Excellent suggestions… I have adopted parts of each.

I think one problem people run into with new budgets is making them too tight so there is no room for error. This could result from necessity (ie not enough money) or just optimism since it can be “fun” to watch your debts go down. As a result they often have to dip into the EF because they run out of cash frequently.

I don’t have any magic solutions other than to suggest some of the following ideas:

1) If possible then either loosen the budget or cut spending more to create some extra money to handle extra costs.

2) Reduce debt payments a bit to free up more cash.

3) If 1 and 2 aren’t an option then maybe consider treating the EF as an “overflow” fund until you get to the point where it can be a real EF.

These ideas kind of go against the “gazelle intensity” train of thought but sometimes you have to look at the reality of living and adjust accordingly.

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I like the idea of making the money ‘hard’ to access. We still want a high degree of liquidity and we don’t want to jeopardize the funds but it’s kinda like the fire extinguisher behind the plate of glass. Accessible when needed but more trouble to access for goofing around with.

1 thing each that I’ve done and plan to do are this:

Earlier this year (prior to April 15) I parked 10k as my 2008 Roth IRA contribution (technically my wife’s and mine). I did not release these funds into the market and I can pull them back out at any time with a call to my broker. It would take about 3 days to get the money which is a short enough window. I’ve also made my 2008 contributions before that window closes forever. I’ve written about this a couple times if you’re interested in checking it out.

Second, is a CD ladder. I’m drafting an outline for an article on this too, but the idea is to have CD’s coming due each month with enough to sustain that month in the event of an emergency. The funds are available but not immediately so… out of sight out of mind.

Hey, thanks for sharing on this great topic.

Dave

I haven’t had to watch my EF empty yet… I bet that can be a little discouraging, even if the cause is utterly necessary as in your case.

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