Especially when its because of bad cash-flow management.

For those that don’t know, an emergency fund is a stash of moola that you can easily access in the case of emergencies. And by emergencies I mean “Oh crap my car engine blew up” or “Oh crap I just got fired because I kept sleeping on the job.”

How much should you keep in your emergency fund? Well, the answer really depends on your personal financial situation, but the general consensus seems to be between $1,000 to $5,000. Obviously, this number can change significantly for those with a big family, or those that are single with very stable jobs.

For more on emergency fund, you can read this post I wrote awhile back.

As mentioned, due to some major mishap on my arithmetic ability, along with spending like a king on trips and lending money to others (always a bad idea) — I found myself staring at a checking account balance that reminisce my early college years.

Realizing that I couldn’t possibly pay for the month’s credit card balance in full with 28 quarters, I cursed aloud and dipped into my emergency fund of $5,000 (an amount that can take care of my full expenses for about 4 months).

All in all, not a big deal.

But what I soon realized was that I became fairly uncomfortable with the prospect of an emergency fund that’s not fully funded. It’s not as if I was broke or anything, but the fact that my emergency fund was missing $800 made me felt… incredibly insecure, for some strange reason.

As so I’ve learned two things:

  1. I have a lower tolerance for financial risk than I realized.
  2. When you dip into your emergency fund because you spent more than you thought, you’ll feel pretty stupid.