Taking it easy and Baby Step 3

We were hanging out with some friends on Friday night when I thought I was having an allergy attack. My nose was stuffed up, eyes itchy, throat scratchy... I took some allergy medicine hoping I'd be better soon. But I wasn't.

I woke up on Saturday morning feel more congested and decided I'm offiically sick. Bummer.

I updated my sidebar to include my workouts for the week. Obviously Monday and Tuesday will depend a lot on how I'm feeling each day with this cold. I may opt to just walk on the treadmill and take it easy.

I thought I'd talk a bit about the next step of our Total Money Makeover- our Emergency Fund. As you can see, our goal is to have $13,000 in savings for emergencies. Here's how we came up with that number:

Above is a list of our expenses each month. As you can see, we get $1,100 from our tenants for rent so our total expenses each month are $2,685.29. However, in an emergency, what if they don't pay rent? What if they move out and we're stuck paying for our mortgage? That's why you see the $1,100 added back in later. You also see me adding "COBRA" in... if I were to lose my job, Michael and I would have to pay $500 for COBRA since our health insurance is through my work.

The total monthly expenses then is $4,285.29. We feel comfortable with 3 months worth of expenses in our emergency fund. Everyone is different- some people don't feel comfortable with 3 months and want more. Dave Ramsey calls this your "security gland." Everyone is different.

3 months works for us because I know that each of us makes enough to cover our monthly expenses should 1 of us lose a job. We would both have to lose our jobs for our emergency fund to come into play and we are both very secure with our jobs.

Our goal is to have $13,000 (3 months worth of expenses) in our Emergency Fund by the end of the year.

We're marking 2010 as the year we start paying ourselves and stop paying others.