Emergency Fund

I’ll keep this simple because most advisors recommend similar amounts. Keep the emergency fund slim while getting rid of high interest debt such as credit cards. These need to be gone yesterday. Don’t stash cash when it needs to go somewhere. Look at where you are living and what you need to survive if something were to happen. Keep $1,000-$2,000 on hand to cover an emergency repair. If this feels like a rather flimsy twine safety net, it is. And that’s exactly what I want. If you are uncomfortable, what better motivation than to stick to the plan. With a CRNA income, it shouldn’t take more than a couple months to clean up the high-interest debt.  

The end goal is to have 3-6 months living expenses in an account that is easily accessible if needed. Think about losing income for a while. This pot of money is enough to keep you away from credit card debt and pay-day loans. If you are single, keep a bit more because your income is the only income. If you have a spouse that works and there would be income even if one of you couldn’t work, maybe a 3-month safety net will do. This gets easier as things are paid off and monthly payments decrease.

Bear in mind that this money is working for you on the daily like your investment portfolio. That is the downside of having a healthy emergency fund. That’s a big chunk of change, say $60,000 just chillin. That money could be producing $5,000 annually and compounding. The plus side is peace of mind. Hard to argue with that.