Honestly, I get where you're coming from about the emergency fund—it’s tough to put a price on sleeping well at night. But sometimes, when I look at clients’ numbers, I see folks with a big cash cushion just sitting there while their mortgage interest racks up. Even a small extra payment here and there can shave off years and a ton of interest over time. The trick is figuring out what “enough” is for that safety net, and not letting the rest just idle. Not saying everyone should drain their savings, but sometimes the math really does win out over the what-ifs...
The trick is figuring out what “enough” is for that safety net, and not letting the rest just idle.
That’s the million-dollar question, isn’t it? I see people with $50k or more just sitting in a savings account, earning next to nothing, while their mortgage is eating away at them with 6% interest. I get the comfort factor—nobody wants to be caught off guard by a job loss or a busted water heater. But at what point does that “sleep well at night” fund become overkill?
I’ve had clients who swear by keeping a year’s worth of expenses in cash, and others who get nervous if their checking dips below $2k. There’s no one-size-fits-all answer, but I do wonder if we sometimes let fear drive our decisions more than the numbers. If you’re paying hundreds extra every month in interest just to keep a pile of cash untouched, is that really peace of mind—or just expensive insurance?
I’m curious if anyone here has actually run the numbers on how much interest they’d save by putting even a chunk of their emergency fund toward the mortgage. Or maybe you’ve done the opposite—had an emergency and were glad you kept that cash handy? I’ve seen both sides play out. Sometimes the math wins, sometimes life throws you a curveball and you’re grateful for the cushion.
Has anyone changed their approach after a rate adjustment? Did seeing your new payment make you rethink how much cash you want on hand versus knocking down your principal? I’ve noticed some folks get more aggressive with extra payments once they see how much interest they’re really paying over time. Others double down on savings because they’re spooked by market volatility or job uncertainty.
It’s such a personal balance. But I do think it’s worth questioning whether our “enough” is based on real risk—or just habit.
But at what point does that “sleep well at night” fund become overkill?
I’ve asked myself this a bunch after my last rate hike. Here’s what’s helped me: I keep 3-4 months of expenses liquid, then any extra cash goes straight to the mortgage. It’s wild how fast the principal drops with just a little consistency. That said, I did once get slammed with a surprise foundation repair, and was glad I hadn’t thrown every spare dollar at the loan. For me, it’s about being prepared but not letting “just in case” money pile up endlessly. The numbers usually nudge me to act, but I still need that buffer to sleep at night.
Honestly, I wrestle with this too.
That’s exactly my fear—one busted pipe or HVAC meltdown and suddenly that “extra” mortgage payment feels like a mistake. I try to keep 6 months liquid, but sometimes it feels like overkill. Then again, every time I see my principal drop, I wonder if I’m being too cautious. It’s a weird balancing act...“I did once get slammed with a surprise foundation repair, and was glad I hadn’t thrown every spare dollar at the loan.”
