Emergency Fund

[mameejhy]

^sa remittance center, sis Malapit sa Nayong Pilipino restaurant.

[marssie]

^talaga, kakatuwa naman, sige check ko nga, gusto ko kasi ang maxi saver para sa EF, nakalimutan ko ayusin to nung umuwi kami,kasi naman si hubby me unpaid cc sa BPI kaya di ako makaporma

[mameejhy]

^ilagay mo na lang under your name. you need 1 ID picture, passport + Qatar ID (nasa qatar ka, diba? ) + 25kpesos + form hehe

[marssie]

^Yup. Naku yan din sabi ko, kaso tintakot ako ni hubby, conjugal property daw pati utang kakainin daw

Usually ba ang EF joint account or mas better na me sariling EF ang mag asawa?

[mameejhy]

^Personally, it doesn't matter kasi kahit ilagay mo yun under my husband's name eh ako rin naman gagamit nun, if ever hehe Anong purpose, bakit mo gustong joint account?

Nun nag apply ba sya ng cc naka indicate dun na ikaw ang asawa nya?

[marssie]

^ para lang pareho sana kami me access  

Nope, kasi single pa siya nun eh.. kaya nga ako naasar, di naman ako ng gf niya nung nabaon siya sa cc na yun aliw pa naman ako sa BPI nung nakita ko ang interest sa maxi saver, feeling ko lang is good choice siya for EF.

Just a thought.. kung 6xs ng salary ang dapat ilagay sa EF.. and you are earning like 500k per month, so meaning 3M ang ilalagay mo sa bank? eh diba 500k lang ang insured ng PDIC? pwede ba mag open sa bank ng different accounts with same name?

[sachism]

6 mos sis worth of expenses. Sa pdic alam ko per depositor at hindi per account. Kaya go for big banks na stable. Or mag SDA ka para insured ng BSP. Unless bumagsak ang phil govt, secured ito 

[marssie]

^ ah expenses pala.   Thanks, sa SDA naman ako magbabasa

[sarahsensible]

Ito na! Finally hubby and I had a serious talk about Safety Funds (yes I dont call it EF  I practice LOA kasi) Explained to him na dapat meron ito bukod pa sa mga kinuha namin na Life Insurance at HMO ito at iba pa ito sa SAVINGS talaga. 

As for the computation, para ma build namin paunti-unti ang 3mos worth muna..9k every month for 19months (parang ang tagal so mukhang kailangan ilagay din dito ang mga extrang kita).. Ito na lang talaga ang kulang sa amin so need na umpisahan talaga ASAP.

[freelancer_babe]

^ Nice! That's sensible indeed.

19 months? Ang tagal din, hehe. Basta 3 months worth of expenses ha, not 3 months worth of income.

Better look for extra income to shorten saving time.

[chefron]

question: hindi ba mas malake ang income kesa expense? baket sa expense magbase? 

[happyelle]

Wala pa rin ako emergency fund/contingency fund. It should be at least 6 months ng sweldo. Paano nga ba ito simulan? 

[sarahsensible]

^^yes sis freelancer_babe expenses talaga.. And oo sis tama ang tagal 19mos huhuhuhu kaya lang kailangan talaga eh diba? Discipline talaga.. Yung mga makukuhang company Yearly bonus ni hubby yung half plano na rin nyang ilagay sa EF para kahit papaano mapabilis naman.
Now, ang pinagiisipan saan namin sya ilalagay.
Meron kaming account sa export bank na hindi namin masyado napapansin,
Inisip namin kung dun para hindi nagagalaw. Kasi accessible sa amin ang bpi,bdo,eastwest and unionbank.

[sachism]

question: hindi ba mas malake ang income kesa expense? baket sa expense magbase? 

good kung mas malaki income sa expenses. madalas halos pareho lang, minan pa nga mas malaki expenses 

kasi it's what you will spend/have to spend just in case you lost your job/means to earn income.

[freelancer_babe]

question: hindi ba mas malake ang income kesa expense? baket sa expense magbase? 

For instance, combined family income/net take home pay is P50,000. Let's say you decided to save the recommended 20% each month = this is P10,000 per month. The remaining P40,000 becomes what you live on - and becomes your expenses.

Generally, you build up emergency fund from the P10,000 or 20% of your income. Eventually, you'll reach the threshold ng EF - say you've decided na 6 months worth of expenses ang iipunin, or total of 6 x P40,000 = 240,000.

Let's say nawalan kayo both ng jobs nang sabay because the company that you are both working for folded up. Eh di wala na ang P50,000 income ninyo per month. But you still have that EF to live on, at yun ang gagamitin ninyo while you are searching for new opportunities/jobs.

As you might see, if you had decided to save EF based on income, then it doesn't make sense to save again, kasi, part of that P50,000 income that you had was budgeted on savings (yung P10,000), and that P10,000 per month savings, in turn, was the one that you used to fund your EF.

Another reason too, EF based on income is not recommended because it can turn out to be a very huge amount. Imagine savings 6 months worth of income = 6 x P50,000 = P300,000. That's P60,000 more than what is based on expenses so you lost the potential of making that P60,000 grow.

^^yes sis freelancer_babe expenses talaga.. And oo sis tama ang tagal 19mos huhuhuhu kaya lang kailangan talaga eh diba? Discipline talaga.. Yung mga makukuhang company Yearly bonus ni hubby yung half plano na rin nyang ilagay sa EF para kahit papaano mapabilis naman.
Now, ang pinagiisipan saan namin sya ilalagay.
Meron kaming account sa export bank na hindi namin masyado napapansin,
Inisip namin kung dun para hindi nagagalaw. Kasi accessible sa amin ang bpi,bdo,eastwest and unionbank.

Basta merong EF. Importante yan. Kaysa naman uuutangin mo pa ang ipang-emergency ninyo. It's a good thing your husband is really cooperating with you on this. Not all couples do.

EF is best placed in safest investments at safe banks. ATM (disadvantage of this is that you can withdraw funds easily), passbook, time deposits, SDAs, even money market and bond UITFs, fixed mutual funds. Medyo mas risky nang konti lang money market and UITF and mutual funds - but if you can time the market, then you can do well with them. The reason why it should be placed at safest investments, is that, hindi pwedeng mawala ang mismong amount of money na inilagay ninyo.

Over time though, those safest investments suffer losses due to inflation, so it's important rin to top up your emergency fund, siguro each year. The inflation rate is usually at 5% each year, so 5% din ang idadagdag ninyo each year sa EF.

[chefron]

freelancer_babe, thank you.

[sarahsensible]

^^sis kulang pa ba yung itatabi namin for EF? kasi yung 9k is the 10% monthly's net salary nya hindi pa kami combined nyan haayy life  dapat ba doblehin para mas mabilis than 19months sis? yung another 9k kasi tinatabi as savings. Or ito ba yung sinasabi mo na "it doesnt make sense to save again"?

I convinced him na kasi plano na nya mag MF game na game na sya LOL

[freelancer_babe]

Kung sa tingin ninyo you can live with 3 months expenses, then yun na. It depends on how you assess your situation.

Kasi ganito ang mga situations sa EF (rules of thumb):
1) single with no dependents (kahit kamag-anak or elders): at least 3 months worth of expenses
2) single with dependents, married: at least 6 months worth of expenses

Depending on your situation, you might want to adjust your EF from that given rule of thumb. Like, kung sakaling freelancer ako, single with no dependents, I would rather build at least 9 months worth of expenses rather than going for the 3-month rule because I do not have fixed income. If I were after jobs na may stable income, then the 3-month rule is just applicable for me.

Kung medyo gipit ang economy natin (hard times), like may massive layoffs or lessened office hours dahil sa cost-cutting measures ng kumpanya, you might want to consider building a bigger EF.

Probably the biggest EF you can go is one year's worth of expenses in any situation. Tingin ko sobra-sobra na kung lalampas pa doon.

[mameejhy]

Ito na! Finally hubby and I had a serious talk about Safety Funds (yes I dont call it EF  I practice LOA kasi) Explained to him na dapat meron ito bukod pa sa mga kinuha namin na Life Insurance at HMO ito at iba pa ito sa SAVINGS talaga. 

As for the computation, para ma build namin paunti-unti ang 3mos worth muna..9k every month for 19months (parang ang tagal so mukhang kailangan ilagay din dito ang mga extrang kita).. Ito na lang talaga ang kulang sa amin so need na umpisahan talaga ASAP.

Bakit iba pa to sa savings? Para saan yun Savings at EF, kung magkaiba? Kami EF lang, walang savings kasi gusto namin instead na pera sa bank (savings) eh ibili na lang ng property o ipagawa ng bahay...

Nahihirapan din kami mag set aside ng money in a short period of time... So, ang plano namin (ko) is to set aside 8% of hubby's monthly income para sa Dec 2012 meron na kaming equivalent ng 1 month income nya sa bank. We already did this Jan & Feb this year, sana magtuloy tuloy... Sana rin, next year, kayanin namin mag ipon ng 15% monthly income nya para ang total sa Dec 2013 ay 2 months monthy income nya.

19 months? Ang tagal din, hehe. Basta 3 months worth of expenses ha, not 3 months worth of income.

Better look for extra income to shorten saving time.

Sis, mababaliw ako kakaisip paano mag come up ng figures (for savings) if monthly expenses ang basis kasi hindi consistent ang monthly expenses namin... Kaya monthly income na lang   

Let's say nawalan kayo both ng jobs nang sabay because the company that you are both working for folded up. Eh di wala na ang P50,000 income ninyo per month. But you still have that EF to live on, at yun ang gagamitin ninyo while you are searching for new opportunities/jobs.

Another reason too, EF based on income is not recommended because it can turn out to be a very huge amount. Imagine savings 6 months worth of income = 6 x P50,000 = P300,000. That's P60,000 more than what is based on expenses so you lost the potential of making that P60,000 grow.

If terminated, hubby will be given 4x his monthly salary so pwede na yun... while looking for a new job.

I have another question pero baka OT kaya gagawa na lang ako ng separate thread.

^^sis kulang pa ba yung itatabi namin for EF? kasi yung 9k is the 10% monthly's net salary nya hindi pa kami combined nyan haayy life  dapat ba doblehin para mas mabilis than 19months sis? yung another 9k kasi tinatabi as savings. Or ito ba yung sinasabi mo na "it doesnt make sense to save again"?

I convinced him na kasi plano na nya mag MF game na game na sya LOL

Sis, naguguluhan ako bakit bukod ang EF at Savings nyo...  Mabuti ka pa game ang hubby a MF... Actually, nag start na rin kami sa MF (kalahati ng EF namin nandito) pero nagtataka sya bakit daw kelangan pa ng EF, MF eh pwede daw naman ibili/ipagawa na lang ng property yun pera. Sabi ko for diversification purposes, lol 

[freelancer_babe]

Bakit iba pa to sa savings? Para saan yun Savings at EF, kung magkaiba? Kami EF lang, walang savings kasi gusto namin instead na pera sa bank (savings) eh ibili na lang ng property o ipagawa ng bahay...

Sa case ko, the separate savings is for other things - investments (kung hindi pa mameet ang minimum required), vacation fund, car maintenance, house maintenance, little extra money na rin in case kulangin sa budget, gadgets, pambili ng gasul, tuition fee and even those yearly taxes and yearly expenses sa pagrenew ng licenses and any other things that I won't classify as emergency. I call it the "sinking fund" but plenty of people would rather call it simply as "savings". Yung division ko ng money dyan is tracked through excel.

Baka ganun di kay sarahsensible sa separate savings. Not sure though.

Sis, mababaliw ako kakaisip paano mag come up ng figures (for savings) if monthly expenses ang basis kasi hindi consistent ang monthly expenses namin... Kaya monthly income na lang   

If you find it cumbersome to compute for expenses, then compute for savings instead. Magkano ba monthly ang sinesave ninyo? If your combined monthly income/take-home pay is P50,000 and you are able to save P10,000 monthly, then P40,000 should be your monthly expenses.

Take that P40,000 x 6 months (or kung ilang months ang emergency funds ninyo) = P240,000.

Ganun lang kasimple sis. :-p

If terminated, hubby will be given 4x his monthly salary so pwede na yun... while looking for a new

It's NOT just the job loss ang concern mo. You will also need to spend your emergency fund rin in case of hospitalization. Hindi rin kasi lahat covered ng HMO/health insurance. Hospitals bills aren't cheap too and you wouldn't want to take a loan, or worse, use that cash advance on your credit card.

And 4x the monthly salary? Are you sure your hubby will be able to find a job within that 4 months kung aalis siya? Paano kung nagfold-up ang company at nahirapan nang magbigay ng amount na yan? Or even in the event na magkaroon ng massive layoffs and that 4x salary will be delayed dahil walang pera/frozen ang assets ng kumpanya?

Don't rely much on your company. Use that 4x monthly salary claim as additional buffer na lang, or invest it.

Sis, naguguluhan ako bakit bukod ang EF at Savings nyo...  Mabuti ka pa game ang hubby a MF... Actually, nag start na rin kami sa MF (kalahati ng EF namin nandito) pero nagtataka sya bakit daw kelangan pa ng EF, MF eh pwede daw naman ibili/ipagawa na lang ng property yun pera. Sabi ko for diversification purposes, lol 

It's like this; you need different funds:
1) emergency fund - use safest investments like savings account, time deposit, SDAs (never use high risk investments like equity MF, equity UITF, stocks coz you don't want to lose money here)

2) sinking fund (explained above) - use very liquid investments. savings account (ATM/passbook type) is the best choice here. Use an excel file to keep track of the amounts.

* some people decide to put vacation funds in another savings account, preferrably ATM, to control their expenses when they are out of town.

3) retirement fund - obviously, use this if you have decided to stop working anymore. It should be able to fund your lifestyle as well as have enough for hospital expenses during your retirement age. Best instruments for these are the moderately risky to riskiest ones like stocks, equity mutual funds, equity UITF, balanced funds, balanced UITF. Some even use VUL that are mostly invested on equities. Use peso-cost averaging for this.

4) investment fund - use different instruments here, dito dapat mangyari ang diversification mo. You can have UITF (bond/equity/balanced), MF (bond/equity/balanced), stocks, bonds, time-deposits in rural banks, etc... yung mga tubo sa mga ito - these are ideal in funding your "wants".  Or even your needs. Some people are good enough in building passive assets that they do not need to work anymore and just rely on this - kaya ang tawag din nila dito ay "financial freedom fund".

5) business fund (optional) - where you invest in real estate and other forms of businesses. added diversification na rin ang mga ito if you know how to handle these. Time is also needed for this.

6) gift/donation fund (or "tithe" fund) - in my case this is just another savings account in another bank separate doon sa savings/sinking fund at EF . I also call this the "Christmas fund". Pinakamagastos sa Christmas so I use the money here. This is where I put all the "excess" of my budget. I also withdraw money from this account kung merong biglang may mag-iininvite for other occasions. This smooths out my finances na rin, kasi ang mga gifting na ito ay wala sa monthly budget.