How much for emergency fund?

lemoncrush

I think that's because I have the cushion of a property worth £300k that would make me mortgage free and would leave some ££ in the bank 

eskbanker

lemoncrush said:

I think that's because I have the cushion of a property worth £300k that would make me mortgage free and would leave some ££ in the bank 

Not sure what notional scenario you're envisaging here with a property that would make you mortgage free - is this a second property such as a BTL, that you could sell to clear your own mortgage with some left over?  If you do have that then it would be worth highlighting when outlining your financial circumstances, especially difficulty in saving and repaying debts....

lemoncrush

No, I own this property outright and rent it.

MEM62

lemoncrush said:

I think that's because I have the cushion of a property worth £300k that would make me mortgage free and would leave some ££ in the bank 

Ah!  Yes!  The perfect vehicle to cover a few months cashflow shortfall - an illiquid, not easily disposable asset which, once turned into cash, realizes far more money than you need to cover the situation.  

eskbanker

lemoncrush said:

No, I own this property outright and rent it.

Sorry, I don't follow you - if the answer to 'do you have a second property' is 'no', which property is 'this' one that you own outright and which do you rent, and where does the mortgage come in?

lemoncrush

I own two properties, one outright (that I rent), and one that I live in (which has a mortgage). 

Jami74

Rich1976 said:
the 3-6 months outgoings would be if you lost your job and the savings would cover your essential bills whilst you look for a new job in the meantime. for many people it takes several weeks to find a new job so without the savings how is the mortgage, council tax etc going to be paid?

car breakdowns or the boiler needing repairing should be on top of that amount. its not sitting there doing nothing, it acts as an insurance in effect.  

I did type out a long answer but decided that you probably weren't that interested in my Emergency Plans and were asking rhetorically, so deleted it to avoid boring everyone. 

I guess my message to the OP would be that they should consider what they would do or what they would need if the excrement hit the fan and come to their own figures/plans, rather than aiming for an arbitrary amount they've seen suggested on the internet.

Maybe an interesting thread would be 'What would you do if you lost your job/got a massive bill equal to 3 months outgoings?'.  

lemoncrush

Well I have an answer for that! I was made redundant the same day I signed the contract for the house I'm living in. I'm the main bread winner too, as my husband's salary wouldn't even be enough to pay the mortgage. My family helped a bit, and the rest was put on credit cards. Which will be paid within 10 months of having an income 

tl13

Do you mean step 1 emergency fund or step 3?

lemoncrush

Step 3 is the one that would take me ages, but I guess the idea is that the monthly £400 will one day take me there (at current bills should take around 2 years). BUT obviously an emergency might take away from that fund so realistically I would expect to get there in 3. Which isn't bad considering I would still be having a "decent life" and not feel strangled by saving.