01-09-2015, 11:56 AM
A good rule of thumb that I commonly hear is to set up an emergency fund before paying down debt, investing, ect. Usually you hear 3, 6, or 12 months worth of expenses recommended.
I have a few questions to ponder.
1) How much is too much of an emergency savings; over 12 months?
2) If your families monthly expenses are two to three thousand dollars, 12 months worth of expenses is not a small amount of cash to be sitting. Should it all be in a bank's savings account or would laddering CDs be a better set up.
3) If you do have an emergency that severely depletes your emergency fund, should you pause your investments and extra debt payments until you fully rebuilt the fund?
I have a few questions to ponder.
1) How much is too much of an emergency savings; over 12 months?
2) If your families monthly expenses are two to three thousand dollars, 12 months worth of expenses is not a small amount of cash to be sitting. Should it all be in a bank's savings account or would laddering CDs be a better set up.
3) If you do have an emergency that severely depletes your emergency fund, should you pause your investments and extra debt payments until you fully rebuilt the fund?