Emergency Fund?????

Do you have an emergency fund?  You may have your $1,000 quick cash emergency fund but I am talking about the 3-6 months of income emergency fund.  They are both important and are both very necessary.  The $1,000 quick cash is cash on hand that you can get to easily for emergencies like broken pipes and pay day is a week away or broken heat pump in the middle of summer.   The 3-6 month emergency fund is for times when you may not have an income.  Maybe you or your spouse are hurt and cannot work or you get laid off.  Unfortunately both of these situations can be your reality in today's economy.  
If you follow Dave Ramsey you have heard him talk about both of these items in his Financial Peace lectures.  I told you earlier you would get tired of me saying, "Dave says."  I do believe what he has to say works, we do not do everything according to Dave but we do most.  If you read what he has to say and really sit back and think about it, it makes sense.  I would not do it or recommend it if it did not make sense to me.
I have dipped into my $1,000 emergency fund and I replaced it as soon as dear hubby was paid.  With all of our debt paid except the house, any extra money we get is divided between the 3-6 month emergency fund and extra house payments.  We have already taken two years off of our mortgage and saved a good deal on interest.  You would be surprised what a mere $200 extra could save you in interest.
Now to figure out how much you need for your 3-6 months emergency fund.  Take your expenses for the whole month, be honest, short cutting and lying to yourself will not help you in the long run.  When you have your expenses for the month multiply them by 3 to get a 3 month estimate and multiply by 6 to get a six month estimate.  Last time I checked we had about a 5 month emergency fund.   This is very important for us because my husbands' business is very volatile, he has survived 5 lay offs in the last 4 years or so.  You just never know when you might get that call.  With our emergency fund in place it is not quite as scary.
Since my dear hubby had his injury and had to have surgery and is facing short-term disability and lots of rehabilitation, that emergency fund will be a cushion for us.  Dave always says you need that rainy day fund, because it will rain.  
I think when you have an emergency fund it is insurance against the rain.   We may need ours for doctor and hospital bills too.
I would recommend setting your 3-6 months emergency fund up in a money market account if your bank has one.  As your fund grows you can take advantage of that extra interest.  If it is in a money market account you are less likely to spend it on something that is not an emergency.
I do not get kick backs from Dave Ramsey, this is just something that I believe in and am passionate about.