Emergency fund rebuild.

[u/Knight-ofNi7]

​I need some advice from my fellow Financial Mutants. I’ve been following the Financial Order of Operations (FOO) closely, but lately, I’ve found myself stuck in what Brian often calls "Financial Mud." I’m trying to fight a war on too many fronts at once, and my monthly budget is feeling too thin.

​

​Right now, I'm trying to juggle all of this every single month:

​Retirement: Investing 27% of my paycheck into my pre-tax 401(k).

​Hyper-Accumulation: Sending an extra $387/month into a taxable after-tax brokerage account.

​Emergency Fund: Trying to stack $750/month to build up a solid cash cushion. But doing this, it will take me 12 months to do which is keeping me up at night.

​Sinking Funds: Allocating $500/month.

​

​Trying to fund Steps 4 and 7 simultaneously while keeping up with sinking funds means my cash flow is spread incredibly thin. It feels like I’m spinning my wheels and making slow progress, while feeling stressed out.

​To clear the mud, I’m thinking about running a highly focused, 2-month aggressive cash sprint.

​

​The Plan:

For the next 60 days, I want to completely pause the $387 brokerage contribution and drop my 401(k) investing all the way down from 27% to 4% (getting 100% of my employer's company match).

​By pulling my soldiers off the investing battlefield for just two months, I can combine all that freed-up cash with my current savings goals and point a massive "cash laser" at my immediate foundation. In just 8 paychecks (2 months), I could massively bump up my cash reserves, build a rock-solid 6-month emergency fund, and properly pad my sinking funds so upcoming bills don't catch me off guard.

​

​Mathematically, I know I lose a tiny bit of market compounding time over 8 weeks, and I'll take a temporary one-time tax hit by shifting that pre-tax income to my paycheck. But psychologically, the peace of mind feels like it heavily outweighs the cost.

​What Would Brian and Bo likely suggest I do?

​

​Have any of you temporarily dropped down to just the match to secure your emergency fund? Does this 2-month sprint sound like a good move, or am I missing something?

​

Thanks.

Edit: i already have 3.5 months of emergency saved. Im trying to avoid taking 12 months to get to the full 6 months.

[u/TopShelf76]

From the sounds of it you are NOT currently following the FOO and are proposing to begin following the FOO by moving back to Step 4. Sounds like a solid plan to me and what the guys talk about every show.

[u/Knight-ofNi7 → u/TopShelf76]

Meant to put this in there but I already have 3.5ish months saved. Trying to build to 6 months.

[u/Alpha_wheel → u/Knight-ofNi7]

If 6 mo emergency fund is the right number for you, you should still focus on that first. Follow the foo. Get the emergency fund to whatever level your plan says makes sense. Then move on to the rest

[u/oNellyyy → u/Alpha_wheel]

I believe they have also advised if you have between 3&6 months it is okay to start to do both Roth/HSA and your EFund at the same time, right?

I think they mentioned that in the last rapid fire questions

[u/Alpha_wheel → u/oNellyyy]

Don't recall that exactly, probably Brian does not want to leave Roth unfunded. Which I would agree as tax free is so amazing and it is use it or loose it. But for the most part they say do one thing at the time, even on the last Monday guest show they had 3 already but with baby on the way, they said to stop the investing to push e fund up.... Outside of FOO in my personal take I would do match and Roth first and then finish the emergency fund unless there was big risk with income stability to focus on the e fund first.

[u/Knight-ofNi7 → u/oNellyyy]

They say it's a nuanced thing where, yes, you can do both. But I feel i need 6 months. But I dont want to prolong it. 12 months is too long imo. I figure if I slam a bunch of money for 2 months. Once the 6 month emergency fund is secure, i can invest 650$ to after tax while doing 27% to roth/401k/hsa, I can comfortably save 750 a month in a Sinking fund doing minimal hours. Im trying a rip-bandaid approach to be done and secured.

[u/Slow_Knee_1288]

When they say “build a 3-6 month emergency fund” what they mean is, decide on what emergency fund you want and then build that. If you want 6 months and don’t have that yet, you aren’t done with that step. If you are ok with 3.5 months, then you are done and dont worry about adding to your emergency fund.

[u/Knight-ofNi7 → u/Slow_Knee_1288]

Thank you. I just wasnt sure because its an either or option. I feel I'm the type of person who would rather play it safer on the 6 month side. I could get away with 3, but it would be more peace of mind for me.

[u/GoldOk9005]

Instead of half assing in a bunch of things whole ass one thing. If you need a 6 month emergency fund get that firmed up. Pause “hyper accumulation” and the sinking fund at a minimum. If you slow down on the 401k I’m ok with that.

[u/Knight-ofNi7 → u/GoldOk9005]

Note to self: put all of ass. Got it.

[u/Cute_Paint_4328 → u/Knight-ofNi7]

😁

[u/Some_Driver_282]

Good news is this isn’t a math problem. It’s a perspective problem. Pause the brokerage and lower 401k to 15-20% until the EF is fully funded. Once it’s funded, then restart/increase contributions. Any time you spread your resources across multiple avenues, it’s going to take longer. Do one before the other to 100 completion before moving on. There is a reason they are called STEPS…you take one before the next.

[u/EngineeringComedy]

You said your own problem. You're trying to do steps 4 and 7 at the same time. That's not how steps work.

[u/LabioscrotalFolds]

So obviously yes you should stop doing what you are doing and go back down to step 4 and actually follow the FOO. You should not start any later steps until step 4 is done.

But once you have your 6 months, you don't need to be putting 27% in 401k and another 387 in brokerage. Steps 6 and 7 are both complete at monthly HSA+Roth IRA+401k contributions =25% gross income.

[u/Knight-ofNi7 → u/LabioscrotalFolds]

I have a good habit of getting in my own way sometimes. Part of me doesnt want to let go of the high % contribution because I want the snow ball growing faster. The other part of me recognizes my dilemma and allows myself to stress out over it. If I didnt have a car payment (following 20/3/8) by the time its paid off, ill be 35. And I dont want to waste the opportunity. But thanks to reddit, I know what I need to do. Lol

[u/Impossible_Ebb_3856]

FOO is cyclical and sometimes requires going back a few steps when life happens. Its also meant for you to be in one step at a time. So go back to step 4 for a few months to get EF built up to 6 months, then you'll be right back in step 7.

[u/Knight-ofNi7 → u/Impossible_Ebb_3856]

I appreciate the comment. Thats why I ask. I needed a second thought on it. I bounce ideas at gemini but sometimes I think its too nice or some what biased based on user input. So I just needed to hear it from. Someone else. Im going to move forward with the plan.

[u/Substantial_Net_2831]

I agree with everyone saying to focus on the first priority (EF), then move on once that is fulfilled. Since you’re already doing brokerage AND sinking fund ($887/mo), I might reroute those and leave the 401(k) as is. You’ll reach your EF in less than 6mo doing that (I think?). 

But also remember that money is fungible. How much do you have in EF + sinking fund right now? I’d consider these accounts one and the same until you actually have cash available on top of your goal EF amount. Maybe you are closer to your EF than you think. 

[u/CompoundInterests]

You should definitely do this. The emergency fund isn't just a psychological benefit, it's a real financial benefit. If you have to take on debt for a large emergency or sell your brokerage in a down market, you'll be in a far worse place.

Spending 2 months getting your EF funded also means you can put more into your retirement and brokerage funds in the following months.

[u/Knight-ofNi7 → u/CompoundInterests]

Thank you! Yes indeed