Real Talk: October 2018 – A Fully Funded Emergency Fund

I finally have a true and fully funded emergency fund! I don’t just have cash around that is meant for other purposes. No, this account is a chunk of change equivalent to 3 months worth of expenses for me. It is in a high yield savings account, which as of Monday morning is now earning 1.9% and I still have other money in different accounts for achieving different goals. I have $5,100 in cash just in case. I am very happy about this! It took me a long time to save this up, basically the whole year. I got ahead and then I got behind but now I have it. And it should keep close with inflation with the interest rate. On average, I saved $580 a month since January when I started with about $1000 in that account after emptying it to buy my house.

When I say 3 months worth of expenses, I mean the bare minimum. $1700 a month covers my mortgage, car payment, student loan, utilities, feeding the pup pup, buying gas to get to work and buying groceries. It doesn’t include going out to eat and having fun. This is like a job loss emergency fund. But obviously I can use it for any emergency that occurs. Furnace fixes, car repairs, some other unforeseen circumstance. 

In my November Real Talk I should be reporting to you that my Roth has been maxed out. Now, after I max out my Roth IRA, I can focus on building up my taxable investment account. 

After the Roth bucket is filled, I want to focus on my taxable account because ultimately stock investing is the best hedge against inflation. For years, I have always been saving money in a traditional savings account. I was always saving for something: car, house, vacation. Now I am just saving for my future, and the best way to do that is to use the market to beat inflation and to build up the balance faster. I once said I wouldn’t invest in this account again until I have a reason, which is still true. I just don’t have a specific purchase or goal in mind, other than I want to save for my future and grow my wealth. It’s a very exciting time for me financially speaking.

Net Worth Update

Net Worth Balance Sheet as of 10/1/18

My net worth has increased $2700 since last month, with the most meaningful changes occurring in my emergency fund, my Roth IRA, and my auto loan balance. I feel on track to hit – $40k by the end of the year. 

The goal I set last month is to get $10k into my taxable account by December 2019. It’s a big goal but I think I can do it. I have about $500 a month available for savings, if I am frugal. So over 15 months and a little help from the market, I should be able to do it. 

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