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Author: safehaven One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 308484  
Subject: Funding an E-Fund Date: 10/7/2004 12:58 PM
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Hi All,

I just have a quick question. When funding an efund do you include expenses such as gas, groceries, etc.

Thanks,
Safe
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Author: buckmizer Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 190838 of 308484
Subject: Re: Funding an E-Fund Date: 10/7/2004 1:18 PM
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I don't get what you mean. Are you asking if gas, groceries, etc. are considered emergencies?

When you are funding an e-fund (as well as money to go to debt) you do it with funds left over after all of your monthly expenses are subtracted from your net income. All this should be planned before a given month.

Fred

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Author: TamarianG Big red star, 1000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 190840 of 308484
Subject: Re: Funding an E-Fund Date: 10/7/2004 1:52 PM
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I just have a quick question. When funding an efund do you include expenses such as gas, groceries, etc.

I do. But I think of my e-fund in terms of "maintaining current lifestyle for x months" rather than "fix the water heater this one time".

So, I simply take whatever my total monthly spending is, multiply it by the number of months I'd like to be able to maintain it should unemployment happen, and that's my target. Includes gas, groceries, ballet lessons, and birthday presents. :)

Onward!
Tamarian

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Author: dianakalt Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 190841 of 308484
Subject: Re: Funding an E-Fund Date: 10/7/2004 2:19 PM
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hi safehaven,

My DREAM is to have 1 year of regular (not pared-down) expenses in an efund. In the meantime, I am currently operating at about 2-3 months of pared down expenses for my efund.

I include pretty much everything except optional freedom account categories and most dining out in my pared-down expenses. Thus, I don't try to account for 3 months worth of contributions to my freedom account for gifts, vacations, clothing, newspaper subscription, and house decorating stuff, but I do include car insurance, property taxes, and so forth.

good luck with your e-fund strategy!

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Author: Fuskie Big funky green star, 20000 posts Top Favorite Fools Old School Fool Ticker Guide SC1 Red Winner of the 2010 Rule Breakers Challenge Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 190843 of 308484
Subject: Re: Funding an E-Fund Date: 10/7/2004 2:28 PM
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I just have a quick question. When funding an efund do you include expenses such as gas, groceries

What would it take for you to live per month? Start with requirements - rent/mortage, car and other debt payments you can not afford to miss. Next factor in living expenses - food, phone, utilities, etc - that you can not do without. Then factor in non-critical debt payments like credit card and other things that may affect your credit but will not result in your becoming homeless. Finally include standard of living items which you could cut out in a pinch.

Fuskie
Who had 13 months himself and had to use 10 1/2 months of it...

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Author: Booa Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 190862 of 308484
Subject: Re: Funding an E-Fund Date: 10/7/2004 8:55 PM
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I just have a quick question. When funding an efund do you include expenses such as gas, groceries, etc.

My rule of thumb is, if I have to pay for it during every month, I include it. So gas, yeah, groceries, yeah, gymnastics classes for the boy, etc, yeah. B-day presents and irregular stuff like that, no, because if the poop hits the fan, we can cut back on that, or do cookies or brownies for presents, that kind of thing. But I think it's a good idea to estimate high. It can be really easy to ignore or sweep under your mental rug stuff you spend money on every month and might keep doing reflexively when your income changes suddenly.

Like, I know that we'd probably stop eating out and renting videos at Blockbuster if we lost all sources of income, but it might take a week or two to ramp our costs down, so I don't mind including those in my efund estimates. I am very conservative about my efund, though, I am of the opinion that too much money in there isn't going to hurt me, whereas not enough could be really ouchie. YMMV.


--Booa

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Author: Mark0Young Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 190866 of 308484
Subject: Re: Funding an E-Fund Date: 10/7/2004 11:05 PM
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When funding an efund do you include expenses such as gas, groceries, etc.

The size of the emergency fund is just an approximation--if we knew in advance just how big a cash emergency we would have or how long we would have our income interrupted, it would be easy: just save that exact amount. But since we really don't know, it is just an estimate.

I currently have approximately the equivalent of about ten months of living expenses. By "living expenses", I am including all of my routine spending (mortgage, food, natural gas, gasoline, etc., including non-monthly expenses like property taxes and insurance premiums), but not long-term savings nor long-term investments.

If my income were interrupted, I would try to economize, but it is likely that some expenses would go up (e.g., getting good copies of my resume, subscribe to the paper to get the classifieds and, yes, my current job of now 24 years and counting was from answering a classified advertisement, trips to the unemployment office where they have job listings, an interview suit, and COBRA would be a big expense, which would probably make my emergency fund good for only 8 or so months), some expenses would go down (I don't have a long commute nor do I have to dress well for work so those aren't my expenses that would go down, but I might scale back or cancel my Netflix subscription, not renew some magazines if they come due during that time).

If my emergency fund is fully funded and I am making use of all the "tax favored" accounts I can (yes, yes), the excess cash goes into taxable investments. Dividends from my taxable investments would probably be used, at least initially, to help stretch out my emergency fund if so needed.

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Author: buckmizer Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 190884 of 308484
Subject: Re: Funding an E-Fund Date: 10/8/2004 9:31 AM
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I originally read the question with the wrong perspective.

There are actually two kinds of e-funds. One for if you are in debt and one for if you are not.

If you are NOT in debt then you should have 3-6 months of ALL expenses in an e-fund. That size is needed in case you lose work due to a lay-off or injury.

If you are in debt and get laid-off or injured, then that is not an emergency--it's a total catastrophe. Unless, you find income then you will probably have to add to your debt anyway. This is why you only should have about $1000. That is not really meant to cover living expenses during unemployment. It's meant to cover those "s--- happens" moments when you are working to get out of debt.

Fred

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Author: jrsmith13 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 190913 of 308484
Subject: Re: Funding an E-Fund Date: 10/8/2004 6:34 PM
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In the event of a job loss, do you think you will need to drive your car or eat food?

jrsmith13

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