Going along with this question, what items should we be planning to pay in a month from our emergency funds?

  1. Rent / mortgage
  2. Groceries
  3. Electricity / gas / water / sewer / garbage
  4. Car payments
  5. ??

I am sure there are other things. What items are the baseline and what items should be added if possible. Some things are costly to cancel (like cellphones) so sometimes paying them during a period of joblessness would cost less than canceling.

4 Answers 4


Emergency funding is not a simple matter. Most suggestions start with $1,000-$2,000, so the little unexpected expenses don't add to your credit card debt. This would be things like a heater repair (my starter just went out, the element that gets the fire going. $500. Ouch) or appliance failure. This level isn't enough to address anything like a layoff.

Ideally, you have a grip on what your expenses are each month. Every last item. 6 months of that is the minimum for a well planned EF. No, you might not find work in 6 months, but at least you're not tapping high interest credit cards after the first mortgage payment is due.

I'd suggest that having that 6 months' expenses makes little sense if you also are paying interest at 20%. Killing the credit card debt is high on the list as far as I'm concerned. Perhaps second only to making sure you get the matched 401(k) money if offered by your employer.


Do not forget gas and insurance for the car. If unemployment is the reason for using EF, you need to get to interviews.

As for paying off credit cards, etc: there are two phases for having an emergency fund:

  • $1,000 - $2,000 to start so that you don't get hit by little stuff and while you pay off debt
  • 4-6 months of expenses after you are debt-free except for mortgage/rent.

What about budgeting for credit card payments if you have them?

Maybe to budget for "minimum payment", it might be tough to justify if you are jobless, but if you don't meet that minimum payment it will only get worse with interest (and potentially harm credit rating and lower chances of getting help if you struggle with mortgage)

  • 1
    Yes, but only if you can't just apply those savings to wipe out the credit card debt entirely.
    – user296
    Commented Mar 17, 2010 at 23:11

After experiencing the down side of debt, we have made it a point to become and remain debt free. The very first step in becoming debt free was to establish a "baby emergency fund" of $1,000.

Our emergency fund budget is:

  • $1,000 baby emergencies
  • 6 months living expenses on a survival budget (all necessities covered, but no luxuries)

In our survival budget, we were caught short on the medical insurance front. Make sure to budget that in.

Necessities includes: - Food - Housing - Clothing - Mandatory insurance - Electricity - Communication (phone, internet) - Fuel - Vehicle Maintenance (and possibly emergency replacement) - Home Repairs - School expenses for children

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