HomeEmergency FundHow long can you survive?

How long can you survive?

Beany Babies

I’ve had $10,000 sitting in an emergency fund for about two years now. Thankfully I haven’t needed to use it yet (and hopefully wont need to for a very long time). Even though my income and marital status has changed over the last couple years, I haven’t thought twice about changing my E-fund balance.

I initially decided on $10,000 for two reasons. First, it was a nice clean whole number, and if you read my post last week, you know I like pretty numbers. But most importantly, I picked $10,000 because it represented about 6 months of living expenses for me at the time. My rent was dirt cheap ($580/month) and I was pretty frugal. My expenses were way less than 1,667 a month ($10,000 divided by 6 months).

Last August I got married. As I went from “single” to “married” every aspect of my budget increased (food, rent, gas, etc). Fortunately, Girl Ninja was makes decent money as a teacher, so even though our expenses increased, the net result was positive.

If you look at our 2011 Ninja Budget Of Epic Gloriness, you’ll see we have budgeted for about $3,900 of expenses each month. That would mean our $10,000 E-fund is really only able to cover about 2.5 months of living expenses. Nowhere near the six month reserves I recommend…or is it? dun dun duuuuuun (insert dramatic music here!!!!)

At first glance you’d think we have less than three months expenses in our E-fund, but a closer look shows that $10,000 could easily last us 6 months, and probably closer to a year! But Ninja, how do you do it? Well reader, I’m glad you asked.

The $3,900 outflow shown in our budget accounts for everything. Retirement contributions, tithing, dining out, and the like. If Girl Ninja and I both lost our jobs tomorrow (which is pretty unlikely), we could easily cut our monthly budget to almost half. Here’s how….

Roth IRA: $416 to $0 (stop retirement contributions)
401K: $305 to $0 (see above)
Tithe: $800 to $0 (no income to tithe on)
Food: $500 to $350 (no more dining out)
Gas $200 to $150 (stop using my car)
Random Things: $377 to $200 (cut entertainment, clothing, etc)

By making these cuts, our $3,900/month budget slims down to a much more manageable $2,011/mo. Which means our $10,000 E-fund can last us 5 months in the event we both lost our jobs.

But wait, there’s more!!! (I feel like a cheesy infomercial…haha)

If only Girl Ninja lost her job, we wouldn’t need our E-fund since I make enough to support our current lifestyle. If I lost my job and we decided to keep spending at current levels, we could last 10 months off Girl Ninja’s income and our E-fund. But if I lost my job and we made most of the cuts mentioned above, we’d actually be able to survive off just her income…forever. for. EV. ER. (sandlot anyone?)

So even though it may appear as though I’ve neglected our emergency fund over the years, I really haven’t. Ten thousand is completely sufficient considering the stability of our careers and the flexibility we have within our budget.

For those of you that have an emergency fund (hopefully all of you), how did you determine how much to put in it? Did you pick a pretty number like $5k or $15K? Did you set the amount based off your current monthly expenses multiplied by a specific time frame, like 6 months? Anyone treated their E-fund similar to the ninja household?



  1. the only advice on Efund I’d have is that it should be available to cover non-job loss emergencies or multiple Murphies showing up – like major medical events or carwrecks that also cause income loss… Not that 10K isn’t sufficient, but you might consider setting your medical-out-of-pocket-maximum and your deductible off to the side in addition to the income-replacement (supplement) emergency funds. if/when you buy a house, also consider that insurance’s deductible in the mix.

    • one other “thing” I account for in my emergency fund budget is emergency airfares – fall of 2008 I had to fly cross-country three times for close-relatives’ funerals – two grandparents and an uncle. Attendance wasn’t negotiable and all told, I spent about $3K on airline tix… yeah, there’s no such thing as bereavement discounts anymore! When I’m out of debt, I’ll have a travel sinking fund that can be tapped for this kind of need, but not yet!

  2. Michelle beat me to it! There are many other emergencies besides job loss. Also, you should take into account that some of your expenses will rise if you lose your job (Frugal Dad had a post about this recently). Health insurance could go up (COBRA). If your company subsidizes any of your expenses (reimbursed mileage; cell phone discount, etc.) that will also go away when you lose your job.

    (Yay for Sandlot!)

  3. We’re planning to bank 50,000 in our E-fund. This will cover the mortgage, utilities, student loans, grocery money, and all other bills for just over 1 year. After seeing friends struggle for months to a year to find a decent job I want to be able to last for at least a year. We’ve got a ways to go, but that’s our goal!

  4. I went with pretty numbers that had a purpose. Originally, my pretty umber was $5k, which put me in the 4.5 month range. But then I moved and basically tripled my rent (it had been REALLY low) so I bumped it up to $7.5k, which gets me almost 3.5 months. I’m slowly raising that while most of my extra money is going towards my last student loan….with a possible detour for a trip to Hong Kong/India.

  5. Sounds like you should quit your job and just let GN take care of things like “making money”. 😉

    JK, in all seriousness though, I love the Sandlot. One of my favorite movies from my childhood.

  6. I’m a huge fan of “pretty numbers,” and I actually do the same as you when tipping! My current e-Fund target is $20K, which I’ll reach in July with my savings projections (yep, huge number nerd here!). That will give me living expenses for 6 months, plus reserves for those Murphy visits I know all too well. The biggest perk is the piece of mind provided with my pretty number–I’d really hate to end up in a cardboard refrigerator box on the street given how much I love my condo 😀

  7. I’m sitting at about 3 weeks in my eFund. 🙁

    But I’m rocking the debt repayment like a mo…nevermind.

  8. My e-fund is right at 10K because that’s how much I have in Roth IRA contributions. In a year, it will be 15K, and 20K the year after.

  9. My emergency fund calculation is a bit goofy right now. I’m a grad student and I live with my mom which means I have basically no chance of getting fired and I have precious little in monthly expenses. If I were going to have a REAL emergency fun, then I would include at least 4 months of living expenses. I think the emergency plane tickets are a great idea! I also read the other day that your emergency fund should have enough to cover your insurance deductibles. I was in the hospital for 2 weeks once and had good insurance. Still…I had to be rushed to a large (out of network) hospital over an hour away in an ambulance, multiple surgeries and over a week in the ICU. After insurance, I had over $10,000 in bills. My insurance paid over $30K, but had in-network and out of network deductibles and they split the bills so that I didn’t reach either! Even planned hospital stays like labor and delivery cost a lot out of pocket from what I hear. Seems like having that in your emergency fund is a good idea!

    • Since you live at home, you should have an emergency fund with at least enough money to move out and get your own place in case something happens. First and last month’s rent + security deposit; money for moving help (or a plan for friends to help).

      • Yup! That’s exactly what I’m doing! I loosely call it an emergency fund, but it’s really a moving fund. By the time I graduate, I’ll have enough for moving truck, furniture (mattress, couch and TV), utility connections, plus the rent and security deposit. Unless there’s an actual emergency, I should have quite a bit more than that to buffer any extras in the moving process. I’ve over budgeted so that any little surprises like new tires can be absorbed without any trouble. The post-doc I want pays for moving expenses, but I don’t want to count on that. I’ve even made a projected budget based on the post-doc salary and have a plan to quickly build a real emergency fund once I use my moving fund.

  10. I don’t have a specific emergency fund, but I do have a very large cash slush fund that could support me for years if need be. This means I have no specific number for the account, but just roll whatever is left over after expenses and 401k, IRA, and 529 contributions into it. The balance has never fallen below $20k and I never worry about it so I suppose it’s working for me.

  11. For a bare bones, we’re both out of work budget, our $15k emergency fund would last us about 6.5 months, but that would require that we put both of our student loans into forebearance for financial hardship (something I’ve done before, lived to regret and never want to do again). If we continued paying those as well, we’d be closer to about 5 months.

    We’re currently under contract on both our smart phones and satellite TV, so I included those expenses in the above calculations, but if we could somehow get out of those contracts without penalty and/or if this supposed double employment situation occurred once their primary term expires, we could stretch our emergency savings even further.

    Also, while we have a total of about $15k for “emergencies,” it’s actually not all in one account. We have one account of about $4000 for Medical Emergencies and to cover our $3k combined annual deductible, and $11,000 in another account, which is meant to either float us during unemployment, or pay for major home related expenses if necessary.

    I will say that having the HSA has COMPLETELY changed the way I think about medical expenses. Before, I HATED paying for anything medical out of pocket and would flat out avoid going to the doctor or getting prescriptions in order to avoid it. But now that we have an account that is specifically FOR those things, I’m much more comfortable with medical expenditures.

  12. WOW I just recently wrote a blog post about the exact same thing only yours is wayy….. more elaborate. My problem was I couldn’t figure out how much was enough for me and if I’m comfortable with a certain amount or month and I figure it was my hoarding side wanting to take over and just collect cash. After reading your post I’m going to start working on the #s to see how much is enough for me and move on. Thanks NINJA

  13. I follow a pretty traditional emergency fund setup. Enough savings to cover 6 months of living expenses, including: rent, food, uilities, going out etc. I actually never factored in a roth and 401k contribution as a monthly expense, because you’re basically moving money around to pay yourself.

    Realistically I would probably go crazy if I was unemployed and had to cut into my eating and fun time though. Money grubber’s need monies to eat and schmooze the ladies.

  14. Our net worth plus our available credit is our emergency fund 🙂 Like you, we could cut back on everything but I would probably downsize and liquidate everything to get to that minimalist lifestyle I keep hearing about from personal finance bloggers. Extreme? I don’t think so.

  15. DH and I have a $20,000 general e-fund that would cover about 7-8 months of expenses at roughly our current rate of expenses or 10 months with a bare bones budget. We also have a $1500 car e-fund and about $45,000 set aside so far for a house downpayment fund. (This is roughly enough for 20% down in our area, but we aren’t really in a rush to buy, and are pretty happy living as renters for now!). In a pinch, we could use that money as an e-fund too. Similar to you and Girl Ninja, we essentially live on one income and bank the rest. So we could cover our basic expenses on either my income or my husband’s income, though we wouldn’t really be able to save much.

  16. 11k… Cause it felt better than 10k… and that is closer to 6 months of expenses for us than 10k.

  17. Ahhh! So many people are quick to stop contributions to their retirement accounts. Loss of a job is temporary but delaying retirement contributions will have long term impact.

    Sure, you may intend to catch up after getting a job again – but depending on the timing, you might miss out being able to max out your Roth for the previous fiscal year. Similarly, you’ve already lost out on that compound interest you could have had.

    I have my e-fund in a money market account with a stop loss. The principle is my emergency fund, any extra will just help if I need to tap into it. Should it ever get close to devaluing, the stop loss pulls my money out.

    For hard numbers – I’ve got 7 months stored – about 12K. That’s NOT just my average monthly spending x7. I cherry picked my 7 most expensive months of the year and added them together. Why? Simple averages don’t address that certain parts of the year are more expensive. I’ve got some expensive plane tickets in December to visit family whereas April is one of my cheapest months. So, I overshoot my e-fund.

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