How much for emergency fund?

MovingForwards

The way I've done it is save 'pots' for different things, some are emergencies, others are for upgrades.

I purchased my home 2.4 years ago and had just over £750 in the bank; I used a chunk of that to pay a tree surgeon within a few weeks of moving.

The pots I have:
- mortgage payments, it will be 5 months worth this month.
- £1k pot for bills.
- car repairs, insurance etc and home insurance I save £100pm.
- £1k pot in case of a leak or replacing white goods.

I'm slowly building up pots for internal modernisation and external maintenance.

My bills are low as I the only things I pay monthly are utilities, CT, mobile and internet.

Car repairs, insurances etc are paid as required.

Initially I focused on saving for the car etc pot, building up bills and mortgage pots to 1 month, then 2 months.

Not many people can quickly save 3 - 6 months outgoings, it takes time but won't be achieved without making the initial deposit and carrying on each payday thereafter.

phillw

MEM62 said:
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.  Yep, you sure got that sorted.  

It depends on what you class an emergency. If you have a BTL property without a mortgage, then you have an entirely different concept of what an emergency is compared to someone with no savings.

In my circumstances, if I had a BTL property with only maintenance to cover, then I could essentially retire.

lemoncrush

I guess the emergency is the "liquidity". The BTL property is seen as an investment for the most part (it was an inheritance). As we see it, as long as we have salaried income coming in, we'd rather just keep it as a rental property.

lemoncrush

MovingForwards said:

The way I've done it is save 'pots' for different things, some are emergencies, others are for upgrades.

I purchased my home 2.4 years ago and had just over £750 in the bank; I used a chunk of that to pay a tree surgeon within a few weeks of moving.

The pots I have:
- mortgage payments, it will be 5 months worth this month.
- £1k pot for bills.
- car repairs, insurance etc and home insurance I save £100pm.
- £1k pot in case of a leak or replacing white goods.

I'm slowly building up pots for internal modernisation and external maintenance.

My bills are low as I the only things I pay monthly are utilities, CT, mobile and internet.

Car repairs, insurances etc are paid as required.

Initially I focused on saving for the car etc pot, building up bills and mortgage pots to 1 month, then 2 months.

Not many people can quickly save 3 - 6 months outgoings, it takes time but won't be achieved without making the initial deposit and carrying on each payday thereafter.

Yes I find saving that much a challenge and not necessarily a priority (I do need to have an emergency fund) but I think having such a high one is  mid term goal 

Indout96

lemoncrush said:

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. 

Step 3 is only after step 2 which you have not completed as you say you have credit card debt, It seems you just want to be Dave-ish. If you don't agree with most of what he says it seems a bit pointless stressing about his step 3 amount. 
The reason for it being after step 2 is that by then your only outgoings would be Mortgage, utilities, transport and food costs so far easier to save the EF (it is to cover necessities not wants) 
3 months is for people in a secure job/industry, 6 months for where you feel your job is not that secure or if you are the only breadwinner and others rely on your income.
In our case car repairs would come out of the motoring sinking pot but we have a 6 months EF in Premium Bonds so accessible within a few days. 

lemoncrush

My credit card debt is not accruing any interest, and as long as I'm on track to clear it by the time that ends, I don't see the need to be stressed about it. 

Believe at some point my whole goal was that, but it gave me WAY more stress than Satisfaction. 

phillw

lemoncrush said:

I guess the emergency is the "liquidity". The BTL property is seen as an investment for the most part (it was an inheritance). As we see it, as long as we have salaried income coming in, we'd rather just keep it as a rental property.

I meant why you would need to declare an emergency. If it's just because you have lost your job and you start the new one next month & you have credit cards and savings, then that is different to a lot of peoples experience where they can't survive if they missed one paycheck.