16 Aug 2008 08:18:25 +0000

I’m going to raise a bit of hell here and say something a tad controversial: I don’t think emergency funds are a good idea for most people still paying off debt. I know most PF bloggers think it’s integral to save money even while paying off cc debt, I personally think the money can be put to better use.

I blabbed about this on my own blog, with numbers to back up my argument, but basically the reasoning goes thusly:

If you’re saving for an emergency fund and have a credit card with, say, 12% interest, the money you’re putting away in the emergency fund isn’t going to be earning an equivalent percentage. So you’re losing money by putting it away for when you *might* need it. Meanwhile the money you already owe is collecting interest.

I’m not saying this works for everyone, but I think a lot of people haven’t actually sat down and done the math. My husband is on unemployment at present and I’m on disability but we’re still paying down debt and making rent, etc.

By: agriya

agriya — Wed, 13 Aug 2008 07:44:36 +0000

yes, I am also did the mistakes in my life, after that I just think about those think then I felt my mistake, now I am clear about my finance any my shopping from now I have to plan well and try to save my money.

By: The Digerati Life

The Digerati Life — Wed, 13 Aug 2008 04:21:19 +0000

Here’s what we did, we did the usual calculation of 120 – our age to determine how much — percentage-wise — we’d put in the stock market. The rest goes into safe, liquid assets, including our emergency fund.

By: Gary Hardin

Gary Hardin — Tue, 12 Aug 2008 23:15:20 +0000

Encouraging readers to have an emergency fund is a responsible piece of writing. Thanks! We discovered last week that we need a new roof. Yikes! We do have an emergency fund to pay the costs of the new roof. In my old days (days of debt and no emergency fund) I would have been in a panic. In these days (wth an emergency fund) I have piece of mind.

Gary Hardin

By: Richard @ Student Scrooge

Richard @ Student Scrooge — Tue, 12 Aug 2008 18:16:49 +0000

It has taken me a while to fully appreciate the need for a distinct emergency fund that is separate from a simple savings account, and that it is important to plan for the “worst case scenario.” It really is a good idea to have an emergency fund.

I think your last piece of advice is the often-overlooked part when people advocate emergency funds — its not really an emergency fund if you are using it for pseudo-emergencies.. its smart to have a solid idea of what constitutes an emergency when you start setting aside money.

By: Start-Up

Start-Up — Tue, 12 Aug 2008 16:54:20 +0000

I would also like to add that having a partial emergency fund before beginning to pay down debt is a good idea. I know that if you have significant amounts of debt, it is difficult to begin thinking about saving for an emergency fund, but it’s better to have a small amount in case of minor emergencies like a flat tire. Even if it’s a zero balance transfer card, as most new purchases on those cards do not come with the zero percent interest rate. I wouldn’t recommend a full emergency fund if you have massive amounts of debt, but a small one is helpful.

By: Frugal Dad

Frugal Dad — Tue, 12 Aug 2008 13:23:34 +0000

We’ve had a string of bad luck here over the last couple months, from badly sprained ankles to a broken air conditioner to the hospitilization of a loved one. In each case, it was comforting to know the emergency fund was there to help “float” a while if needed. Fortunately, in all but one case we were able to cashflow the crisis out of our normal spending account.

By: ToughMoneyLove

ToughMoneyLove — Tue, 12 Aug 2008 12:29:18 +0000

Regarding an emergency fund, I would add that a HELOC or other form of credit line is NOT an emergency fund, despite popular belief to the contrary. Lenders are now re-assessing such credit lines and indeed freezing them as home values fall.