Cheddarblog

The best line from the 1966 film The Russians are Coming The Russians are Coming is “Emergency! Everyone to get from street!”

The Swiss_Mouse doesn’t believe most people (excluding Uzbeks) have to worry about the Russians anymore.

However most people do need to worry about an unexpected medical bills, automotive breakdowns, home repairs or cheese spoilage.

The best solution is to insulate yourself from these issues with an Emergency Fund.

Dave Ramsey suggests 3 levels of Emergency Funds:

1. First accumulate $1000 in cash.
2. Save up 3 months of living expenses. Dave simplifies this to: Food, Shelter and Clothing.
3. (Optional, but suggested) 6 months of living expenses.

The Swiss_Mouse achieved his goal of 6 months of expenses earlier this year. The Swiss_Mouse never need the $1000, he always had that. But the 3 month fund was more difficult. Once achieved it was very satisfying, like a fine cheese. However the 6 month fund took almost 4 years of saving dollar by dollar.


What goes into an Emergency Fund exactly? The Swiss_Mouse Shares the contents of his:

• Mortgage Payment
• Utilities
• Child care( Even if you are out of work, you’ll have to look for work.)
• Insurance
• Gasoline
• Groceries

You could add to this list, for example, Clothes or Medical. However the list above is pretty straight forward and gives an excellent example of what would be needed to get by for 6 months.

Of course if you budget properly you’ll KNOW exactly how much you’ll need for each of these categories.

The Swiss_Mouse uses his Emergency Fund balance and the dynamic nature of his automatic budgeting method so that he recalculates how many months of Emergency Fund he has every time he balances his books. With his current Emergency Fund and current budget requirements, the Swiss_Mouse has 6.22 months worth of Emergency Fund. THAT is a tasty wedge of cheddar.