Originally posted by Twipper333
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Originally posted by Throwin Darts View PostThis right here is where he goes wrong. You can't catch up your retirement in regards to a 401k. For every year you work the IRS and your employer gives you a chance to contribute, the employer to the match and the IRS to the annual limit. Once one of those years passes you never get that opportunity back again. Say your employer will match you up to 5% and you don't do it this year. You can't call them up next year and say hey I'm ready now but I want the 5% match I didn't get last year on top of the match offered this year. Same goes for the IRS. If you don't use your allowed tax deferral in a year it is gone forever.
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Originally posted by Twipper333 View PostAgree if you are just talking about 401k, those same rules dont necessarily apply to the numerous IRA's, mutual funds, etc that are available. If you boil it down, he is not wrong at all, the burden of carrying debt is in the long run, greater than missing out on the short run of funds that might be contributed to a 401k.
I don’t think he is completely wrong nor right. If you make 50k/yr at 4% match that is 2K of free money. That same 2K on a 24% credit card would take 3 yrs to accumulate the match in interest. Now that is not much time, but a 5% vehicle loan is different as well as you would only pay 300 in interest in 3 yrs. There is no complete right answer and depends on your condition and your debt makeup. I don’t mind keeping low interest debt and taking the match.
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Originally posted by Acameron52 View PostNo sir, just out of my normal savings account. I don’t want to touch those accounts.
Don't overcomplicate it. You don't need a fancy strategy for your emergency funds. You just need enough cash to cover potential emergencies (home/auto repairs, job loss, etc....). The less stable your job/income is, the bigger your emergency fund should be. If you lost your job, how easy would it be to find another job paying the same or more income? The harder that would be, the more you need in emergency funds.
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Originally posted by bmac View PostI don’t think he is completely wrong nor right. If you make 50k/yr at 4% match that is 2K of free money. That same 2K on a 24% credit card would take 3 yrs to accumulate the match in interest. Now that is not much time, but a 5% vehicle loan is different as well as you would only pay 300 in interest in 3 yrs. There is no complete right answer and depends on your condition and your debt makeup. I don’t mind keeping low interest debt and taking the match.
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I think I have now successfully hi-jacked the OP's post about an emergency fund and that was not my intent. The emergency fund of 3-6 months cash on hand is always a good idea and not everyone can do that if they are living paycheck to paycheck!
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One thing you can do to supplement your emergency fund is to take out a line of credit at your bank or credit union. Only do this if you have the discipline to not touch it unless it is a TRUE EMERGENCY. Remember, this is not a replacement for an emergency fund, just a fallback if things get western, your emergency fund is not sufficient, and you have tapped all of your more liquid assets.
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Originally posted by Twipper333 View PostOf course they will, that's how those advisors get a paycheck!
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Originally posted by bmac View PostStock market isn’t a gamble. You can constantly get 10% as stated above [emoji51]
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Originally posted by Shane View PostSounds like you have an emergency fund going already then. Just keep adding to the savings account until you build it to where it needs to be to cover your emergency fund plus whatever extra spending you have planned for the next 2 or 3 years. Ignore the recommendations to put your emergency fund in any type of investment that fluctuates in value (gold, stocks, etc.). If you do that, you'll invariably have an emergency and need to liquidate that asset during a time when it's down in value. Keep your emergency money somewhere that is convenient, stable, and liquid. If you can earn some interest on it, great. But your emergency fund isn't your "get rich" pot of money. It's your "stay out of debt" pot of money.
Don't overcomplicate it. You don't need a fancy strategy for your emergency funds. You just need enough cash to cover potential emergencies (home/auto repairs, job loss, etc....). The less stable your job/income is, the bigger your emergency fund should be. If you lost your job, how easy would it be to find another job paying the same or more income? The harder that would be, the more you need in emergency funds.
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Originally posted by be12hunt View PostThis is sound advice. To clarify my earlier comments, I completely agree to have a set aside amount of emergency money that is not in a fluctuating investment account. The only reason I made the comment about investing was that having 30k+ sitting in a savings account is probably more than necessary.
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Originally posted by Shane View Post$30K may be more than necessary for your situation, but for someone else it might not be enough. It depends on their monthly needs, how many months they need covered, etc....
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Originally posted by be12hunt View PostI won’t argue that for sure, but for the OP I assumed since he said he was about a year into his “big boy job” that 30k was excessive. Either way what you said about having a set amount of emergency money, whatever is necessary for your situation, is the right advice.
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