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My whole budget plan fell apart when my car needed a new transmission
I had my 2024 money mapped out perfectly, down to the dollar, for saving and investing. Then my 2017 Honda's transmission went out in early March, costing $3,200 to fix. That wiped out my entire emergency fund and my planned stock purchase. I used to think a strict monthly budget was all you needed, but this showed me cash on hand for real disasters is way more important. What's a good rule for how much to keep liquid before putting money into longer-term stuff?
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leo_fisher29d ago
Wait, a 2017 Honda needed a whole new transmission already? That's wild.
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vera51429d ago
My 2014 Ford Focus taught me the same lesson with a $2,800 repair bill last year. I was all about maxing out my Roth IRA first. Now I keep five grand liquid at all times, no exceptions. I basically do what blair_martin said and figure out the worst thing that could realistically break.
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Forget the three to six months of expenses rule everyone parrots, because that's for job loss, not car repairs. Start by listing every single thing you own that could break tomorrow, like your furnace, roof, or that aging Honda, and find the replacement cost for each. Your real emergency fund target should be the price of your most expensive likely disaster, which for most people is either a major car fix or a new HVAC system. Only after you have that cash sitting in a boring savings account should a single dollar go toward stocks.
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