Emergency fund

[Steve]

Do you have an emergency fund? If so how big is it? Is this something that is important for you to have? If you don't have one, why don't you?

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[MountainViewGreenskeeper]

Lawn care business tips

Originally Posted by Steve Do you have an emergency fund? If so how big is it? Is this something that is important for you to have? If you don't have one, why don't you? I dont have one yet but that more out of not making enough yet. Now that I have everything I need really till I need a bigger mower. I can finally put some tward savings. But I dont know if you considering savings an emergency fund. Savings for me is equipment/business upgrades and rainy day fund.

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Colton
Mountain View Greenskeeper proudly offering yard care in the East Valley of Arizona.

[mark123]

I had a nice emergency fund before my last job quit paying me. They'd give me a few bucks here and there to string me along and it ended up that I had to spend my entire $10k fund just to keep the family in food. It ended up they owe me over $14k. I had no choice but to start cutting grass.

If I hadn't had that emergency fund I'd have lost my house and probably be living on welfare or something horrible like that.

[Steve]

How does living through that experience effect your view of having an emergency fund?

From your experience, how long should a persons emergency fund hold them for?

Would you do anything differently now when it comes to emergency funds?

[mark123]

Originally Posted by Steve

How does living through that experience effect your view of having an emergency fund?

It's surely a must to me now. I only have a few months built up and that may disappear over the winter so now that I know what I know I may have to extend my emergency fund to more than 6 months.

Originally Posted by Steve

From your experience, how long should a persons emergency fund hold them for?

6 months of all bills including food. No need to include things like going out or entertainment because in an emergency you do without as much as possible. If you're purely seasonal (no work or pay in winter) then extend it to 10 or 11 months. Winter really isn't 3 months long for a lawn service, It's more like 4-5 months especially considering that your first month's money doesn't start rolling in until it's over. For example if you start on April 1 every year and you don't bill until the end of the month like me then you're into the second week of May before you start to see cash. Of course if you're like me and pick up leaves and apply lime into November then you have a little bit still coming in during December and a few late payers in January so realistically you have about 5 real dry months to consider.

Originally Posted by Steve

Would you do anything differently now when it comes to emergency funds?

I'm also considering storing 3 months of food for emergencies. Who knows if 6 months worth of money is going to be worth 6 months in the future?

[Steve]

What is your suggestion on where to keep your emergency fund? Do you keep it in a bank, put in mutual funds or maybe something else?

[mark123]

Originally Posted by Steve

What is your suggestion on where to keep your emergency fund? Do you keep it in a bank, put in mutual funds or maybe something else?

It has to be liquid so a bank account is probably the best. I also try to keep a couple of bucks in the safe at home as well.

[MountainViewGreenskeeper]

I think another question that should be asked is what does your account sit at. I try and keep 2 months of expenses in checking so Im not waiting for the checks to roll in to pay for stuff in stead of "pay check to pay check" like most people seem to do. Nov. was our first month we were really able to put anything to savings(emergency fund) cause we werent buying any equipment.

[Steve]

So many banks now seem to be paying no interest at all. If this is the case in your bank, what do you feel the difference is between keeping the money in a savings or checking account?

[Growing Green]

I think the key with an emergency fund is to look at it as just that...an emergency fund. A lot of times we see it as an "investment" or "what new toy can I buy next with this money" fund.

In my opinion the two most important facters is it should be extremely liquid and we are to not spend it for anything other than an emergency. If we have $10,000 in an emergency the different between what a standard bank savings account (maybe .7% interest) compared to a Money Market account (maybe 1.2%) is about a $50 difference for the year for every $10,000. So might as well make it as easy on you as possible to spend if you really have too.

Matt