How much in emergency cash should we have

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Familyman77

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Just looking for broad opinions really. We moved a bit of money round , made a bit of an overpayment and have our mortgage down to 150k and home valued at 350k so weve taken the 50% LTV rate and pay €920 per month , We have 25k in the credit union and then 7k in easy access current accounts. My job is fairly secure private sector and my wife is rearing the family. I'm thinking of taking another 10k out and overpaying again but also thinking the 25k is our safety net, just wondering if other people have a " magic number "
 
unless you think your roof is going to blow off, I reckon your 25k is definitely enough to have as a buffer.
 
Weve actually only recently done works around the house so dont envisage any big expense there. Our only debt is the mortgage aswell
 
Paying €10k off your mortgage saves you €275 a year in interest.

Or look at it another way to increase your emergency cash from 22k to €32k costs you a premium of €275 a year.

What is likely to happen in such an emergency that you won't have the money for it?

If you lose your job, you will get redundancy.

I would keep about €5k and pay the rest off the mortgage. You are obviously savers, so you will build this up again.

If some emergency does hit, you will have access to credit via the credit union or your credit card or a bank overdraft.

Brendan
 
Alternatively invest the €20k in shares so you can cash them at short notice if this emergency does come to pass.

By the way, do you have other investments which you could cash in an emergency?

Brendan
 
I think it depends on your industry and your role and how often that type of role would come up

It's not unusual for someone in my role / level to be on the sidelines for a couple of years (or at least not have a full time equivalent for a couple of years). Especially in Ireland. So I've planned for that... Or to have to move to NY (which in the current environment is not a runner). Either way I need to have a fairly liquid buffer.
 
€5000 is too small, if there are car repairs or boiler issues or even dental work required. I would keep at least.15k to feel secure.
 
I keep around a years' worth of anticipated expenses in cash.

That's probably a bit on the conservative side but it helps me sleep at night.
 
If lost my job I would get 14 years redundancy , plus the PPI I have would pay the mortgage for 12 months so I guess theres not really much emergency funding needed for that side if things plus we have private health insurance. Work wise I would get work relatively easily even if not at the same level. I dont have any investments
 
Sarenco said:
I keep around a years' worth of anticipated expenses in cash.

That's probably a bit on the conservative side but it helps me sleep at night.
Click to expand...

I think that’s smart. The most important thing is to feel comfortable and it also allows you to take more risk elsewhere within your asset allocation. I did laugh though as I remember you having a go at me for keeping 6 months’ worth plus the kids’ future school fees!
 
I think a lot of it is exactly as mentioned , which is what makes you feel comfortable. I like the idea of investing the 20k in shares so that its easily accessible but wouldn't have a clue how to go about it or where to invest. The PPI is worth 10k for the year if I lost my job so that and the 20k gives me 50% of my take home for the year if I then added job seekers of €400 ( wife and 2 kids ) I'd be pretty much same as I am now. When I do that maths in my head I think my magic number is going to have to be the 20k in the CU.
 
Be careful about assuming things about PPI unless you have already gone through the contract/terms and conditions with a fine tooth comb.
Such policies have a habit of being very picky about when and for how long they pay out.
 
ClubMan said:
Be careful about assuming things about PPI unless you have already gone through the contract/terms and conditions with a fine tooth comb.
Such policies have a habit of being very picky about when and for how long they pay out.
Click to expand...
We have previously claimed through the policy when my wife broke her ankle and was out of work. It paid out after the first 30 days. It pays for up to 12 months, then it doesnt pay again for another 12 months claim free. Its through AIB but back then it was TWG assessing the claims, now I believe its AXA assessing. I had asked approx 6 weeks ago if we could change the terms as my wife isn't working now but was told they dont offer the policy anymore but I'm welcome to cancel if I want
 
I think you need to better define emergency as everyone has a different definition and different risks. Is car maintenance an emergency? flights to visit a sick relative? Car insurance?

I put money aside each month for yearly predictable costs like car insurance, tax, holidays, health insurance.

I also have money out aside for less regular expences like replacing phone, laptop, car, house stuff. These things aren't really an emergency unless they break earlier than I planned.

So as opposed to emergency fund I have an income replacement fund. I looked at my current monthly expenditure (incl what I contribute to the above funds) subtracted things I would go without if I lost my job e.g. holidays. That's how much income I would need a months. I then also subtracted what I would get from the dole.

I decided I wanted to have 6 months replacement so multiply by 6. I don't touch this money and would basically pay myself a monthly salary from it.

It might mean I have more cash tied up and some of it could double job but it is piece of mind.
 
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