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Monday, October 28, 2024

Refilling A Depleted Emergency Fund

We all know that an emergency fund within our budget is essential to surviving the unplanned and unforeseen events that happen in life. Events this past winter and spring plowed right through my family's rather generous emergency fund. In fact, we needed to tap into money that we had set aside for retirement. (This was not tax-deferred money, so we don't owe any penalties for withdrawal). A slew of unforeseen events can wipe a person's account out in a matter of months. And it can happen to anybody at any time.

My husband and I add to our emergency fund each month, so its growth is never stagnant. But the amount added each month is not enough to quickly replenish the fund. Should anything else happen, we'd need to take more money out of that set aside for our future. So, we are attempting to rapidly refill our emergency fund. 

Here are my thoughts on how this is achievable.

How to refill after an emergency fund has been depleted

There are 2 ways to go about this, cut back on spending or bring in more money. Cutting back on spending can be the simpler way to go about this. while bringing in more income has more avenues to pursue.

  • cut back spending in all discretionary areas and redirect that money towards refilling the fund. In the past, we've simply cut every variable category by a flat percentage. This works well for us and doesn't leave us feeling too deprived.
  • bring in more money via yard/ebay/Craigslist/Facebook marketplace sales of used household items or clothing. Bring in more money through temporary side or supplementary employment (temporary holiday job, online gig work, such as Cambly or Upwork, start/rejuvenate and monetize a blog or YouTube channel, take on extra shifts with current employer, take on part time work through a new employer.
If you do just one of these checklist items, your emergency fund could be refilled with time. However, if you pursue several avenues, the time-to-goal can be dramatically reduced.

How it's going for my family

What we've done
  • we had a yard sale this summer, getting rid of kid stuff and unwanted furniture while adding to our emergency fund.
  • my husband has picked up additional work in his field. This is work he does remotely and can do on weekends/evenings. 
  • I've cut our budget in many areas. Some of the basic frugal things we've been doing: diligently turning down heat when no one is home, cooking/baking from scratch regularly, using the oven for several items at one time instead of heating the oven multiple times, sticking to grocery lists when shopping, mending clothing instead of buying new pieces, harvesting as much as I can from the garden and freezing for winter meals, substituted free or cheap day outings in place of an extended vacation this summer.
The impact so far

We've already refilled about 40% of our emergency fund (and this is after we bought a second car). We're at a point right now that we could handle one major appliance repair or replacement, if need be. 

Our monthly contributions to an emergency fund are roughly four to five times what they normally would be. It's fair to say that we're being aggressive about saving right now, forgoing most discretionary spending. And yet, I don't think we feel deprived. 

I try to plan for fun but free or cheap entertainment and meals on a regular basis. We continue to have Friday pizza (homemade) and movie nights (library DVDs or what we can stream for free through library's apps, or borrowing DVDs from friends). We had a game day in early September which was a lot of fun. This month we went to a pumpkin farm. By mid-November there will be many holiday activities to enjoy for free or low-cost. For example, the pumpkin farm does a  Christmas thing between the middle of November and the middle of December. 

If all continues to go well, our emergency fund should be fully replenished by the end of 2025. That's not that far off.


10 comments:

  1. The emergency fund is there for emergencies and that's just how you used it. It sounds like you are making good progress toward replenishing it.

    ReplyDelete
    Replies
    1. Thank you for your thoughts and encouragement, Live and Learn.

      Delete
  2. We're with you on all of this with you Lili, and we are also replacing the savings account rather vigorously to make up for all the expenses.

    Have you ever played Quiddler? It's a card game of words and it's a thinking game. The two of us play that a lot at night. We don't watch TV but do watch youtube for a movie or the History channel (Free) by using the HDMI cable to our laptop computer. There are some things to watch but never anything on regular TV.
    Alice

    ReplyDelete
    Replies
    1. Hi Alice,
      Thank you for your support and understanding.
      No, I've never heard of Quiddler. It sounds like fun and like it would be good for keeping the mind sharp. I'll look into it. Thanks!

      Delete
  3. I cannot keep to a budget, even in lean times. It just doesn't work for me. The only way I know how to tow the line is to simply never buy what I don't need, and to always find a cheaper way to address a need. That seems to have worked for me, in lieu of a budget. But I do see the good in designating funds for different purposes. It acts as a firewall, so you have time and space to change gears before an emergency hits long-term savings.

    I do keep track of daily expenses (to the penny) on Google spreadsheets and track savings to act as guides to tell me if I need to change spending. We're hit with unexpected spending almost every year, but as long as daily we spend responsibly, I don't think it should affect the long term trajectory.

    It's impressive how much you've saved to restore your emergency fund this year. I would be interested to learn what was the biggest contributor to the bottom line.

    Have a great Tuesday,
    Laura

    ReplyDelete
    Replies
    1. Hi Laura,
      It sounds like your non-budget system works well for you. Great work!
      Biggest contributor to replenishing our emergency fund? That would have to be skipping a vacation. We saved a couple of thousand by staying home, no motels/hotels, no airfare or gas costs, significantly fewer meals out, no entertainment/admission costs. All of that adds up surprisingly fast. Unfortunately, skipping an annual vacation can only be done once a year. The other thing that contributed in a major way was my husband picking up remote work in his field. But I don't want to discount all of the little things we've done. The sum of all of the small savings is substantial, too.

      Delete
  4. That's an impressive rate of replenishing your emergency fund. I always get a little nervous when our emergency money has been used, so I understand your desire to refill the fund.

    I just got back from a coffee outing (it's "latte Tuesday" at my favorite place--$3 for a large latte, which these days is a steal) with my siblings, and we were talking about freebie activities that they do with their grandchildren. I think my brain automatically lights up when I notice cheap or free activities. Something that hadn't been on my radar until recent years was watching for free concerts at area colleges/universities. That's a nice way to enjoy an outing with minimal expense. I attended my daughter's concert last week and got to hear some good music (and see her) for free.

    ReplyDelete
    Replies
    1. Hi Kris,
      Oh yes, university performances are great for free entertainment. We saw several really impressive concerts on campus for nothing but gas to get there. We even found free parking. Community centers sometimes host free concerts, too. We save a wonderful piano concert at our local community center years ago. And with Christmas not too far off, local churches host concerts and chorales in December, most are free in my area.

      I'm glad that you not only enjoyed the concert, but that you got to see your daughter too!

      Delete
  5. I agree, that's impressive how you are taking steps to replenish your emergency fund.
    What I've been asking myself lately when I want to do something is, "How can I do this with what I have already?" This has been working quite well - and I'm saving money and being more creative.

    ReplyDelete
    Replies
    1. Hi Tina,
      You technique to save is a very good one. It puts items to use that you already have and it saves you $$ from not buying more things. Bravo! I'm glad this is working so well for you.

      Delete

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