Goals: Your First Number

I’ve been away for a while. Part of that has been due to Real Life. Most of it is due to a realization that I had to develop, research, and test. That realization is this article, broken up into four posts.

“They” say that you need to pay yourself first by saving %10 of your income.

“They” say you need to max out your IRA contributions.

“They” say you need to max out your 401K contributions.

“They” say the numbers involved here are different for everyone.

That’s why “they” talk about percentages and generalities.


“They” are just afraid to really put their knowledge and expertise on the line. “They” are afraid of being called out as wrong. Because EVERYBODY’S situation is “different”.

Well, I have no professional financial qualifications, and no fear of being called out as wrong on this. So I’ll put out some numbers… AND I’ll tell you that it will vary depending on your situation.

Why? You ask. Why would I do this?

Because having a good, solid, definable number (not a percentage, not a generality) gives you an actual GOAL to work towards. Once you have a defined GOAL, you can work out a way to achieve that GOAL… and as you learn new stuff along the way, you can modify that GOAL.

I’m even going to give them to you in the order you need to achieve them.

Here is the First Number:

You need an emergency fund of $10,000 liquid cash. Liquid meaning you can get the actual cash in your hands within 72 hours (3 full days).

  • That’s enough money to buy a decent used car on the spot, for about $5,000.
  • That’s enough money to pay off a high deductible medical insurance – the kind that you want so that you can take advantage of a Health Savings Account – for about $5,000. It’ll also make your doctors happy enough to give you an honest-to-Creator-of-choice cash discount.
  • That’s enough money to pay mortgage/rent, utilities, and food for 3-6 months, depending on where you live. (If $10,000 isn’t enough for 3-6 months, then you either need to move, or the cost of living where you’re at is insane. If it’s enough for you to live more than 6 months on, then you are on the right track.)
  • That’s enough money to hire a lawyer if you, or a close family member, suddenly get in serious legal trouble (of the I’m in Jail kind).
  • That’s enough money to move yourself and enough belongings for a fresh start half-way across the country (in the USA), and still have a couple thousand left over to get you going.
  • That’s enough money to handle most non-catastrophic medical bills if your insurance screws up.
  • That’s enough money to drop everything, run, and hide from someone who’s trying to kill you – and live in some comfort until you reach safety.
  • That’s more than enough money to jump-start your IRA for the year, with some left over.

That’s your GOAL for an emergency fund. In most cases, that $10,000 is enough for two of the above. That’s pretty good coverage.

Next, I’ll talk about your Second Number.

8 Responses to “Goals: Your First Number”

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