Emergency & Vehicle Fund??

[DollarBill]

What do people think about how much you should save for Emergency & Vehicle Fund? From what I read on the net it says to have anywhere from 6-12 months emergency fund...which I have a years worth. I also recently bought a 2012 car with 62,000 mile...mostly highway and don't expect any repairs soon. I would also use this fund for house repairs. House was built in 2006...it's in good shape and don't expect any steep repairs.

Do you think if I put $150 a month away for future emergencies, house/vehicle repairs, vehicle upgrades (if needed)...would this be enough or would you bump it up? I do carry good insurance on the house and vehicle. I know it's all a crap shoot but still looking for advice.


How much do you put away for such a fund?

[rocksinmyhead]

hmm. I agree that "crap shoot" is a good way to put it.

definitely depends on your deductibles, and also what your financial priorities are. if I were paying down SUPER high interest debt, mine might be smaller because I would want to throw more money at the debt.

I am oddly paranoid about losing my job, so I keep a few months' worth of expenses. for me, the amount I am comfortable with is $10k. this turned out to be a good thing because last year I ran into an emergency I would NEVER have anticipated, namely my boyfriend's car getting repossessed (he can't walk or bike to work either, it's pretty far away and in a really industrial area). thankfully I had enough in the e-fund to buy it back from the bank before they sold it. (don't worry, he is on a repayment plan and we are both MUCH more open with each other about our finances now, which is good since we plan on joining them in marriage eventually. I had NO idea at the time that he was having that big of a problem, which was frustrating since the problems were due to him moving across the country for me and being out of a job for two months, and I could have helped him out at any time before it got to that crazy point... but, I digress.)

honestly, if I had a house I would probably up mine to $15k. but I'm kind of neurotic, so I'll be curious about what other people have to say :)

[ender]

I budget my car expenses at about 30 cents a mile.

This goes into a separate "automotive" checking account, I pay gas/insurance/maintenance and eventually will buy a replacement car from this account.

This has the added (and depressing) side effect of making the full cost of transportation really obvious to me.

[CarDude]

My approach has always been to save up enough for a car I'd be all right buying in a pinch if mine completely broke down for some odd reason. For me, that's at around the 3k mark.

[DollarBill]

I budget my car expenses at about 30 cents a mile

This seems pretty high. Are you buying new? I normally buy used. I'm a mechanic by trade and can do most of the average stuff.

namely my boyfriend's car getting repossessed (he can't walk or bike to work either, it's pretty far away and in a really industrial area). thankfully I had enough in the e-fund to buy it back from the bank before they sold it.

You might want to be weary of that situation. I understand people fall on hard times but would mostly think it's bad decisions. 

[rocksinmyhead]

You might want to be weary of that situation. I understand people fall on hard times but would mostly think it's bad decisions.

I assume you were trying to quote me... yes, there were some bad decisions involved. or more like the bad decision to not put money away to prepare for hard times, which I think is often the case when people "fall on hard times." :)

enderland, I really like your idea!

[Thegoblinchief]

I currently fund my vehicle repair/replacement based on a percentage of net cash flow but I've only been doing it that way for a little while. I may look into doing the mileage bit.

I'm certainly thinking of "paying" for field trips out of my homeschooling budget that way.

[DollarBill]

I assume you were trying to quote me... yes, there were some bad decisions involved. or more like the bad decision to not put money away to prepare for hard times, which I think is often the case when people "fall on hard times." :)

lol...I don't know how I got that quote wrong.

I budget my car expenses at about 30 cents a mile.

Now that I think about it more, this doesn't seem that high when you take all the cost for repairs, tires and replacement vehicles. I just got my new tags and the sales tax was $820...ouch!! All of my gas saving for the first year are shot.

[zurich78]

What do people think about how much you should save for Emergency & Vehicle Fund? From what I read on the net it says to have anywhere from 6-12 months emergency fund...which I have a years worth. I also recently bought a 2012 car with 62,000 mile...mostly highway and don't expect any repairs soon. I would also use this fund for house repairs. House was built in 2006...it's in good shape and don't expect any steep repairs.

Do you think if I put $150 a month away for future emergencies, house/vehicle repairs, vehicle upgrades (if needed)...would this be enough or would you bump it up? I do carry good insurance on the house and vehicle. I know it's all a crap shoot but still looking for advice.


How much do you put away for such a fund?

I'm a little weird, but here's what I do and I know it differs from what a lot of people on here do but it works for me.

My emergency fund is specifically set up to give me X months ability to live.  That means pay my mortgage, bills, food, etc.  So I won't ever touch this money unless I lose my job.  And for me, that account is 7 months of living expenses (which essentially gives me 8 months because I always have at least 2 weeks of vacation l'd be given if I were to lose my job).

Then, I have a separate account for home and vehicle emergencies.  I follow the 1% rule so I budget 1% of my home value ($5,750), divide that by 26, and put that in to my Home/Vehicle/Other Emergencies budget.  (Other could be like, I have to buy a suit for a wedding, or, a new piece of furniture or something).

If I'm fortunate not to have many emergencies and my account is funded to the point where I have 2% of my home value in it, I move the excess in to other accounts (investment or other savings accounts that I have).  As long as I don't have an emergency right after I move out the excess, I'll always have access to funds somewhere in the range of a minimum of 1% of my home value up to 2% of my home value for repairs.

[dorkus619]

I am working slowly towards building up an emergency fund and vehicle maintenance fund. I have read all sorts of figures varying between 3-12 months living expenses. But think about how much you would be willing to cut in that type of emergency. If I lost my job I would quit ALL restaurant purchases and decrease spending quite a bit. Or maybe you hope to have a cushy emergency fund that you can continue as you live now.

I like the idea of saving up enough to buy a car in case yours completely dies. I think about $3k is a good number for that. Good goal for me.

[samburger]

I like the idea of saving up enough to buy a car in case yours completely dies. I think about $3k is a good number for that. Good goal for me.

I do this too. It makes me feel a heck of a lot better about driving a questionably reliable car (my wife predicts it won't make it through another winter; I say it's got three years left).

[horsepoor]

I think another factor is how much cash flow you typically have to replenish any E-fund.  For instance, if $10K is my e-fund amount, and I suddenly needed to buy a used car for $3K, I would be OK taking it out of the e-fund if I could refill that account within a month or two.  I'd be less inclined to touch it if it would take a year to refill (this is just an example and should also be adjusted based upon  your job security, severance, responsibility to dependents, etc.).  So while working and saving a high percentage, I think it's less important to keep a bunch of different earmarked cash accounts around, but these might be more important if you're retired and living off of investments.  In that case, you don't want to be forced into cashing in investments to deal with an emergency at a time when the markets are down.

[DollarBill]

I think I'm going to keep the $150 a month to the acc. Might funnel a few dollars from the retirement fund until I get to $5Kish, then I'll drop it to $100. I'll still have investments, two credit cards, and good credit if needed. I think if it really got bad I would have options to move things around and cut back on spending.

I think it's different when you're trying to hit FI and after you're FI. I'm sure after FI you would have access to more money. I'm at the breaking point.   

[ender]

I budget my car expenses at about 30 cents a mile.

Now that I think about it more, this doesn't seem that high when you take all the cost for repairs, tires and replacement vehicles. I just got my new tags and the sales tax was $820...ouch!! All of my gas saving for the first year are shot.

Right. Even 30 cents a mile seems really high initially but when you start adding things up you realize it's a lot closer than you want to think.

I bought a used bare bones car (05 Focus a few years ago). That cost was $7500 which if I drive it 100k miles works out to still be 7.5 cents a mile. Gas is close to 12 cents a mile too, even at 30+ MPG. Adds up real fast.

When you include:

• Car cost / depreciation (however you want to include this)
• Gas
• Insurance
• Registration
• Maintenance

your cost per mile gets really obnoxiously high.

[BlueMR2]

Right. Even 30 cents a mile seems really high initially but when you start adding things up you realize it's a lot closer than you want to think.

your cost per mile gets really obnoxiously high.

I plan on 50 cents a mile for our cars.

As far as a buffer goes, $3k-5k for the car is where I like to be.  For repairs: Break the transmission and your in for $3k.  Blow an engine, and you're out $5k.  Decide to buy a another car for $2k, and lets face it, $2k cars tend to have gremlins lurking no matter how well you look them over.  Is used cheaper overall, sure.  However, that $2k car *could* end up costing you another $2k in repairs pretty quick.  It may not, but you still need to have the buffer allocated because the probability of needing repairs on it right away are definitely non-zero...