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Right now, DW and I have about 6 months of net pay in emergency funds, but that is a gross over simplification.

Those same funds account for about 18 months of core spending, and we are still increasing them. I have them distributed as follows:

Local savings (held at same bank that holds our primary checking account). This one gets funds automatically, every paycheck. It holds about 1 month of core spending at any given time, and I use it primarily to smooth out some of the unexpected expenses from month to month. Interest rate is pretty low, but its pretty easy to get access

Secondary savings (held at same institution holding a number of investment accounts). I presently have about 8.5 months of core spending in this account. It earns a somewhat hire interest rate, but is still FDIC insured. Its a little harder to tap into, but I have used portions of it when replacing a car, etc. Adding to it every month.

Tertiary emergency fund. This presently holds about 9 months of core spending and is invested conservatively in the bond and stock market. DW and I are relatively young, and at this point, this is more akin to an EOTWAWKI fund and is only likely to be tapped in the event I loose my job and we are not able to establish an additional income stream. Adding to it every month. Having enough funding in my secondary savings means I don't get excited about the extra risk involved in being in the market.

At some point (and I'm projecting about 3 years) I'll probably have more than 12 months of core spending in each of the secondary and tertiary funds, and I expect to use some of the secondary savings to pay off our mortgage at that point.

We are working to aggressively reduce core spending by paying down debt (mortgage and student loans at less than 4.25% car payment at 0%). Some would argue that building the emergency funds further would be a better use of the excess we are paying, but getting core spending down will really change the dynamic.

In our instance, getting the car, mortgage, and student loan paid off will decrease core spending not quite 50%, which would double the duration my efunds could cover.
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