Jun 02 2008

At the 70% mark: Thoughts on our emergency fund so far

I really enjoy putting money into our emergency fund. When we started out, we had a clear, tangible goal: To have six months of expenses that will help us if we lose our income, a car breaks down, we need an insurance deductible, or emergency travel, etc.

We aren’t quite to our goal yet–we’d like to have $10k in our emergency fund before we start saving for other goals. But, I thought I’d tell you a little about how saving has worked out for us so far.

With each dollar added, I gain a little more peace of mind. It’s so comforting to know that anything short of a major catastrophe, we should be fine financially. I can’t tell you how incredible this feels.

That $7k in the bank is the most money Shane and I have ever had at one time combined–by far. Last June, if you told me that we’d have all of our credit cards paid off and $7k in the bank in a year’s time, I’d think you were crazy.

In the beginning

At the end of 2007, we had eliminated all of our credit card debt (which at its highest, was several thousand dollars). We had our $1,000 starter emergency fund, but we didn’t have a big enough cushion in our checking account, so we weren’t making progress building it up. That was so frustrating! It felt like we were walking uphill in sand.

That starter fund stayed in our main bank for the longest time, because I wasn’t sure if we could part with it. I was worried that we’d need it–and sometimes we did! Not for emergencies either, but because we were still sort of going paycheck to paycheck for one reason or another. Since we’re still banking with a brick & mortar bank, and keeping our emergency fund in ING Direct, it takes about a week for the money to clear and be usable. I was worried about needing that money in the lag time.

We finally transferred that $1,000 into ING around the end of February, and haven’t looked back.

We added my husband’s annual bonus, our tax refunds and economic stimulus money. We added all my snowflakes (extra income/discovered money) all my freelance earnings, and whatever was leftover from Shane’s paycheck. We chipped away at our expenses, and tried to get them as low as we could without depriving ourselves.

This month, our electric bill will be $43. At its highest in the winter, it was at $89. That’s an extra $50ish I had budgeted for, and now we can throw that into our fund, rather than spend it.

The key is to be focused, and really dedicate yourself to putting money into your emergency fund, and not touching it once it’s there (unless a true emergency arises).

At the beginning, it was a slow start. Seeing $1,000 in our emergency fund, and knowing that we wanted to save $9,000 more was daunting. It felt so out of reach.

But you know what? Once we got our momentum going, and really focused on our goal, it got easier, and we really started to see that fund grow. Here’s a breakdown of our monthly progress:

Feb 2008: $1,000

Beginning of March: $2011 (Increase of $1,011 since Feb.)

End March: $3578 (Increase of $1567 since beg. of month)

End April: $4441 (Increase of $863 since March)

End May: $7005 (Increase of $2564 since April)

You can see that we have decent months and then we have incredible months. It depended a lot on what else we had to spend our money on that month, and how much we were able to scrounge up.

Telling others about our goal

At first, I was reluctant to put a savings goal progress bar on my blog. I thought maybe it wouldn’t be good for the people I know personally to know how much money I have. Then, I realized, whatever. As a society, we’d rather talk with our friends about embarrassing pregnant bodily functions than about money.

I’d rather have a meaningful dialogue about finance with my friends and family, if they’d like to talk about it. Plus, seeing that bar grow really excites me!

Nobody said it would be easy

Thus far, we have had some small financial setbacks. We went to Florida for a wedding, setting us back about $1,000. We bought a $500 laptop when Shane’s finally bit the dust. We spent money on a replacement wedding band for Shane, after he lost his in the Gulf of Mexico on our anniversary. We had an unexpected trip to Indiana for a funeral. But all of these things are important to us, and we’re glad we’re in a position to spend money in those areas.

We haven’t given up eating at restaurants. We try to save money by eating at more affordable places, using coupons, or gift cards. It’s important not to feel deprived.

I’m hoping that by the end of June, we can have it up to $8,500 and get that last $1,500 by the end of July or mid-August.

From there, we’ll evaluate our savings goals and redirect our focus to other projects.

Even though this hasn’t been easy, it hasn’t actually been that hard. It’s all about focus and momentum, honestly. Now that we’re close enough to the finish line that we can practically see it, we’re going to keep on chugging away, knowing that we’re going to make it.

Coming up next, I’m going to share some ideas on how you can save for emergencies, too.



7 Responses to “At the 70% mark: Thoughts on our emergency fund so far”

  1. What an amazing journey…you and Shane ought to give yourselves a HUGE pat on the back :)

  2. That’s really awesome, Kacie. It’s particularly good timing that you’ll have the E-fund in place before the baby gets here. So much less to stress over. :)

  3. You’re doing really well Kacie. I wish I could say I had that much put away, but I don’t.

    We’ve had a number of unexpected expenses since we bought our other house.

    First, the fridge flooded part of the kitchen, damaging the floor and subfloor. We replaced the fridge and fixed the floor.

    Then a winter storm removed the rolled roofing on our addition and melted snow came through the ceiling in the master bedroom. Fixing that included drywalling and insulating in addition to replacing 2 rafters, the plywood and rolled roofing.

    All told, those 2 incidents cost us just under $3,000. I put $10/week into ING and we’re sitting at $583.50, as of today. At this rate, we won’t have $1,000 until March 10, 2009 (assuming we don’t have to use any of it in the interim).

    I don’t even want to think how long it will take to have 6 months worth of expenses put away. (For that, we have to get to a point where we’re putting away much more money than we are currently!)

  4. Stay with it, Shevy! Don’t be discouraged. I really know that it can feel overwhelming at times.

    My husband and I are at an advantage right now, in that we’re renters, and any time something in our apartment breaks, it doesn’t cost us anything.

    That was really handy when our hot water tank exploded!

  5. Thanks for sharing your story :)

    I’ll share mine once my journey nears its end LOL

    I’m linking to this in my next round of link love

    Fabulously Broke’s last blog post..Furniture Galore!

  6. Wow – that’s amazing how fast you’ve grown your emergency fund! Nice work :) We opened an ING account for an emergency fund early in 2006, but we kept dipping into it during that year, and didn’t really start to think of it as a real emergency fund until early last year. We committed to $100/month automatic deposit, and haven’t taken any money out since. Our balance is about $1500, and growing by $100 each month. We’ve been focusing on our HSA and our IRAs and paying off our HELOC, so the emergency fund has taken a bit of a backseat. Luckily we haven’t had to use it, and it’s been able to grow. But at $100/month it will take us quite a while to get where you are!

    Frugal Babe’s last blog post..No Hybrid For Me

  7. That’s awesome! Congratulations on the progress so far!

    With some extra money last year, we created our emergency fund. What a difference it makes in our lives to know we have it. And we have firmly committed to NOT spending it except for a true emergency. Even when something was facing up with the possibility of getting a HEL (home equity loan) or using the e-fund, we chose the HEL route because it wasn’t an emergency where we had no other options. (And, had we gotten the HEL, we intended to get a 3-year loan and pay it off in approx. 1 year.)

    another cool side effect is watching the interest grow. I put most of ours in CDs, and have earned nearly $500 in interest in the past year! (Rates, sadly, have gone down, and the new rates are barely above the ING savings accounts. But when you are talking in the thousands, even 3% adds up.)

    AnnMarie’s last blog post..First exta payment $4

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Hey! I'm Kacie, wife to Shane and mother to Jonathan (7), Vivienne (5) and Amelia (2) . I write about my family's finance: how we save money, improve our spending, and plan for the future.

I hope I can inspire and encourage you to improve your situation. See disclosure.

I'm adopting a much slower-paced posting schedule, and treating this as a hobby blog now.

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