When I was planning my EF, I took a hard look at what I consider “living expenses”. If I lost my job today I would go into extreme frugal hermit mode. No cable, no eating out, no movies, no extras period. It would be peanut better and jelly Monday - Friday and Ramen Noddles on the weekends. My student loans (the only non-mortgage debt I have left) would be put on hardship forbearance - I wouldn’t even attempt to pay them until I was back to work. The only “extras” I would keep would be a scaled back internet and cell phone plan for job searching. So, my EF amount covers necessities only. There would also be some unemployment benefits flowing in, but I never factored that money into the equation.

I think the point of the EF is just to give you some options and keep your butt in the game until you can get back on your feet. The reality is that I could take as much as a 50% pay cut right now and could still manage to tread water for a very long time thanks to the EF. I sleep a lot better at night knowing that…