| You've been diligently setting aside
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| | Do you prefer the safety of savings over
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| money every month to cope with life's
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| | riskier investments? Emergency funds
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| unexpected events, and then one day it
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| | exist to keep us feeling safe. The money
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| occurs to you that your emergency fund
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| | we save in them gets stashed someplace
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| might be getting too big.
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| | very safe. All of this safety can make
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| Can that happen? It's a question that one
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| | you feel, well, pretty safe. But it also
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| Fool recently posed to the Fools and
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| | comes with a cost. Money invested in the
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| Their Money discussion board. And the
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| | stock market stands a pretty good chance
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| question elicited some good advice from
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| | of outperforming the yield on your
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| fellow savers.
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| | savings or money market account over the
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| The general recommendation suggests that
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| | long haul. It's riskier, but you stand to
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| everyone should have at least three to
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| | gain more. You'll want to balance the
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| six months worth of expenses saved
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| | goals of short-term safety and long-term
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| someplace safe but easily accessible,
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| | gain.
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| just in case of job loss, major medical
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| | Has your e-fund been on autopilot? If
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| emergency, or natural disaster. It's up
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| | you've been automatically funding your
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| to each individual to tweak that
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| | emergency fund every month for a long
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| suggestion to fit his or her personal
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| | time without paying much attention, it
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| circumstances.
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| | might be time for a reassessment. Remind
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| If you've ever been knee-deep in an
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| | yourself of your original goal. Ask
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| emergency, you may wonder whether it's
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| | yourself whether your circumstances have
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| even possible to overfill an emergency
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| | changed enough to warrant revising the
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| fund. Unfortunately, you can't really
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| | goal. Then, see whether you've reached
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| know whether you've stockpiled enough
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| | your target.
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| until something actually happens.
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| | Do you have a better use for the money?
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| At a certain point, however, your
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| | Being dogged by creditors while trying to
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| emergency fund will get big enough that
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| | find a new job in a shaky economy isn't
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| you'll wonder whether you can put some
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| | anyone's idea of a good time. In
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| money to better, or more profitable,
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| | preparing for a potential emergency, you
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| uses. When you start pondering whether
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| | may want to include paying off some of
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| you have enough or even too much, it's
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| | your debts, such as car loans or student
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| time to look at the bigger context,
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| | loans, so that you have one less thing to
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| several Fools at the board said.
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| | worry about in the event of an emergency.
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| If your emergency fund is the only
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| | Or you may want to factor your debt
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| financial asset you have in case of a
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| | payments into your emergency savings
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| serious or long-term financial problem,
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| | plan.
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| you may be better erring on the side of
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| | Has your financial, family, or work
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| having too much. The financial
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| | situation changed? When building an
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| consequences could be more dire if you
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| | emergency fund, we typically plan for the
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| started to run out of emergency funds
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| | worst-case scenario. If you have
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| without any alternatives to fall back on.
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| | children, if your chosen profession seems
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| If you have a pretty big portfolio of
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| | unstable, or if you have a lot of
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| assets, such as a home, stocks, or mutual
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| | financial commitments, you may want an
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| funds, you may feel pretty secure keeping
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| | extra margin of safety with your savings.
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| just enough money in cash or its
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| | All those situations can change, though.
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| equivalent to cover minimal expenses for
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| | It may be time to reassess once the kids
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| those three to six months. Although it
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| | have left home, you've paid off the
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| might not turn out to be ideal timing if
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| | house, or you're no longer worried about
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| you're forced to borrow against your
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| | a job loss.
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| house or liquidate your investments, you
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| | Can you sleep at night? Though hardly a
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| at least have that option if things turn
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| | scientific yardstick by which to measure
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| out to be worse than you'd hoped.
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| | your emergency savings, it may be the
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| You might also ask yourself these
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| | most important. You'll want to be able to
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| questions when trying to determine
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| | rest assured that your emergency bank
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| whether you've overfilled your emergency
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| | account will provide enough if you need
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| coffers:
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| | it.
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