Now, with two children and a mortgage, the stakes are much higher. Add to that an economy that’s in various stages of failing, rising fuel costs, grocery costs and so on, anyone living without an emergency fund is quite honestly waiting for financial disaster.

This book isn’t geared towards everyone. This book is primarily geared towards the individual who has taken debting to an extreme, much like an alcoholic (and, it’s based on the principles of a 12-step group – hence the spiritual concepts). People living on those extremes (and I can say this, because I have been there, and charged the t-shirt) often need more than “just suck it up and stop using your credit card”. That is what this book offers.

When calculating how much of one’s ‘earnings’ one spends, I’m sure most people assume this is in relation to income, and not changes in asset values (i.e. net worth). Although I can see a grey area potentially.

So I had assumed you meant that you spent less than your family earnt on a ‘monthly’ basis, not that you would incorporate how much your house value had risen or goodwill from TSD for instance in this calculation. The reason, as you found out, (”figuring my net worth wrong”) is because most of this data is firstly subjective in nature, plus it could also be more volatile.

Additionally a net worth figure could seriously lull one into a false sense of achievement. But perhaps not in the current economic climate and predominantly falling asset values!

Someone who has had a universal life policy for decades may be in for a rude surprise when they go to cancel and get term.

I too think Trent is closer to the mark than Mr. Mundis. To save excessively while fretting about myriad looming disasters simply isn’t a healthy psychological state. The hoarded money is a symptom, but not the problem.

Common sense and my own experience tell me that a moderate buffer against the unforeseen is immensely beneficial to someone’s overall wellbeing. Rather than “build a poverty mentality” it allows you to feel some control over your destiny and not feel so blown about by the inevitable ebbing and flowing of luck and circumstance.

You could also look at the argument from a disaster-preparedness standpoint. The person who doesn’t even have a fire extinguisher in their apartment is just as foolish as the one who builds a bunker in their backyard and stocks it with a decade worth of MRE. Both are refusing to live in reality.

I had a bad day on Sunday and ended up dipping into my fund to the tune of $180. I’m not complaining about the $180 because it could have been much, much worse.

First, we had a flat tire while traveling, which ended up only costing us time, but if we’d had to have the car towed and then replace two tires because the flat couldn’t be repaired (and you’re supposed to replace tires in pairs), that could have cost $500 or more.

Second, we came home to a dead air conditioner. That ended up costing $180 to fix. If it had been beyond repair, it would have cost more like $2,000 to replace.

Knowing that I could write a couple of checks to cover the worst case scenario if necessary made that day a whole lot less stressful.

Speaking from experience – several times over – not having an emergency fund is outright stupid! I was unemployed and uninsured for over a year. I had nothing in the bank to speak of. Halfway through, I needed $1200 worth of emergency dental work. The Dr. wouldn’t touch me until I gave him every dime. My parents lent me the money.

That was only one instance in that 13 months. I’m probably still paying off the debts that I had to put on a credit card to survive that period of time.

Now I have about 4 months of living expenses and am paying down debt. I may put a little more away, but I think this will be enough to prevent a similar disaster. I don’t ever want to go through that again!

We live well below our income right now, have our emergency fund, and other fairly liquid investments. We have been saving for a house down payment and now that we are closing in on having accrued the minimum amount we decided we would need before we started the real mortgage approval/house hunting process I worry that we need to save just a little bit more. Just a bit more for house stuff, just a bit more for the emergency fund, just a bit for into the mutual fund, etc. It’s not that I have trouble spending money, but I do fear that I will never have a big enough cushion for all the things that could come my way.

Interestingly I do also have some physical hoarding issues. I hold on to things far past their usefulness, especially if I can attach a memory to them. I lost a great deal of my possessions in a house flood when I was 15, and I know this has something to do with it. I’m working on trying to adjust how I think about things though, and am hoping to be making a big Goodwill donation soon. :)

I found 95% of the content in the book pretty darn interesting and reasonable and would recommend the book. As a personal finance educator, myself, I even modified some of his ideas and applied to my own finances.