Emergency funds

CatLady13

I lost my job to redundancy just over a year ago and had no savings to fall back on. It was a bit of a shock not being able to get another job as I’ve never been without employment since I started working. I had to fall on plan B which was to go self employed.

Now whilst I did earn money in self employment, it was a fraction of what I used to earn and I quickly fell into having to use my credit card to pay my mortgage just to keep a roof over my head. I wasn’t earning enough to pay off my credit cards even with selling off possessions and things spiralled.

Luckily for me I knew I had some money coming to me eventually and it’s the only thing that kept me going. I came out of it all still with a roof over my head and even my credit rating was unscathed but it was all too close for comfort.

I’m telling you this so you can learn from my experience and try and get as much into a “worst case scenario” emergency fund as you can and not be too complacent about it, and definitely don’t plan to live off credit cards. Hopefully if you did find yourself unemployed you’d be able to get a new job fairly quickly but think what would happen if you were still trying to find work 6 or 9 or 12 months down the line or longer. Or you might find another job but at a massive paycut. Just food for thought.

KeepOnKnitting

CatLady, that sounds a little like my own story, only my happy ending took a lot longer and my lows were a whole bunch lower. I am glad it all worked out for you in the end.

CatLady13

KeepOnKnitting wrote: »

CatLady, that sounds a little like my own story, only my happy ending took a lot longer and my lows were a whole bunch lower. I am glad it all worked out for you in the end.

Glad you got your happy ending KeepOnKnitting, even if it did take too long. It’s probably an all too common tale. I even had insurance in case of loss of job but then realised it only paid out if I was on unemployment benefits which I couldn’t claim as I was self employed (earning marginally better than benefits).

It’s essy to think you’ll just take on any old job if things get desperate but that can also be hard to find! I have no experience in bar work or cleaning or a load of other jobs I looked at. I rang my mortgage provider to see if I could take a repayment holiday or go to interest only for a while but they wanted to go through all my finances to ensure I’d be able to meet the new payments when they kicked in and iI never went through with that phone call as I knew I’d never meet their requirements. It is a very scary situation to be in not knowing how long you’ll have a roof over your head for. My debt went from a manageable (albeit with a steady income) of around £6k to around £24k and a lot of interest charges on my credit cards where I’d had to withdraw cash plus money I owed to family and even a friend (£1k). It’s a low point I never want to go through again and I can totally see how people end up homeless.

TheTracker

I think of emergency funding as a cash flow requirement. I need £x accessible within minutes/hours for a sudden short term need and £y within 3-7 days or more for a medium term need. I keep the former in instant access cash & credit cards and the latter in liquid investments.

Eco_Miser

How volatile are those liquid investments?