Is Your Emergency Fund BIG Enough?

The most important aspect of any financial security plan is to have an adequate emergency fund. Is Your Emergency Fund BIG enough???

You are on your journey to establishing financial security. Then BAM! The car “dies” or one of your family members requires an emergency room visit.

If you do not have an emergency fund in place, these unexpected expenses can send your financial plans into a tail spin. You reach for that credit card, the one you swore you would not use to “rescue” you. Instead of paying off debt, this “emergency” has you piling on more debt. Right then and there, you may give up and accept debt will always be a part of your life.

YIKES!!! Please, please, please establish an emergency fund TODAY to avoid a mess like this! I do not care if it is $5, $20, $100 but please put something in your “rainy day fund” and continue to pile up that cash!

Mini Emergency Fund vs. Emergency Fund

Mini Emergency Fund

In the initial stages of getting your finances on track and paying off debt, you may be comfortable with a “mini emergency fund.” In Dave Ramsey’s baby steps he recommends a $1000 emergency fund ($500 for those with incomes below $20,000). Something is always better than nothing, but please view this recommendation as the ultimate minimum emergency fund you need.

Personally we were comfortable with 1-3 months of expenses for a “mini” emergency fund. However, today I want to focus on the fully funded emergency fund.

Emergency Fund: tips from the “experts”

The amount you should have in your fully funded emergency fund is where things start to become confusing. Some “financial experts” will recommend 3-6 months of bare essential expenses. While other “experts” will recommend a full year’s worth of income in an emergency fund. This can be a HUGE difference, so how do you know if you have “enough?”

When Should You Establish a Fully Funded Emergency Fund?

In ideal circumstances you will have a fully funded emergency fund once you are out of consumer debt. Get out of debt and then start saving as intensely as you were paying off debt!

Your Emergency Fund

First, clarify the use of YOUR emergency fund. Will you be using this emergency fund only if you lose your income? Or will it also cover car and house repairs? Medical expenses? Other unexpected/unplanned expenses?

Some people prefer to have separate funds, such as a “home repair fund” and “car repair/replacement fund” on top of their emergency fund. Others prefer to lump all these savings and expenses into an emergency fund. There is no right or wrong way, after all it is personal finance, “personal” being the key word!

Factors to Consider

There are several factors that are going to impact how much you need in YOUR emergency fund. You need to look at these factors as “risks” and determine the probability of these risks impacting your emergency fund.


How reliable is your income? Are you a double or single household income? Have you been at your job for years and have a secure position in the company? How quickly would you be able to find employment if you were laid off?

If you are a two-income household with steady and reliable jobs. You have less risk of losing your income. You would probably be okay with a smaller emergency fund. If you are a single income household, you will need a little larger emergency fund because if the sole income earner loses his/her job, you will have NO income.

Do You Own a House?

If you do. I do NOT need to tell you repairs can be EXPENSIVE! If your emergency fund is going to cover unexpected house repairs. You need to consider the cost of possible repairs.

Your homeowner’s insurance will most likely cover the huge expense if your house is ever damaged severely. However, take note of your deductible and be sure your emergency fund can cover it.

Medical Expenses

Even if your family is relatively healthy. Make sure your emergency fund can cover deductibles. You never know when an emergency surgery or hospitalization will be required. Your emergency fund is there to prevent debt. Medical bills are known to cause havoc to one’s finances. Be prepared!


If you are going to have an emergency fund that covers everything. Take your car’s condition into consideration. How likely will your vehicle need a costly repair? How soon will your vehicle need to be replaced?

Family Circumstances

You will need to consider possible family circumstances that may impact your income or expenses. Will you or your spouse need to be a caregiver for a family member? Are you or your spouse pregnant? Will you or your spouse be transitioning out of the military soon? Will either of you be returning to college in the near future? There are numerous circumstances your family may be facing that would cause the need to increase your emergency fund.

Employment Expenses

Yes, I am referring to you military families and business professionals who travel and/or move often for your employer. For those of you who are required to travel on your own money and then wait for reimbursement. Be sure your finances are ready for these expenses. I do not need to tell you that traveling and moving is EXPENSIVE. Be sure you have these expenses figured in your emergency fund or a separate fund.

Our Emergency Fund

To put actual numbers to the above thoughts I will use our emergency fund and budget as an example.

Our monthly expenses are roughly $2800. This is the basics: rent, utilities, insurance, food, fuel to work, and the difference between the mortgage we pay and the rent we collect. Therefore, a very basic 3-6 month emergency fund would be $8400-$16,800.


We currently have one income, my husband’s military income. It should be a relatively secure income. Congress passed a bill in 2013, which protects military member’s paychecks from a government shutdown. Also, my husband’s enlistment still has 2+ years left so if the military decides to “fire” him. We should have several months notice to prepare our finances. Also, if push came to shove. I could move back to the states. I am very employable state-side and could be employed within 2 months. My income would cover our basic needs.

Medical & Car

Our medical expenses are very minimal because we are both covered through Tricare (military health insurance). Our plan has minimal co-pays and no deductibles. We also fund our car separately. We have $3000 in this fund. In the UK, this buys a reliable used car.


Our major risk is our rental property. The monthly payment (including insurance & taxes) is $950. If our renters were to move out we would need to cover it until we had new renters. Also, our 1970’s house will need many things replaced/repaired in the near future. We figured $10,000 should be our biggest possible expense.

Military Move (PCS)

My husband is currently on a controlled overseas tour with a dependent (me 🙂 ) Therefore, we know with as much certainty that is possible in a military lifestyle that we will live in England for 3 years. We have just over a year left. Once we have approximately 6 months from our PCS date. We will decrease our debt pay-off and increase our emergency fund. However, at this time our emergency fund does not consider this expense. Although in an “emergency PCS” situation, we could cover the expenses with our fully funded emergency fund.

Total Emergency Fund

Considering all of this, we have decided on a nice round number of $20,000 in our emergency fund. Do you think it is enough? too much?

How to Calculate Your Emergency Fund

  1. Determine your basic/survival monthly expenses.
  2. Calculate your 3-6 month emergency fund.
  3. Determine your financial risk for an “emergency”
  4. Low risk. You should be fine with an emergency fund around 3-months of expenses.
  5. High risk. You will be better off with an emergency fund of 6-months or more of expenses.

Is Your Emergency Fund BIG Enough?

Please take into consideration your own comfort level with your risks versus your safety net. An emergency fund is there to protect you from accumulating debt. With the appropriate insurance plans and an adequate emergency fund, you can protect your family from a financial disaster.

***Keep in mind I am NOT a financial expert, advisor, counselor, etc. These suggestions are only based on my research and experience. Please contact your financial advisor for personal finance advice. Military families, please remember financial counseling is FREE on military installations if you need basic financial advice.***

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Shared at: Thrifty Thursday, The Thrifty Couple, Frugal Friday,

Emergency Fund

Bring Out the Rainy Day Fund

Yesterday I was in a funk and could not shake it so I took the day off from writing. Although the weather is absolutely beautiful here in England, the past six days have held up to the motto “when it rains, it pours”.

Last Thursday, the day before heading to Stonehenge and Bath, England with our guests (I will share pics soon I promise), the emissions light in our car turned on. My husband bought some type of solvent that is supposed to clean the sensor. Well, the light turned off for a bit but it is back on.

The performance of the car hasn’t changed at all and we haven’t died of carbon monoxide poisoning so chances are it is just the sensor that died. So, right there is a guaranteed $200 expense for the mechanics just to assess the situation. I’m just hoping it won’t be much more than $500. Yuck!

Yesterday (Tuesday) with 10 days worth of dirty clothes our washer decides to die. Luckily, my husband did a load of underwear on Sunday, so at least we are good for the week. In the states this wouldn’t be that big of deal. We would probably just go buy a used washer for $100-200.

Here in the UK, we are renters. In the past it has taken weeks just to get in touch with our landlord. The UK also has its unique pace. Where in the U.S. it may take a day or two to get someone in your house to fix an appliance… it may take weeks if not months here in the U.K.

For instance, it was nearly 2 months before someone came out to basically flip a switch so we could have internet. Although, this will be more of a pain than a financial hardship because we will be doing laundry at the launderette (new experience for me). But in all honesty, I am tempted to just buy a washer and the landlord can deal with the broken one when we move out. Because I am way to much of a spoiled American to be without a washer for months on end. LOL.

Well, they say things happen threes… so we are holding our breath around here! Yikes!


Any hiccups in your household causing you to dip into the rainy day fund? I hope not!!!

Insurance… Love it or Hate it, You Need it!

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Can we agree that paying for insurance is something we all love to hate???

But insurance is essential and is part of our financial plans. You must have insurance to cover the tragic and expensive possibilities in life. If you didn’t have health insurance, a $50,000 emergency surgery would drown most people in debt. If you didn’t have home insurance and your house was a complete lost, most people do not have $100,000+ sitting in the bank to build a new house. Insurance protects us financially from the unthinkable events.

When is the last time you updated your insurance? When is the last time you researched and called around for better rates?

Car Insurance

Most people have car insurance because in most states it is against the law to not have some type of insurance coverage. But have you made sure your coverage and deductibles fit your needs? If you have a 3-6 month emergency fund, chances are you could take on a bigger deductible possibly saving you a good chunk of change.

Medical Insurance

Due to recent laws, more people have some type of health care insurance in the United States. Basically, if the poor/working/middle class and elderly can afford health insurance, they have it. It would be silly not to because health care costs are so expensive. I know the “new” regulations of health care insurance has made it affordable for some who couldn’t afford it before and too expensive for others who previously could afford it. I won’t discuss it, because I think we all can agree that if we can afford it, we have it.

pic source Jetoboj

Home/Rental Insurance

Although loss of your home due to a fire or natural disaster is a relatively low occurance (depending on where you live), the cost of home and rental insurance is next to nothing! We pay ~$10/month in rental insurance and ~$35/month for house insurance on our state-side house that we rent out (house insurance with renters in it is more expensive than having house insurance that covers all your belongings, how crazy is that?). Anyway, for very little money (less than going to the movie theater) per month you can protect yourself from a $100,000+ catastrophe. Don’t be silly, just do it!

Okay, now that we have covered the basic three insurances that most people have or should have or want to have if they could afford it (but are doing everything in their power to be able to afford). I am going to discuss insurances that are SOOO important but we don’t like to think about.

Life Insurance

Who wants to think about losing a loved one or dying? Absolutely no one! But just because we don’t think about it, isn’t going to prevent it from happening. I am sure most of us don’t have to think to long to remember a friend, family member, or co-worker who died at a young age and had children still at home. It is an absolutely heart wrenching thing and what is really bad is to think that nearly half of all adult Americans DON’T have life insurance! Meaning, half of those families not only had to deal with a horrific loss of their loved one, but also had to deal with the financial hardships that followed.

I know it is not fun to sit down and figure out how much life insurance your spouse or loved one will need in the case you leave this life too early. It is not fun to figure out which life insurance plan you are going to go with and then go through the medical exam to get coverage. I was right there with you. I kept putting it off.

A couple of weeks ago, I discovered that I have a life insurance plan that I didn’t know about. It is through the military and as a dependent I was automatically signed up for it. It is not much, but if the unthinkable happened to me it would be enough to pay off our mortgage and pay for funeral services. For now (because we don’t have any other debts or children) we believe it is enough coverage. It was actually quite the relief to know that financially my husband would be “okay”.

If you have loved ones who depend on you and/or your income it is SOOO important to get life insurance. It is quite affordable too. A healthy 30 year old, could get a $500,000 term life insurance policy for 20 years for around $20/month. Even if you don’t work outside the home but have children you most definitely need life insurance. If you passed away, your spouse would need to cover childcare expenses and depending on your spouse it may need to cover a chef, maid, tutor, gardener, etc. LOL.

If we were ever to have children, we would probably get another $200,000 – $400,000 term life insurance policy on me. Because affording childcare costs and college tuitions and all the other expenses children come with would be extremely difficult to manage on one income.

Long-Term Care Insurance

This insurance pays for the need of long term care, such as an assisted-living or nursing home, or in-home health care. However, this insurance is extremely expensive and when you are young you have a very slim chance of needing it. So, it is an insurance you buy later in life, but hopefully while you are still healthy so you can qualify. Dave Ramsey recommends at the age of 60 to purchase this insurance. The reason being, is once you have your 60th birthday your likelihood of needed long-term care dramatically increases.

You may be young, but are your parents nearing this age?

Why is this insurance so important? Long-term care is $$$expensive$$$, easily $25,000/year for a nursing home. If one spouse has poor health at a relatively young age, maybe 70 years old, and needs to have long term care. This spouse’s healthcare costs could wipe out the nest egg in just a few years and the other spouse could live to be 100 years old, but no nest egg to do so.

I have also seen first hand, family members who have had to sacrifice a lot financially, emotionally, and their time has been devoted to caring for an elderly family member, missing out on many opportunities to live their own life. Just because you encourage your parents to buy this insurance or if you buy it for them doesn’t mean you don’t intend to take care of them in their old age. It just insures that financially you will be able to provide the best possible care for your loved ones.

Will & Estate Plan

This has been on our “to do list” for the past couple of years. We really need to get it done!

Everyone needs to have a will. Especially if you have children! Or if you have any type of assets. Or if you love your family/friends. Your loved ones will have enough to deal with over losing you so don’t make this time any more difficult on them. Have a plan and make sure it has been discussed with your loved ones. No need to surprise them. Dealing with the loss of a loved one and then finding out a couple days/weeks later… “oh by the way, you get my children and my $200,000 mortgaged house”… Can you imagine, YIKES!!!

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I am learning more and more every day as far as the benefits included for military members and families. I will add an easy to find “Military” tab once I gather enough information. But here is what I have learned so far:

Life Insurance:

Members: All active duty military members are automatically enrolled into a $400,000 term life insurance policy. The cost for this insurance is $26/month and is taken out of your paycheck labeled as SGLI. Visit the VA website HERE for further information.

Dependents: Spouses who are enrolled in the DEERS program are automatically enrolled into a $100,000 term life insurance policy. The cost for this insurance is $5/month (increasing slightly with age, once 35 years old). It is labeled as FSGLI when deducted from your paycheck. Dependent children are automatically enrolled to have a $10,000 term life insurance policy free of charge. Visit the VA website HERE for further information.

Veterans are eligible for life insurance through the Veteran’s Group Life Insurance. Veterans can qualify for life insurance without a medical exam or health questionnaire, if the veteran signs up for this life insurance within 120 days of separation. The cost of this insurance would be slightly more expensive for a healthy adult (~$5-10/month) but if you have a health condition (high blood pressure, diabetes, tobacco use, etc.) that would increase your rates or disqualify you for private insurance this is definitely the way to go! Visit the VA website HERE for further details.

Traumatic Injury Insurance:

Military members are automatically enrolled into a Traumatic Injury Protection Plan. This coverage is $1/month and is included with the SGLI when deducted from your pay. This covers traumatic injuries both on and off duty. What is covered with this plan? Basically the loss of a body part, vision, hearing, severe burns, paralysis or TBI resulting in the inability to perform 2 or more activities of daily living. If you would like more information go HERE to the VA website.


Now, that all the “fun” stuff has been covered… I promise to have more care-free posts at least for the next few days! But it is SOOO, SOOO important to have the relevant and needed insurances in place to financially protect you and your loved ones. If you don’t have these insurances in place, go do it, NOW! 🙂

It’s Tax Time!

Do you hate the word “taxes” as much as I do??? No matter how much or how little I end up having to pay in taxes, it leaves me irritated. Perhaps if our government was better at managing finances I wouldn’t be so irritated. Or perhaps if everyone paid their fair share I wouldn’t be irritated. Or maybe no matter what, “taxes” would still make my blood boil.

In all honesty, my husband and I didn’t pay our “fair share” in taxes this year (not that I want to pay more). I only worked for a few months this year and my husband’s “housing allowance” isn’t taxable. So, we paid less than half the taxes this year, than we did last year. Which will result in a nice tax return in our bank account in a couple of weeks.

***Phew, I started rambling about government and politics and had to hit the delete button. I have my opinions and talking/writing about it, won’t do much good. So, let me refocus. 🙂 (you’re welcome LOL)

Although, I know intellectually receiving a tax return means we gave the U.S. government an interest free loan. And believe me when I say, I wouldn’t give my own family an interest free loan. Especially a family member who is poor at managing money. So, the best thing we could do is adjust our my husband’s W-4 so less taxes are taken out monthly. Although, we hold onto hope that I may eventually get a job this year and then we get bumped into a higher tax bracket and then our W-4’s are where they need to be.

So, we are still unsure of what to do. We I need to figure out how difficult it is to change my husband’s W-4. If it is not a big deal, then it would make sense to change it, so less taxes are being taken out, until I have a job and then change it back.

For the previous years, when I had a full-time job, our W-4’s were correct. Both years, our taxes were within $100 of what we had already paid throughout the year. This was a good place to be, because we never owed the IRS a big chunk of change and we didn’t ever provide much of an interest free loan.

What are your thoughts? Would you rather provide an interest free loan and receive  a tax return or keep as much money as you can every month and then owe something at tax time?

If you are receiving a tax return, what do you plan on doing with it?

We are putting 100% of ours to our April mortgage payment! 🙂 Can’t wait for this mortgage to be gone and my 2nd least favorite bank to be out of my life for good!!! 🙂

Great ways to spend your tax return:

  • Get Current on your Bills
  • Establish an Emergency Fund
  • Pay off Debt
  • Invest it in your Retirement Account
  • Invest in an Education Savings Account (Education IRA) for your Child’s College Education (you can invest $2000/year per child).
  • Saving for a big purchase? House, Vacation, Boat? Boost your Savings with your return.

How are you spending your tax return?

Or do you owe taxes? How are you adjusting your budget so you can pay your taxes?

Did you know there are several ways for military members to file their taxes for FREE?

There are a couple options for military members, some free options are limited to E1 – E5.

I have used both Turbo Tax and H&R (when it wasn’t associated with OneSource) free military e-file programs and haven’t had issues with either.