Last month (July):
Years left: 0.666666666667
P =$1,175.46, I =$38.94, Escrow =$812.79
This month (August):
Years left: 0.5833333333333333
P =$1,180.12, I =$34.29, Escrow =$812.79
This is the first time in a long while that we’re not saving up for something big. DH may lose his job, because jobs aren’t guaranteed, but he’s not planning on leaving his job any time soon. I’m not eligible for leave for another 5+ years. There’s not really any reason to hold onto large amounts of cash. Certainly not the 84K that we ended up having in savings before we left for Paradise.
DH’s salary is also substantive enough and year round enough that we don’t really have a long unpaid summer like we used to. I think we will be spending more than his take-home pay in the summer, especially since that’s when a bunch of our big annual bills come due (mostly insurance), but there’s a big difference between being a little short and having literally no summer income. We don’t have to have quite as big a chunk come May as we used to.
On top of that, we were paying a year’s tuition of daycare and/or salary in September, about a month before we got paid so we needed money for that as well. We’re no longer doing that because DC1 is going to public school and we no longer trust daycares to not go out of business.
Previously I mentally partitioned our savings account into “summer expenses” for the 3 summer months without income, “DC1 tuition”, “DC1 summer camp”, “DC2 daycare”, and “emergency fund”.
This year I’m going to try something different. I’m going to try to maintain 21K in savings all year round and call it the “emergency fund”. I won’t save extra from each paycheck for summer expenses leading to a gradually increasing savings amount. I’m just going to have 21K in there. I will allow it to dip below that during the summer, but I’ll try to keep it above, say 14K. If DH loses his job or something, then we’ll sell some stocks, but otherwise 21K should get us through until the next paycheck(s).
It occurs to me that if I weren’t lazy and if rates weren’t so low, it would make a lot of sense to put that 21K into a 9mo CD or into a three month ladder of CDs that come due.
Where did I get the number 21K? Well, mostly I just pulled it out of my posterior region, but IIRC, it’s about 3 months of expenses (when we’re not living in Paradise) when we’re living large and then some. It is also enough to cover pretty much any major emergency other than a car purchase.
What will we do with the rest of our income? No idea! Maybe we’ll figure something out next month after everything has settled down. Right now I’m leaning towards lumps to a taxable Vanguard account, but first I will need to drive my car for a month to see if it needs to be replaced.
What are you all doing for an emergency fund these days? Does how much cash you have in savings change over time?