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Subject:  Re: What comes first? Date:  2/21/2001  11:20 AM
Author:  TTRoberts Number:  28023 of 88775

cacsc3, you asked:

<< I'm really glad establishing an Emergency Fund was mentioned. I would like it if someone would clarify something about that for me. I called TIAA-CREF (who also administers my 403b) and I believe they said that 911$ should be 10% of income seperate from any other investments??

Also, about my original post: I don't make much ( I work for a school). My 403b allows you to contrib. up to 20% or $10,500- whichever comes first. The 7% contrib. from my employer will begin this coming Sept. and is directed into whichever TIAA-CREF funds I indicate (existing or new ones). This money will be contributed as long as I am an employee of the school, regardless of whether I continue to fund money into the 403b or not.

So, again, what to do first? I am putting the 10% into a 911$. I probably should and could comfortably contrib. up to 10% into my 403b. Is this all I should do for now? No other IRA/Roth?

After paying down all unsecured debt (as someone mentioned in an earlier post), YES . . . .establishing an Emergency Fund is the first thing you should do for now. Once you get that established, it's been my experienced and observation that people then tend to feel comfortable and confident where they tend to make much better investment decisions.

Typically an Emergency Fund should be much more than “10% of income”. It should either be 3 to 6 months of one's income . . . or, 3 to 6 months of one's total living expenses. Whatever this amount turns out to be, it should also represent that conservative element of one's investment asset allocation model.

It's important to take advantage of any employer matching too. So, while one would not to put the Emergency Fund at the top of the priority list and try to complete the funding of it as soon as possible, if one can afford to, one should also try and stretch themselves to try and also take advantage of what the employer is willing to give.

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