How Much is Too Much - Emergency Fund

As Mr. Sam and I work on our 2010 spending plan and fine tune our 2010 savings goal, the issue of the emergency fund has come up (again).

We have $25,000 in our emergency fund which is kept in both our ING savings account and an ING CD ladder. We also have about $13,000 in other targeted savings and sinking funds (i.e. escrow accounts for each property we own, our baby fund, our house/furniture fund, our travel/vacation fund, our holiday fund, etc.) at ING for a total of about $38,000 in cash savings.

This weekend we were discussing our savings goal for 2010 and Mr. Sam originally objected to adding more to our emergency fund, as he sees it we have almost $40,000 in cash and we should be putting more money into the market. $40,000 in cash does seem like a lot, but first off we can't count the $13,000 since that money is (1) already allocated to certain expenses or (2) already allocated to certain goals. And $25,000 in emergency savings, in mind, is not nearly enough when you factor in the real estate investment we own and that we are responsible for the mortgage, taxes and insurance regardless of whether or not the properties are all rented up.

Now, it is true, that luckily we have never been in a position that all of our rentals were vacant at the same time, but the idea of an emergency fund is to be prepared for the unexpected. Once, I had explained all of this to Mr. Sam he agreed that we need to continue to add to the emergency fund.