How much savings is enough?

[Liba]

We have been debt free for 9 months including our mortgage, credit card free for a couple years now and things are, thank God, looking pretty good. My job is stable, no real worries about losing it or real prospect of a raise. It covers expenses plus a little bit at this point if we are frugal.

Over the last 6 months I have managed to save a months worth of salary. When the savings drops under that I get a bit nervous. Usually we don't have to take money out, but there are occasional cash flow problems (like a late paycheck or large unplanned for expense) that necessitate that, I always know the money is going right back in though as soon as I get paid again.

DH does not have an income producing job at this point. I work nights and he takes care of the kids during the day.

We have a tax refund coming, @$2k and I have started dreaming about finishing our third floor which will cost @$10k. It will give us another bathroom and two or three more bedrooms depending on how we do things. It would be a huge help. With the tax refund we will be about half way there.

The thing is, the more I have in savings the more I feel like I need to have that amount there. Once I get to my goal for finishing the third floor will I be willing to be parted with that money? I remember when $500 in savings was good, I remember when $1k was a huge amount, but now either of those numbers would have me worried.

How does this go long term? When is it "enough". I feel like I am on a diet and will never be happy with how skinny I am, except I am on a savings binge and not sure when enough savings will be enough.

Is this normal? Has anyone else become attatched to their savings and watching it grow? Would it help if I had a seperate account for long term savings and for saving for the renovations?

I really really love being debt free. It has freed me and made life much more pleasant. I don't want my savings to stress me out like my debt did though! LOL How much savings shouldn't be as worrysome as how much debt we had!!

[debqcat]

Originally Posted by Liba

Is this normal? Has anyone else become attatched to their savings and watching it grow? Would it help if I had a seperate account for long term savings and for saving for the renovations?

Savings??? What is this concept you speak of?????
I definitely become attached to our savings, when we have it, so I think that's normal. I don't remember the figures but I think it's to have at least 2-3 months of savings for emergencies. I think the idea of 2 separate accounts would be a good idea. Good for you and your family for getting out of debt!! Way to go!!

[LatteLover]

Liba, I don't know, but I am with you, the more I save, the more I think I need.

[SmartyMama]

this is where dh and I are. we call ourselves "money-rexic". I can't seem to let the money *go*. I say a year of salary is good. outside of that, if you're contributing to retirement, I can't see why you should not add to your home.

[Mama2HoneyBears]

I personally want 6 months expenses---Dave Ramsey course advocates 3-6 months.

[Robin]

Dave Ramsey recommends 3-6 months, I think 6-12 months would be my goal.

[Kristin]

Hi Liba ~

Suze Orman said 8 months last night on her show.

I think its different for every family. I think if we're paying off debt aggressively, then we won't be able to save as much. If we're debt free, then I feel we need to save aggressively till we get to where we have that cushion enough that will save us from losing everything if there is some sort of bad situation.

For my family, money enough for 6 months worth of bare bones expenses if not enough. I would feel more comfortable at a year's worth. We are no where near that, however.

[norasmama]

I'd love to have 6 months of bills in "liquid" investments. Maybe not jsut a savings avccoutn, but a good money market, or short-term CD's that make a little more interest.
Anything above that, I'd throw toward retirement.

[Liba]

I asked my mother and she said a year.

I find that so depressing. LOL I want to have the savings but I want to do the work on the house too. To get a years worth of salary saved HAS to take years, no?

I was so proud of my savings and my mother was obviously not at all. That actually helped put things into a little better perspective for me. I do need more savings, but I really want to find a way to save for both long term and my third floor at the same time.

Maybe once I have three months worth of salary saved I can start matching the savings fund with the third floor fund? Is that a silly idea? If my next is a boy I will need the third floor done before he can move out of my bedroom. That only gives us a year or two. We have three bedrooms now, the three girls share one, DH and I share the second, and my office is the third. If I didn't work nights I would share with my children or move my office in with my DH, but since I am on the phone until crazy hours there is no real way to use my office as a bedroom as well.

[norasmama]

Originally Posted by Liba

Maybe once I have three months worth of salary saved I can start matching the savings fund with the third floor fund? I

That sounds like a great idea.

[Sunflower_Momma]

Originally Posted by Mama2HoneyBears

I personally want 6 months expenses---Dave Ramsey course advocates 3-6 months.

6 months here as well.

[Momof6]

Liba it is good to see you!

We are following Ramsey to get rid of all our debt, so we are not where you are at....yet!!

Right now we have about $4K in savings......Ramsey says (while following the aggressive debt reduction phase) to have $1K. But that is only during that phase of his plan.

You are well beyond that!! Congratulations on being debt free!!!!

When we pay off our debt, we were planning on 6 months savings that is easy to access. But now after reading some of these responses, I wonder about having more. But if we went to a year of savings....that seems to be a lot and I think 6 months liquid with a good amount of investments will probably be more our speed.

But for now......we'd like to get one months wages saved up. I know that is more than Ramsey suggests during the rapid-debt-reduction phase, but I just would feel naked with only $1K.

If you can....go for 12 months. Unless you feel as we do...then I'd have 6 months.

How great that you are debt free!!! Any tips you care to share about the ups and downs of how it was when you were paying down the debt....please start another thread on this forum so we can all learn from your mistakes and success.

Congrats again!!

Michelle