Beat the Bush ,,i have 8 years in Emergency fund or sleep money ,,its makes me feel fuzzy and happy in life to know i have money at call when needed ,,,, its easy to build up your sleep fund once you have paid of your home loan .....
There are some recovery related expenses such as moving (when the new job is acquired) and traveling expenses for interviewing (until reimbursed for a large chunk of that). If you build out your emergency fund with these things in mind, you can perform those functions 'freely' when appropriate. Also, part of my emergency fund is what to do if employment isn't viable, as far as investing in self. Such as, getting that next degree or certification. Some tasks can benefit from that time when the next job isn't ready yet, due to the economy. Instead of sitting around freaking out, it might be the right and best time to invest in growing your career outside of a gig. I think it's also important to be prepared psychologically to be aggressive enough in pursuing employment opportunities but not settling at a loss. Economic down turn is temporary but hurting your career for the sake of any paycheck may be a function of poor financial management versus necessity. Fund your emergency reserves so that you can thrive during the crisis and not just get by. You can build your personal and professional relationships during those times instead of straining them. Based on my demographics, my household is likely to be the first to get released and last to get rehired (as viable), so my emergency reserves reflect that. YMMV.
Sleeping well at night is way more important than "things" and slaving away financially/mentally to obselete social norms and expectations in which I learned a long time ago there is no fines or jail time, so why bother?
I also think 12 months is a good buffer, there's a lot of things you can do in 12 months. Like reduce your spending, maybe sell some unused Items. Maybe sell a vehicle and reduce to a one vehicle household. Simply readjust your life style to extend that 12 month emergency fund.
I agree.. 12 months is the bare minimum, but I would add three additional separate accounts (their own savings account) for the following: 1) Car Emergency Fund: $2,000 for expensive repair or cheap replacement car 2) Electronics Emergency Fund: $1,000 for computer/phone die...you need these for job search, etc. 3) Travel Emergency Fund: $1,000/person for emergency travel, such as death in family or similar.
Sure thing. Once you have 12 months, they all get clumped into one big cash ball. If you have investments you can lower this a little bit if you're okay with selling some investments if you ever get low on cash.
Being young, single, debt free, car payment free, mortgage free, and dependent free, I currently do 6 months. This keeps it lean at around 10k. Further in life, in marriage, I would definitely bump that to 12 months, and of course it will be higher anyway with dependents. Discover online savings is a great option for cash. Currently APY is at 1.15%, one of the best you’ll find.
Mannnnn,you don't know how truuuuue this video isszzzz! I am currently unemployed and I have learned sooo much lessons during this time. Good jobs don't come easy no more for sure. I made the awful mistake of resigning from my last job. It had a lot of b.s. going on, but it had a lot of great benefits. i.e. health, dental etc. Having 12+ plus of emergency funds allows you to be less stressed during interviews. I blew a few interviews because I was so much under pressure to get the questions 'correct' that I fuk'd up on them during the interview. Also, I feel when some of these employers know you're unemployed (especially for a while) they believe you are desperate....and it seems as if they act like the position requires you having a PhD in the industry to get a damn call center job.....so you're often stuck trying to overly impress the m.f. Anyway, I got a job offer with great benefits starting in 8 days....and trusttttt me, I will continue to be a frugal being from the moment I start. I'm relatively young and if I'm having a hard time with good employment at my age, I would hattttttte to see what it would be like when I'm older.....I Have learned a lot. Thanks for the video, they seem to often coincide with experiences going on in my life at the present or recent time.
=D Glad you are able to take something away from the vid! From what you state, it sounds like you could strive to advance in some form of career. It's all that much harder to do so when you are working a full time job. As I always think, it's very hard to go back to school and work at the same time so I would just borrow so that I wouldn't have to work while going to school so I can concentrate on getting whatever credentials you are after.
BeatTheBush lol. I'm actually 1 class away from my Masters in Healthcare administration from a legit university....the problems I ran into was I need to be bilingual and have x amount of years of experience. I'm trying to now get into selling insurance but most are commission based only....so the plan for now is get licenced, and work for at least a year or more at the upcoming job to save up 'emergency money' and cover me for the first 1-4 months working on commission. It's lucrative if one is into that kind of thing. I also have something else in my back pocket that I'll be doing (that will lead into part of my retirement goal/plan.
Ahh glad you have a plan. =D And what a rude awakening for the requirement for healthcare admin right? Shouldn't they tell you these things before you get your degree?
BeatTheBush yep that would have been a good thing to know, but this is something moreso depending on where you live (the demographic). I live on the east coast and have a very diverse group of people in my state. A lot of which are Hispanic... for that reason many jobs here require you to be bilingual. It's super crazy sometimes....because I've been to interviews in the past where my competition clearly looked like that just rolled out of bed, showed up for interview, and was hired....no experience lol. I 'learned' a bit of Spanish as a requirement during my Associates. what we 'learned' would merely allow us to try to use during a short vacation. 😀
Great Video. Emergency funds are very important..I remember the time I was unemployed for 5 months, I saved enough money from working to travel, spend time with family, and work on new projects and went back to work because it was draining my emergency fund haha
If you have over and beyond what you need to feel secure and you can travel in between work then that's all the better! It's disconcerting though knowing the positive flow isn't there.
You can use ladder CDs for your emergency fund to earn more interest. For example, with a 2 year emergency fund every month you can buy a 2 year CD with the principal being your current monthly expenditures. Then if you need to access the emergency fund, you can just claim the CD money every month instead of automatically rolling it over.
No emergency fund, I invest all the surplus of my income after I pay my house rent and electricity/water/etc. Not having a car and living in a country where I have 100% of healthcare service supported helps a long way. It´s so awesome to see your stack growing. Im 25, great videos btw.
I guess you can push it as far as you are comfortable with. While it works great on an appreciating market, it really makes you not sleep well when it's going down.
Funny you agree with Mr Ramsey on a few points ..... My goal is to get this warm fuzzy emergency fund feeling you have it just seems so difficult as a contractor to do.
Might only be you have an idea of what you spend so 6 month salary feels comfortable. If your salary remained the same but you are able to reduce expense by 50%, then I bet you'll also feel comfortable with 3 months salary.
hmmmm , actually I am working on reducing my expenses , but 50% is very ambitous . But if that means that my emergency fund can be 3 months salary , this is something that I need to try ! And I love your channel by the way :)
=D. Reducing expenses in a comfortable manner while not sacrificing much on quality of life is the key. Anyone can just skimp. It's also two fold because if you get used to spending less while getting roughly the same things, then the amount you need for retirement drastically reduces.
6 months seems sufficient for me even a bit too much. However, I have no debt and considerable investments in that scenario. If I had debt and no other investments I'd want more.
Dave Ramsey has a few good ideas, one of which is to start with a *small* Emergency Fund. Pay off your debt, and *then* grow your Emergency Fund. The keys in deciding how large of an emergency fund to have are: #1 If you are married, does your spouse work? If so, then what's the likelihood that he(?) will be unemployed at the same time. If "low", then you'll need a smaller E-Fund. #2 Critically analyze how quickly you could get a new job (especially in a down market).
2 years worth of an emergency fund is a lot. How long did it take you to amass the fund? I'm trying to get my emergency fund rolling, but it seems like it's going to take a while to reach those heights.
I didn't really say what kind of emergency fund I have only that I would prefer that level. Btw, if you have investments, that might make you comfortable enough to have a smaller cash only emergency fund.
I don't get the idea of an emergency fund. Why do we make a separate account? Can we just store the money in my checking account? Many TH-camrs explain how much people need to save without explaining the actual benefit of opening the account. It's just for a little tiny bit of interest???? If I can park money in my "emergency fund savings account" with nothing, I would leave it in my checking account.
at my current burn rate, i can last over 10 years. I got out of a bad marriage, no kids, no mortgage or loans to pay. But I want to keep working at least another 5 years to increase my networth, and improve on my investments.
It also depends on how secure your job is. In my current position, I feel very comfortable with 6 months of emergency fund. When I worked for private firms, I had 12 months worth of expenses mainly because the likelihood of losing my job was higher
BeatTheBush I agree. However, I work for the government and layoffs are unheard of with this company. That’s not to say I’ll be here forever. I’m following your lead to becoming financially independent
Not a good idea to have emergency fund in a savings account where the interest rates are too low. Better to invest in low risk liquid funds to match up with inflation
12 months for me that's $20k emergency fund.... had that last year, but the house absolutely needed new windows. Now I'm inching my way back up and almost to $15k
The windows on the garage were about to fall off, but the house needed new ones too. We had negative temps this last winter but my heat bills were half of what they were the previous years with mild winters.
Yep! While I realize that Dave Ramsey says 3-6 months, considering the ABSOLUTE NIGHTMARE I endured during The Recession, there will NEVER be enough money saved to get out of THAT sweat! In addition, because of a narcissistic dynamic I recently discovered in my family, I am working to separate from them. Minimum 1 year of savings, as far as I’m concerned. One has to take into account, not just what you’ve said, but if you’re getting older and/or run into race or gender issues, you’re going to have to have more saved as it may take a longer time to find a job - a real and decently paying job. Not a job where someone gets to call themselves your boss for a few hours per month, while you live in your car. Add to that that many jobs, even if not contract, may not last. Many jobs are not like they once were. Companies want you to have to hyperventilate while you work or you just won’t measure up. Not everyone can last under that kind of daily pressure. If you find yourself unemployed, that’s the time COBRA is recommended for medical, which is more expensive - and comes out of what you, now, don’t have (a paycheck). Gone are the years of extended unemployment also. It’s 6 months or die.
you could do 4 mouth, and then a 3 mouth and 6 mouth CD that you just revist ever time in less you need it, it will not be much but is something and CD are very safe.
I know you've done a diet video, and I eat similar. Rice, veggies, chicken, fruit, but I also have potatoes(sweet potato) once in while. Whats your take on coffee? Do you drink it, or why dont you?
Coffee is roasted which is really slight burning. I don't think it's healthy due to this and I do not drink it regularly. I may have perhaps one cup every month or two just as a social thing.
If you put your emergency fund into Capital one 360 your earning some interest. That's better than a regular savings account. And you still have access to it .
actually you can defer your school loans for economic hardship. Its sucks cause they still collect interest but if it prevents credit card misuse while unemployed then its worth it.
In dire circumstance sure. But you are saving your emergency funds and you project to keep on paying all bills and not try to lean on any kind of assistance. There is also unemployment payments if you qualify which could extend your lifeline a bit.
hi there, your channel is very useful man. thank you! quick question, what do you think about having gold as another form of emergency fund? one of the portfolio that I'm trying to mimic has a 7% allotment on gold for diversifying investments. Thoughts? Thank you.
I think having some gold is an important part of your total portfolio. Some might argue having it is a losing proposition since it has not gained value in a long time. Think of it as the cost of hedging the rest of your portfolio. Now the percentage depends on how much you think the risk is and how bullish you are the economy will tank and gold will gain.
Hi 👋 love your videos, I have several questions, where do you put your emergency fund? In a Savings account? Do you put it all together or spread it in different banks? Do you first save for 12+ months of emergency funds and after that is complete start saving to invest ? Thank you 😊
Thanks for your support! =D =D I put it in a high yield savings account across a few banks. The order of savings is: employer matching in 401k, Roth IRA, then emergency fund savings. This is because those that come before you can take out at a gain EVEN with the possible penalties. This is a lot more complicated than I thought. I'll have to make a video explaining more.
Well.... that might be gears for people who have a hard time saving money. The idea is not to force yourself but practice the ways to do it so you willingly do it. Not buying something when you really want to is just torturing yourself.
awesome video... Do you have any opinions or advice about how to network or establish at home business? I have extensive mechanic, carpentry, and general maintenance experience but most people here just like buying the cheap stuff from Wal-Mart that breaks very quickly even though my prices are among the cheapest (less than a third of something comparable from the stores). I'm mainly asking since my income will be cut in half when I graduate from college very soon since I will no longer be recieving the gi bill every month.
I think you just have to start small. Have you tried those gig websites where you plug your skills in and people pay you by the job? i.e. TaskRabbit? Then you need to market your carpentry. Perhaps you can do custom stuff for people but you'll need to do a bit to get your name out there.
Out of a job and retiring is very different. Out of a job means you have no income and are using your reserve resources to sustain yourself. Retirement means you are using resources that you get from passive means to pay for your living expenses. VERY different.
I've been working on building my emergency fund for some time now. Just recently hit 6 months in reserve. Now I'm watching this money sitting, not earning. What are your thoughts on buying a series of CDs so that they are set up that you always have one of them maturing (say every month or two). Not possible with my 6 month reserve, but with a 2 year reserve like yours, I think this is very doable. As I figure it, i shouldn't need all of my emergency fund at once, so this monthly CD payout scheme would be similar to getting a regular pay check. And in the mean time, my money is at least earning a little. Anyway, this is my next financial goal to work towards. Interested to hear your thoughts. Thanks for all the insightful videos.
BeatTheBush quick Google search tells me that currently you can get a CD with an apy of up to 2.4% with a 5 year term. But the best savings account I could find offers an apy of 1.3%. I haven't done the math yet to determine my actual benefit, but obviously the CD offers a better rate of return. But is it worth the 5 year commitment?
How about putting the savings in the bank in a money market account since the interest rate is slightly higher than a savings account, and the money is federally insured?
You need emergency funds to be very liquid so yes, put it in a high yield online savings account and 1 month in a regular savings account that is immediately accessible.
I put my E-Fund in a granular set of $1000 12 month CDs at a high yield online bank. That way, I earn more than a regular savings account, but won't break (and incur penalty on) a *large* CD.
Nobody pays their property tax annually - your mortgage provider takes the money monthly and pays it annually. Every home owner just has a PITI amount that covers everything. Obviously there will be exceptions but this will cover 99% of people. Find it hard to take your advice when you don't know something as simple as this.
@@BeatTheBush yes, I said there are a small amount of exceptions - but if you're presenting yourself as a financial authority you should be aware that the VAST majority pay it monthly. Assuming everyone pays it the way you do, as your video suggests, isn't a good look.
@@easterlake Go back and watch that section again, start at 1:35 - the quote is "if you have a mortgage you have property tax and HOA. Property tax usually comes once a year". He's explicitly talking about it in a mortgage situation, not a free and clear situation.
Hi great video. I'd like to ask what's your opinion on what to do besides the emergency fund, be it 1 year or however much. Of course I'm talking about investing them, but more specifically do you have any suggestions or ideas on percentage of different kinds of investment? Something like 50% in real estate, 20%stock, 20% bond, 10% to do speculative/interesting things like bitcoin? What's your thoughts on these?
Your investment risk profile will depend on when you estimate time to retire. Generally, the closer you are to retiring, the less risk you will take since you do not have enough time to recover a sudden shock. This is not dependent on age although usually, older people are closer to retiring.
I have around 90k saved up. 70k in checking and savings and 20k in my emergency/rainy day fund located in another bank account. BTW I calculated I would need another 5K (thats 25K) in my rainy day fund to cover my expense for 12 months or more like you suggested. Not to mention about $250 in spare change that I keep in my change jar. Do you have any other savings and/or investments ideas that might help me out? Thx!
Savings and investing ideas? Get the highest online savings you can. Have several so you switch between them. Check out my investing playlist to learn how to find investments on your own. I cannot recommend an investment directly and other than general methods.
Because investing only 1 year worth of emergency funds will only improve your cash flow marginally. Your emergency fund is for emergencies and needs to be in cash.
Very good advises, thank you. Since you have your emergency fund saved up, do you essentially put your entire paycheck minus weekly expenses straight to your investment accounts?
I actually have 2 one with synchrony bank and the other with Marcus plus a ROTIRA both high yield savings have just about 4000 each I just don't want to depend on anything like selling everything
BeatTheBush will closing a credit card with credit one hurt my credit it's now at 700 I was planning on increasing the limit on my other cards then close it
I would feel safe with a years living expenses set aside including spouse and all dependants. Also want all my set bills prepaid in advance 6 months. And the ones that wont work for prepayment, the money would be set aside in a seperate account for that bill. It would be good to have passive income in addition to my career job also. Then there would be spouse's income and my investments further than that, but it should never get close to that point.
For emergency funds, how do you feel about liquid investment accounts (non-retirement) counting towards some portion (obviously not all because the market could drop 70% tomorrow for all we know)) of those emergency funds if you have a job in high demand? Otherwise, should absolutely all emergency funds be in savings/checking accounts or should some be allocated in physical commodities in your possession (ie silver under your bed) for the case that there is an economic downturn and your bank actually does go under (even if insured by the government, that could be a long turnover process)?
Being versatile or diversified is in general not a bad idea. If you keep it in stocks then it would be quite likely to fall to much to be worth cashing as you pointed out. On keeping something real like gold or silver (as in not on paper but under your bed), that usually beats the market when there is a recession. However this is prone to getting stolen and should be weighted against the chance of the bank going bankrupt, also if BTB is a fan of keeping commodities then he might not say so as it could paint a mark on his house.
This really comes down to how comfortable that emergency fund makes you feel. The more you put in an investment account, the more risk you put on your livelihood. So this depends on how on the edge you feel like living. Some might just be very risky and put everything on the stock market. It works out when the market goes up but doesn't work well when the market goes down. To prevent a bank closing and not having access to your money, I generally bank with multiple banks keeping some in each in order to diversify. Gold and silver in physical form is a bit of a hassle but some swear by it. I think you'll have to take great care keeping them as they are prone to theft.
If you do want to keep gold, you might also need to buy a safe to put it in. Then you might need to hire a sniper guy to camp out on the next house to protect your gold.
What is your recommended priority in diverting your savings? Should I build a solid emergency fund before I max out my Roth IRA and invest my money? Should I be doing all at the same time? Sometimes a year-long, strong, emergency fund is so difficult to form for when you're starting out, especially in high COL areas because that would sometimes require a +$20k fund.
Max out matching on 401k, Max out Roth, Back to Max out 401k, then savings. Worst case you can take the principal amount out of a Roth IRA without tax and without penalty. So it's like an emergency fund.
Depends on what kind of loan. If you can pull money back out easily then you pay off the loan first. If you cannot, then you want to get a minimal emergency fund first.
What is your view on having passive income instead of an emergency fund. I make about 60k a year passive in rental property income. Each building has insurance as well as a growing maintenance balance. I feel like an emergency is not needed in this case. What are your thoughts?
I guess if you need a large chunk of money you still have to wait for your passive income to come in and pay for that large emergency expense. It's all about what makes you comfortable and how much you want so you feel PERFECTLY comfortable.
You are totally good husband material. I would be happy to marry someone with this much common sense and knowledge. Thank you for the. Ideas I love to hear your opinion while I began my budgeting .
Lol, thanks! You need a solid financial backing if you want to live well. To have one, you have to cast aside trying to look rich and care about showing people how well you are doing.
First, thank you for the videos! Second, I'm surprised you keep more than one year of emergency savings. I am wondering what you think about keeping one year of emergency funds, then any surplus of money goes to a brokerage account where you apply the 4 percent rule to the brockerage account money. Do you like the two tier strategy? If so, would you recommend putting the 2nd tier in something less risky, like a mini fund?
Yes I like the two tier strategy and as you have more, you may want to invest the extra money. Perhaps less risk in bonds instead. Really, I like the comfort of more than 1 year or even 2 years. 3 years? Plus, having cash allows for buying of depresses assets when it does happen.
I do not make allot of money. Then again I’m only 19, I take $150 a month and put it in my savings account. That’s the absolute most I can put in. I have $1,500 now in savings. Plus I just got my first secured credit card. I have ghost credit (which is none) because of that I cannot buy a car or house... or really anything. I am working hard to build my credit and my savings account. Let me know is anyone has any tips for me!
Being 19, you need to work on increasing your income. Are you working full time or are you a part time student? Because if you want to get ahead, you cannot do that with $1500/month.
Great video! Do you have any advice for newly weds trying to gain financial independence together? i.e. if it is better to have joint accounts, how is credit affected being married compared to being single, should you get a co-loan for a mortgage or should you have only the person who has a better credit score get the loan. Thanks for your help!
For this couple thing I really have no idea since I haven't been there before. I do think each half should be just as good in saving and building wealth. If you have a big spender spouse and just does not 'get it' in terms of financial independence, then you'll be spinning your wheel and never get anywhere.
For those who are starting out and with student loans, when should a person start their emerg fund, before, during or after they've paid off most debts?
Beat the Bush ,,i have 8 years in Emergency fund or sleep money ,,its makes me feel fuzzy and happy in life to know i have money at call when needed ,,,, its easy to build up your sleep fund once you have paid of your home loan .....
Lol... 8 years. That's sleep like you're dead level. =D Very very nice. Or.. smile fund. You constantly are in a really good mood. LOL.
if you are not investing that money, you are just wasting it and losing it to inflation
stick it in a cd
i used to feel 3 months is good.but after watching ur video, i think 12 months is better.
Glad you are preparing for things appropriately. It's really just comfort money. =D
I copied my existing budget spreadsheet and modified it for unemployment, *including COBRA.* It was very enlightening.
There are some recovery related expenses such as moving (when the new job is acquired) and traveling expenses for interviewing (until reimbursed for a large chunk of that). If you build out your emergency fund with these things in mind, you can perform those functions 'freely' when appropriate.
Also, part of my emergency fund is what to do if employment isn't viable, as far as investing in self. Such as, getting that next degree or certification. Some tasks can benefit from that time when the next job isn't ready yet, due to the economy. Instead of sitting around freaking out, it might be the right and best time to invest in growing your career outside of a gig.
I think it's also important to be prepared psychologically to be aggressive enough in pursuing employment opportunities but not settling at a loss. Economic down turn is temporary but hurting your career for the sake of any paycheck may be a function of poor financial management versus necessity.
Fund your emergency reserves so that you can thrive during the crisis and not just get by. You can build your personal and professional relationships during those times instead of straining them.
Based on my demographics, my household is likely to be the first to get released and last to get rehired (as viable), so my emergency reserves reflect that. YMMV.
There are certainly changes in expenditure while working and while looking for a job. Good point with adding those extras in.
great tips!
*demographics?*
*?*
I agree at least 12 mths of emergency fund.
Sleep money is important. =D
Sleeping well at night is way more important than "things" and slaving away financially/mentally to obselete social norms and expectations in which I learned a long time ago there is no fines or jail time, so why bother?
I also think 12 months is a good buffer, there's a lot of things you can do in 12 months. Like reduce your spending, maybe sell some unused Items. Maybe sell a vehicle and reduce to a one vehicle household. Simply readjust your life style to extend that 12 month emergency fund.
I agree.. 12 months is the bare minimum, but I would add three additional separate accounts (their own savings account) for the following:
1) Car Emergency Fund: $2,000 for expensive repair or cheap replacement car
2) Electronics Emergency Fund: $1,000 for computer/phone die...you need these for job search, etc.
3) Travel Emergency Fund: $1,000/person for emergency travel, such as death in family or similar.
Sure thing. Once you have 12 months, they all get clumped into one big cash ball. If you have investments you can lower this a little bit if you're okay with selling some investments if you ever get low on cash.
Bill Carson oh I like the travel emergency fund . I have about 5 accounts lol I name them different things
The problem with saving in cash is beating inflation, so difficult.
Our money is being inflated away but should that really be the norm? Something to think about.
there is no problem if you invest your money instead of saving it
But you're not supposed to invest your your emergency fund. It's supposed to be kept liquid so easily accessible.
money lying down unused is money wasted
I prefer gold and silver than cash...atleast you can pawn it or sell it to save you ass...
Being young, single, debt free, car payment free, mortgage free, and dependent free, I currently do 6 months. This keeps it lean at around 10k. Further in life, in marriage, I would definitely bump that to 12 months, and of course it will be higher anyway with dependents. Discover online savings is a great option for cash. Currently APY is at 1.15%, one of the best you’ll find.
Mannnnn,you don't know how truuuuue this video isszzzz! I am currently unemployed and I have learned sooo much lessons during this time. Good jobs don't come easy no more for sure. I made the awful mistake of resigning from my last job. It had a lot of b.s. going on, but it had a lot of great benefits. i.e. health, dental etc. Having 12+ plus of emergency funds allows you to be less stressed during interviews. I blew a few interviews because I was so much under pressure to get the questions 'correct' that I fuk'd up on them during the interview. Also, I feel when some of these employers know you're unemployed (especially for a while) they believe you are desperate....and it seems as if they act like the position requires you having a PhD in the industry to get a damn call center job.....so you're often stuck trying to overly impress the m.f.
Anyway, I got a job offer with great benefits starting in 8 days....and trusttttt me, I will continue to be a frugal being from the moment I start. I'm relatively young and if I'm having a hard time with good employment at my age, I would hattttttte to see what it would be like when I'm older.....I Have learned a lot. Thanks for the video, they seem to often coincide with experiences going on in my life at the present or recent time.
=D Glad you are able to take something away from the vid! From what you state, it sounds like you could strive to advance in some form of career. It's all that much harder to do so when you are working a full time job.
As I always think, it's very hard to go back to school and work at the same time so I would just borrow so that I wouldn't have to work while going to school so I can concentrate on getting whatever credentials you are after.
BeatTheBush lol. I'm actually 1 class away from my Masters in Healthcare administration from a legit university....the problems I ran into was I need to be bilingual and have x amount of years of experience. I'm trying to now get into selling insurance but most are commission based only....so the plan for now is get licenced, and work for at least a year or more at the upcoming job to save up 'emergency money' and cover me for the first 1-4 months working on commission. It's lucrative if one is into that kind of thing. I also have something else in my back pocket that I'll be doing (that will lead into part of my retirement goal/plan.
Ahh glad you have a plan. =D And what a rude awakening for the requirement for healthcare admin right? Shouldn't they tell you these things before you get your degree?
BeatTheBush yep that would have been a good thing to know, but this is something moreso depending on where you live (the demographic). I live on the east coast and have a very diverse group of people in my state. A lot of which are Hispanic...
for that reason many jobs here require you to be bilingual. It's super crazy sometimes....because I've been to interviews in the past where my competition clearly looked like that just rolled out of bed, showed up for interview, and was hired....no experience lol. I 'learned' a bit of Spanish as a requirement during my Associates. what we 'learned' would merely allow us to try to use during a short vacation. 😀
@@TaShar16 do you have student loans now from the Masters degree?
I like the zoom on this video in the middle, looking good
Thanks! I'm always trying to improve my videos. Sometimes I slip up though but that's how it goes. =D
Great Video. Emergency funds are very important..I remember the time I was unemployed for 5 months, I saved enough money from working to travel, spend time with family, and work on new projects and went back to work because it was draining my emergency fund haha
If you have over and beyond what you need to feel secure and you can travel in between work then that's all the better! It's disconcerting though knowing the positive flow isn't there.
I feel comfortable having a 1 year emergency fund, but I have job security and very little expenses. Thanks for the video. :)
Actually, I think job security can change tides VERY rapidly. I've seen this multiple times when the economy takes a hit.
You can use ladder CDs for your emergency fund to earn more interest. For example, with a 2 year emergency fund every month you can buy a 2 year CD with the principal being your current monthly expenditures. Then if you need to access the emergency fund, you can just claim the CD money every month instead of automatically rolling it over.
12 months is really well said. Thank you for making it clear.
No emergency fund, I invest all the surplus of my income after I pay my house rent and electricity/water/etc. Not having a car and living in a country where I have 100% of healthcare service supported helps a long way. It´s so awesome to see your stack growing. Im 25, great videos btw.
I guess you can push it as far as you are comfortable with. While it works great on an appreciating market, it really makes you not sleep well when it's going down.
Funny you agree with Mr Ramsey on a few points ..... My goal is to get this warm fuzzy emergency fund feeling you have it just seems so difficult as a contractor to do.
36 months make me feel fuzzy
I like that too as well. I think that's a good duration to sit on. =D
I like your recommendation for 12 month emergency fund...and 2-3 years is amazing! Comfort fund is a good term, BTB.
How well can you sleep with such a fund? VERY. It puts a smile on your face everyday... or... on my face since I'm speaking from experience.
Love your channel, subscribed!
Thanks for your sub! =D
For me 6 months salary (not expenditure ) is quite right
Might only be you have an idea of what you spend so 6 month salary feels comfortable. If your salary remained the same but you are able to reduce expense by 50%, then I bet you'll also feel comfortable with 3 months salary.
hmmmm , actually I am working on reducing my expenses , but 50% is very ambitous . But if that means that my emergency fund can be 3 months salary , this is something that I need to try !
And I love your channel by the way :)
=D. Reducing expenses in a comfortable manner while not sacrificing much on quality of life is the key. Anyone can just skimp. It's also two fold because if you get used to spending less while getting roughly the same things, then the amount you need for retirement drastically reduces.
6 months seems sufficient for me even a bit too much. However, I have no debt and considerable investments in that scenario. If I had debt and no other investments I'd want more.
If you have considerable investments, you still have to dip into it and might incur a loss. However, you'll be secure.
Great video! Very sound advice.
=D
I don't like having that much cash sitting in a checking or savings account. I much rather have the money invested or going to pay of debt.
Dave Ramsey has a few good ideas, one of which is to start with a *small* Emergency Fund. Pay off your debt, and *then* grow your Emergency Fund.
The keys in deciding how large of an emergency fund to have are:
#1 If you are married, does your spouse work? If so, then what's the likelihood that he(?) will be unemployed at the same time. If "low", then you'll need a smaller E-Fund.
#2 Critically analyze how quickly you could get a new job (especially in a down market).
2 years worth of an emergency fund is a lot. How long did it take you to amass the fund? I'm trying to get my emergency fund rolling, but it seems like it's going to take a while to reach those heights.
I didn't really say what kind of emergency fund I have only that I would prefer that level. Btw, if you have investments, that might make you comfortable enough to have a smaller cash only emergency fund.
Me too. I live in NYC, I need like 60K for 2 years emergency fund
I don't get the idea of an emergency fund. Why do we make a separate account? Can we just store the money in my checking account? Many TH-camrs explain how much people need to save without explaining the actual benefit of opening the account. It's just for a little tiny bit of interest???? If I can park money in my "emergency fund savings account" with nothing, I would leave it in my checking account.
at my current burn rate, i can last over 10 years. I got out of a bad marriage, no kids, no mortgage or loans to pay. But I want to keep working at least another 5 years to increase my networth, and improve on my investments.
=D Good to have some more cushion.
It also depends on how secure your job is. In my current position, I feel very comfortable with 6 months of emergency fund. When I worked for private firms, I had 12 months worth of expenses mainly because the likelihood of losing my job was higher
Hmmmm. They usually try to make employees feel secure to not hinder their productivity.
BeatTheBush I agree. However, I work for the government and layoffs are unheard of with this company. That’s not to say I’ll be here forever. I’m following your lead to becoming financially independent
Not a good idea to have emergency fund in a savings account where the interest rates are too low. Better to invest in low risk liquid funds to match up with inflation
Depends on the risks you want to take. If the market tanks, it does bring low risk liquid funds down as well but by less a degree.
Very thorough well done!
=D Thanks!
TY so much for your help 💙
You're welcome!
12 months for me that's $20k emergency fund.... had that last year, but the house absolutely needed new windows. Now I'm inching my way back up and almost to $15k
I think I need new windows too but they are still needing it, lol. Were they falling off or anything?
The windows on the garage were about to fall off, but the house needed new ones too. We had negative temps this last winter but my heat bills were half of what they were the previous years with mild winters.
Yep! While I realize that Dave Ramsey says 3-6 months, considering the ABSOLUTE NIGHTMARE I endured during The Recession, there will NEVER be enough money saved to get out of THAT sweat!
In addition, because of a narcissistic dynamic I recently discovered in my family, I am working to separate from them.
Minimum 1 year of savings, as far as I’m concerned.
One has to take into account, not just what you’ve said, but if you’re getting older and/or run into race or gender issues, you’re going to have to have more saved as it may take a longer time to find a job - a real and decently paying job. Not a job where someone gets to call themselves your boss for a few hours per month, while you live in your car. Add to that that many jobs, even if not contract, may not last. Many jobs are not like they once were. Companies want you to have to hyperventilate while you work or you just won’t measure up. Not everyone can last under that kind of daily pressure. If you find yourself unemployed, that’s the time COBRA is recommended for medical, which is more expensive - and comes out of what you, now, don’t have (a paycheck). Gone are the years of extended unemployment also. It’s 6 months or die.
you could do 4 mouth, and then a 3 mouth and 6 mouth CD that you just revist ever time in less you need it, it will not be much but is something and CD are very safe.
You can.. it's just different level of locking your money in in varying amounts.
I know you've done a diet video, and I eat similar. Rice, veggies, chicken, fruit, but I also have potatoes(sweet potato) once in while. Whats your take on coffee? Do you drink it, or why dont you?
Coffee is roasted which is really slight burning. I don't think it's healthy due to this and I do not drink it regularly. I may have perhaps one cup every month or two just as a social thing.
Thanks for your reply. Last question, how about breakfast, what do you eat there?
I like the topics you talk about. Very in line w/ my own values. BTW, this video is a bit blurry.
Thanks! I know... I made a mistake here.
My initial goal is 80% of my take home pay x 6 months. I suspect that is more than 6 months of expenses, but I’m still feeling out my initial budget.
Good advice
=D
If you put your emergency fund into Capital one 360 your earning some interest. That's better than a regular savings account. And you still have access to it .
High yield savings account is the way to go for emergency funds. That one and others offer 1%+ on your savings is the norm these days.
actually you can defer your school loans for economic hardship. Its sucks cause they still collect interest but if it prevents credit card misuse while unemployed then its worth it.
In dire circumstance sure. But you are saving your emergency funds and you project to keep on paying all bills and not try to lean on any kind of assistance. There is also unemployment payments if you qualify which could extend your lifeline a bit.
How do you feel about college degrees such as Bachelors of Arts that put people into debt for education and skills they will never use
There is a place for arts but then it's really hard to make money out of it. Do you want to be practical or do you want to take a risk?
For me around 4-5 months of cash Emergency funds is ok; what makes me feel fuzzy is all my investments making money while I am sleeping.
Or it can really take your sleep away during a down turn.
I think 12 months is excessive, ESPECIALLY if you don’t own a home yet, that savings can go to a down payment. 6 months is good enough.
I think this largely depends on your own comfort level.
BeatTheBush I guess
The bare minimum emergency savings should be at least $ 50,000, that's achievable for average people
hi there, your channel is very useful man. thank you! quick question, what do you think about having gold as another form of emergency fund? one of the portfolio that I'm trying to mimic has a 7% allotment on gold for diversifying investments. Thoughts? Thank you.
I think having some gold is an important part of your total portfolio. Some might argue having it is a losing proposition since it has not gained value in a long time. Think of it as the cost of hedging the rest of your portfolio. Now the percentage depends on how much you think the risk is and how bullish you are the economy will tank and gold will gain.
Warm fuzzy feeling very funny but true.
=D It's needed to sleep well.
So no food? This is gonna be tough!
Great video! Your amazing!
Ha! You're watching my vids still! =D
I agree with at least 12 months.
Or more. =D
Hi 👋 love your videos, I have several questions, where do you put your emergency fund? In a Savings account? Do you put it all together or spread it in different banks? Do you first save for 12+ months of emergency funds and after that is complete start saving to invest ? Thank you 😊
Thanks for your support! =D =D I put it in a high yield savings account across a few banks. The order of savings is: employer matching in 401k, Roth IRA, then emergency fund savings. This is because those that come before you can take out at a gain EVEN with the possible penalties. This is a lot more complicated than I thought. I'll have to make a video explaining more.
BeatTheBush thank you for answering !! And yes please make the video 😊
I currently have just over 18 months of emergency fund.
That's a good amount to make you sleep pretty well. =D
I would feel secure with 3 years of expenses. I'm building mine back up.
That's a really good amount actually. =D
What about unemployment benefits? That needs to accounted for to, in my state it’s up to $2000 per month, no negligeable
Good luck getting all that emergency money from the bank when SHTF...
9-12 months is good. dont listen to dave ramsey who says firstly try save £1000 and then the next step is 3 months emergency fund
Well.... that might be gears for people who have a hard time saving money. The idea is not to force yourself but practice the ways to do it so you willingly do it. Not buying something when you really want to is just torturing yourself.
hai.how are you.plz talk about bitcoin and other digital currencies
WIll do. Lots of request on this one, will be doing it soon.
I'd love to have a full 12 month emergency fund unfortunately a year would take me 5 years to save that.
Mysticsoul that’s ok! Start with 3 months emergency and then build it up !
12 months.
I agree!!
=D Thanks for watching! =D
awesome video... Do you have any opinions or advice about how to network or establish at home business? I have extensive mechanic, carpentry, and general maintenance experience but most people here just like buying the cheap stuff from Wal-Mart that breaks very quickly even though my prices are among the cheapest (less than a third of something comparable from the stores). I'm mainly asking since my income will be cut in half when I graduate from college very soon since I will no longer be recieving the gi bill every month.
I think you just have to start small. Have you tried those gig websites where you plug your skills in and people pay you by the job? i.e. TaskRabbit? Then you need to market your carpentry. Perhaps you can do custom stuff for people but you'll need to do a bit to get your name out there.
4mo. Makes me comfortable
Yes 1yr e.f is a nice cushion, have ~15 mth and peace of mind. Less than 6 mths would make me edgy.
Even more the better. =D
"When you're out of a job, you're likely not gonna travel." says the man who "retired" and spent a month on vacation lol
Out of a job and retiring is very different. Out of a job means you have no income and are using your reserve resources to sustain yourself. Retirement means you are using resources that you get from passive means to pay for your living expenses. VERY different.
I've been working on building my emergency fund for some time now. Just recently hit 6 months in reserve. Now I'm watching this money sitting, not earning. What are your thoughts on buying a series of CDs so that they are set up that you always have one of them maturing (say every month or two). Not possible with my 6 month reserve, but with a 2 year reserve like yours, I think this is very doable. As I figure it, i shouldn't need all of my emergency fund at once, so this monthly CD payout scheme would be similar to getting a regular pay check. And in the mean time, my money is at least earning a little. Anyway, this is my next financial goal to work towards. Interested to hear your thoughts. Thanks for all the insightful videos.
CDs earn so little that it almost seems not worth the effort for that 0.2% extra.
BeatTheBush I meant the higher rate online options for CD's as opposed to the poor excuse of an interest rate offered by local banks.
Well... I'm still not that big a fan of CDs, never bought any before.
BeatTheBush quick Google search tells me that currently you can get a CD with an apy of up to 2.4% with a 5 year term. But the best savings account I could find offers an apy of 1.3%. I haven't done the math yet to determine my actual benefit, but obviously the CD offers a better rate of return. But is it worth the 5 year commitment?
5 years? omg...
How about putting the savings in the bank in a money market account since the interest rate is slightly higher than a savings account, and the money is federally insured?
emergency funds! emergency funds! everyone should have it!
Yes! Build it up!
Would you recommend a high yield online savings account to park emergency funds?? Thanks
You need emergency funds to be very liquid so yes, put it in a high yield online savings account and 1 month in a regular savings account that is immediately accessible.
I put my E-Fund in a granular set of $1000 12 month CDs at a high yield online bank. That way, I earn more than a regular savings account, but won't break (and incur penalty on) a *large* CD.
thanks again
=D
Nobody pays their property tax annually - your mortgage provider takes the money monthly and pays it annually. Every home owner just has a PITI amount that covers everything.
Obviously there will be exceptions but this will cover 99% of people.
Find it hard to take your advice when you don't know something as simple as this.
Not everyone. I pay it twice a year. Some mortgages do not hold this money for you.
@@BeatTheBush yes, I said there are a small amount of exceptions - but if you're presenting yourself as a financial authority you should be aware that the VAST majority pay it monthly. Assuming everyone pays it the way you do, as your video suggests, isn't a good look.
Relax! It's just a TH-cam video.
@@brinepacer around 35% of Americans do not carry a mortgage and pay their property taxes twice a year.
You pulled 99% out of your ass.
@@easterlake Go back and watch that section again, start at 1:35 - the quote is "if you have a mortgage you have property tax and HOA. Property tax usually comes once a year". He's explicitly talking about it in a mortgage situation, not a free and clear situation.
Personally, I prefer a 150 year emergency fund.
Agree..shit happen. 2 years at minimun.
Yeah... that is a good amount. =D
Hi great video. I'd like to ask what's your opinion on what to do besides the emergency fund, be it 1 year or however much. Of course I'm talking about investing them, but more specifically do you have any suggestions or ideas on percentage of different kinds of investment? Something like 50% in real estate, 20%stock, 20% bond, 10% to do speculative/interesting things like bitcoin? What's your thoughts on these?
Your investment risk profile will depend on when you estimate time to retire. Generally, the closer you are to retiring, the less risk you will take since you do not have enough time to recover a sudden shock. This is not dependent on age although usually, older people are closer to retiring.
Thank you!!!
=D You're welcome. =D
I had to subscribe
Thanks for your sub! =D
I have around 90k saved up. 70k in checking and savings and 20k in my emergency/rainy day fund located in another bank account. BTW I calculated I would need another 5K (thats 25K) in my rainy day fund to cover my expense for 12 months or more like you suggested. Not to mention about $250 in spare change that I keep in my change jar. Do you have any other savings and/or investments ideas that might help me out? Thx!
Savings and investing ideas? Get the highest online savings you can. Have several so you switch between them. Check out my investing playlist to learn how to find investments on your own. I cannot recommend an investment directly and other than general methods.
Why not invest it and live off the cashflow as an emergency fund?
Because investing only 1 year worth of emergency funds will only improve your cash flow marginally. Your emergency fund is for emergencies and needs to be in cash.
blurry
can you do a video on name brand items vs generic items that you personally buy? for example, listerine vs equate mouthwash.
I don't buy mouthwash because brushing seems to do the job already.
Thats my same answer. Mouthwash is marketed as if its a basic need
Very good advises, thank you. Since you have your emergency fund saved up, do you essentially put your entire paycheck minus weekly expenses straight to your investment accounts?
Correct. Once you have enough then you let paychecks flow into your checking and you periodically transfer money into your investment accounts.
I actually have 2 one with synchrony bank and the other with Marcus plus a ROTIRA both high yield savings have just about 4000 each I just don't want to depend on anything like selling everything
Exactly. If you depend on selling then you might get caught selling at a price you don't like.
BeatTheBush will closing a credit card with credit one hurt my credit it's now at 700 I was planning on increasing the limit on my other cards then close it
6 months... I live dangerously :)
=D Whoa.
What to do when there is an emergency with your finances??? Go to YouTuBe and watch BeatTheBush's channel. That's right.
Lol... perhaps the video about digging out of poverty will help where you minimize all spending.
I would feel safe with a years living expenses set aside including spouse and all dependants. Also want all my set bills prepaid in advance 6 months. And the ones that wont work for prepayment, the money would be set aside in a seperate account for that bill. It would be good to have passive income in addition to my career job also. Then there would be spouse's income and my investments further than that, but it should never get close to that point.
I rather hold the cash in a savings account rather than prepay the bills. That way you collect interest on it relatively risk free.
For emergency funds, how do you feel about liquid investment accounts (non-retirement) counting towards some portion (obviously not all because the market could drop 70% tomorrow for all we know)) of those emergency funds if you have a job in high demand?
Otherwise, should absolutely all emergency funds be in savings/checking accounts or should some be allocated in physical commodities in your possession (ie silver under your bed) for the case that there is an economic downturn and your bank actually does go under (even if insured by the government, that could be a long turnover process)?
Being versatile or diversified is in general not a bad idea. If you keep it in stocks then it would be quite likely to fall to much to be worth cashing as you pointed out.
On keeping something real like gold or silver (as in not on paper but under your bed), that usually beats the market when there is a recession. However this is prone to getting stolen and should be weighted against the chance of the bank going bankrupt, also if BTB is a fan of keeping commodities then he might not say so as it could paint a mark on his house.
This really comes down to how comfortable that emergency fund makes you feel. The more you put in an investment account, the more risk you put on your livelihood. So this depends on how on the edge you feel like living. Some might just be very risky and put everything on the stock market. It works out when the market goes up but doesn't work well when the market goes down.
To prevent a bank closing and not having access to your money, I generally bank with multiple banks keeping some in each in order to diversify. Gold and silver in physical form is a bit of a hassle but some swear by it. I think you'll have to take great care keeping them as they are prone to theft.
If you do want to keep gold, you might also need to buy a safe to put it in. Then you might need to hire a sniper guy to camp out on the next house to protect your gold.
What is your recommended priority in diverting your savings? Should I build a solid emergency fund before I max out my Roth IRA and invest my money? Should I be doing all at the same time? Sometimes a year-long, strong, emergency fund is so difficult to form for when you're starting out, especially in high COL areas because that would sometimes require a +$20k fund.
Max out matching on 401k, Max out Roth, Back to Max out 401k, then savings. Worst case you can take the principal amount out of a Roth IRA without tax and without penalty. So it's like an emergency fund.
And here, an emergency fund falls under savings?
i agree with u
Instead of keeping cash I think it is smarter to own a home with a garden and grow ur own food. I think the Amish have the right idea.
Or how about all of the above?
is it better to start emergency fund or pay off loans first?
Depends on what kind of loan. If you can pull money back out easily then you pay off the loan first. If you cannot, then you want to get a minimal emergency fund first.
BeatTheBush car loans and student loans. I get an income of around 70k, which I don't feel like I can pull money easily
You save for emergency fund first then anything more, all goes into those loans.
where is the free cell phone video link?
I'll put it in the video. It's also here: th-cam.com/video/W7CKRKiZx4I/w-d-xo.html
What's a good way to save up for the emergency fund? Any tips? We are not doing well on it. Thanks.( We are debt free except our mortgage.)
It's like saving for anything else. Minimize spending while keeping a good standard of living. Then you try to maximize income.
What is your view on having passive income instead of an emergency fund. I make about 60k a year passive in rental property income. Each building has insurance as well as a growing maintenance balance. I feel like an emergency is not needed in this case. What are your thoughts?
by maintenance balance I mean reserve funds saved up for maintenance :) Also, I have a normal job on top of this income.
Thought I would throw out there what a huge fan I am :)
I guess if you need a large chunk of money you still have to wait for your passive income to come in and pay for that large emergency expense. It's all about what makes you comfortable and how much you want so you feel PERFECTLY comfortable.
how do u Get internet service if u go with FreedomPop phone, doesn't the phone comes without internet?
The phone comes with 500MB of free LTE data.
You are totally good husband material. I would be happy to marry someone with this much common sense and knowledge. Thank you for the. Ideas I love to hear your opinion while I began my budgeting .
Lol, thanks! You need a solid financial backing if you want to live well. To have one, you have to cast aside trying to look rich and care about showing people how well you are doing.
First, thank you for the videos! Second, I'm surprised you keep more than one year of emergency savings. I am wondering what you think about keeping one year of emergency funds, then any surplus of money goes to a brokerage account where you apply the 4 percent rule to the brockerage account money. Do you like the two tier strategy? If so, would you recommend putting the 2nd tier in something less risky, like a mini fund?
Yes I like the two tier strategy and as you have more, you may want to invest the extra money. Perhaps less risk in bonds instead. Really, I like the comfort of more than 1 year or even 2 years. 3 years? Plus, having cash allows for buying of depresses assets when it does happen.
Is Physical gold a good emergency fund?
Sometimes not liquid enough because you'd have to cash it in for currency.
Your video is blurry. Minimum - 6 months expenses
Sorry, I suck, Will be more careful next time.
BeatTheBush you're videos rock! Keep it up!
Thanks! =D
Emergency fund helps
For security and peace of mind too.
I do not make allot of money. Then again I’m only 19, I take $150 a month and put it in my savings account. That’s the absolute most I can put in. I have $1,500 now in savings. Plus I just got my first secured credit card. I have ghost credit (which is none) because of that I cannot buy a car or house... or really anything. I am working hard to build my credit and my savings account. Let me know is anyone has any tips for me!
Being 19, you need to work on increasing your income. Are you working full time or are you a part time student? Because if you want to get ahead, you cannot do that with $1500/month.
Great video! Do you have any advice for newly weds trying to gain financial independence together? i.e. if it is better to have joint accounts, how is credit affected being married compared to being single, should you get a co-loan for a mortgage or should you have only the person who has a better credit score get the loan. Thanks for your help!
For this couple thing I really have no idea since I haven't been there before. I do think each half should be just as good in saving and building wealth. If you have a big spender spouse and just does not 'get it' in terms of financial independence, then you'll be spinning your wheel and never get anywhere.
Anthony you and your spouse should look up: Dave Ramsey!! Congrats!
Blurry the Bush
why? Oh... camera focus.
For those who are starting out and with student loans, when should a person start their emerg fund, before, during or after they've paid off most debts?
Before. But I have a lot more details on this in a few days due to the many questions on when.