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How long will our emergency fund last?

I have a whole bunch of little freakouts these days. The primary one right now is that I won’t be able to find a new job before my current one ends. I’ve been actively applying to places for months and I’ve heard crickets from all of these places. I’ve gone to get resume and cover letter critiques, talked to 3rd party recruiters, applied to some jobs that I’m not only a very-well qualified candidate for but also a super-enthusiastic fit, and nothing. I know I’m not alone, but come on, people.

But anyway, I didn’t come here to whine. I came here to share the bit of good news I always have after a bit of a freakout. As always, a mini panic prompted me to take some sort of action and discover how bad the worst case scenario could be. (I have to admit that the worst case is probably actually worse than I think it is now, simply because I’m going off the info I have right now. I don’t have all of it, I know. But don’t remind me of that, k? Thanks.)

So, TO THE MATH! That’s what I do when I start panicking (other than update my resume, search job sites, and update my LinkedIn profile). I make myself feel better with numbers.

I decided to calculate, given our current savings account balance, hubs monthly income, and our monthly absolutely-needs, how long we can go without credit cards, retirement savings, or parents (or moving to a cheaper place). Currently, if my income stopped right now and we had to start tapping savings to cover the difference, we can last about 5.4 months. If the situation were reversed and hubs was the no-longer employed, we could go 18 months.

So that may not sound great, but I find even the 5.4 month figure reassuring. There are 3 reasons for this:

1) My job has been extended (with a small raise) for an extra 6 months beyond the original end date. That gives us until October before the clock even starts.

2) Did I mention we’ll still be earning money? More than the minimum to pay the bills? We can (and oh my god yes will we) continue adding to the savings account, so by the time it’s even an issue (October) we damn well better have more than 5.4 months worth of emergency fund.

3) We’re both looking for new (better paying) jobs. And it only takes one of us, really. If I get a new job and hubs doesn’t, it’s probably fine. Within reason, that is. I need to earn either as much as I do now or enough to pay for child care if we’re both working. So there’s that. And having until at least October before the clock really starts just gives us both more time to maximize our search efforts.

Bonus reason: It’s more obvious how every little bit helps. We manage to have a good month and kick in another $1000? That’s 6.2 months of survival. We do that for the rest of gestation? That’s 8.4 months. I’ll be using up my accrued leave days (yay for strong immune systems; I’ve never used any of my sick days) to get myself a decent maternity leave before having to start the unpaid portion, so I’ll basically be getting the same paycheck through October that I do now, and hubs’ job is stable for as long as he wants it. So we save that entire time. That would ideally give us nearly a year of cash to supplement hubs’ income IF WE NEED TO. Meanwhile, I can find some part-time, freelance, odd job, or other kind of income while I’m not 100% employed, and he could take on something else too. It would help if it fully replaced my income, but even if it doesn’t, less borrowing from savings would still keep us up for longer. Long enough to figure out what I’m doing wrong and get hired, or just go “screw this” and get the hell out of San Francisco.

Here’s to hoping some hiring managers are impressed by us soon anyway.

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This entry was posted on March 7, 2014 by in personal finance journey.
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