I was wondering, my current strategy of EF is this:
-50% of my income goes towards investments in the beginning of each month (FYI, I use YNAB's rule #4 = using last month's income for this month).
-If at the end of the month, I still have any money leftover after investing 50% of my income, I put that in the Cash Surplus/EF category.
-If it's the opposite, meaning I don't have enough to invest 50% of my income at the beginning of the money, I take some of my Cash Surplus category and use it to make it 50%. If it's empty, well I invest what I can until the CS/EF category is filled up again and it will due to the three paycheck months (twice a year).
-If at the end of the year (in December of course), I still have money left in the Cash Surplus/EF category, I use that money to invest so that it boosts my investments % for the whole year and I restart the whole process the following year, starting in January.
My theory is that, it almost guarantees me that by the end of the year, I would have more than 50% invested while covering my ass if there is an emergency that arises like last year when I needed the roof repair while minimizing the impact it would have on my savings. So Mustachians, is it a good strategy or is there any way to optimize this to make it even better and more solid? In my mind, I think it covers it well, but since this practice hasn't been tested yet, I always wondered if there was a flaw in this plan.
Basically, I want to have a minimum of 50% of my money invested, but I don't want to have a big EF that does little interest for a long time and I am not a big fan of borrowing money from my credit line either if there is an emergency. So with this strategy, my EF can last at most 1 year, then I just restart the whole process at the beginning of each year.
I hope I explained it well.