Broader PF question for you guys: How do you think about emergency funds when you're otherwise set up really well?
I'd consider my wife and I to be pretty well off these days. Stable jobs that pay well. Unlikely that we'd both lose them at the same time. We are pretty good at planning ahead and have savings specifically earmarked for major travel, car, and home improvement purchases.
I've always been pretty conservative about saving and currently have easily ~4 months of true "emergency savings" allocated that would cover the unlikely event of both job losses. But I keep looking at that savings account total (which includes all of the other major savings buckets) and wondering if I could do better with at least PART of what we have saved.
We have years worth of savings in our Roths, which we could tap into in a true catastrophe. We're at about 70% equity on our house, so I'm not really worried about foreclosure kinds of scenarios. I wouldn't ever just dump all of my savings into an aggressive portfolio, but just curious if you guys generally cheat on the "X months of emergency savings" recommendations once you have a pretty good cushion built up in other ways. [Reply]
I recommend putting some of the emergency savings into Chiefs failing to cover the spread. Ties it up for just a week and almost always nearly doubles your investment.
But in all seriousness, I'd say if you have the ability to get a HELOC at ~4% interest, you can afford to be less strict with emergency savings rules.
Full Disclosure: Not a financial adviser. Also, quite poor. [Reply]
Originally Posted by DaFace:
Broader PF question for you guys: How do you think about emergency funds when you're otherwise set up really well?
I'd consider my wife and I to be pretty well off these days. Stable jobs that pay well. Unlikely that we'd both lose them at the same time. We are pretty good at planning ahead and have savings specifically earmarked for major travel, car, and home improvement purchases.
I've always been pretty conservative about saving and currently have easily ~4 months of true "emergency savings" allocated that would cover the unlikely event of both job losses. But I keep looking at that savings account total (which includes all of the other major savings buckets) and wondering if I could do better with at least PART of what we have saved.
We have years worth of savings in our Roths, which we could tap into in a true catastrophe. We're at about 70% equity on our house, so I'm not really worried about foreclosure kinds of scenarios. I wouldn't ever just dump all of my savings into an aggressive portfolio, but just curious if you guys generally cheat on the "X months of emergency savings" recommendations once you have a pretty good cushion built up in other ways.
I'm a bit of a cash whore. But (the little bit I have) the farmland I have is held personally, plus I incur typically substantial tax liability. So pretty good chance I'm keeping more than you need to, but damn man, cash always spends.
Looking at what you posted here objectively, it's unlikely any of the cash requirements would happen concurrently. I think it's reasonable to stick some more in your ROTHs.
There are some other components I'd look at. You obviously have cash flow if you're saving. You could tighten that up (additional principle on mortgage or increasing your 401K or IRA contributions), and "borrow" from cash buckets if weird stuff pops up.
Another thing, I don't know your leverage positions on cars, but I wouldn't be afraid to keep cash back as a general fund, and borrow money for the next car. Every time the wife buys a car I run amortization tables on payments and for no more than money costs right now, I typically hang onto it and leverage to the extent that my cash flow can handle it. And the last one she got is pretty expensive, so I'm definitely curtailing that one a bit for the sake of cash flow.
Real Estate is an option, but not everybody wants to be a landlord. And while typically Real Estate would be a more stable investment, I don't know WTF to think about RE out there.
I don't know your financials, but I'd say it's probably safe to stick some of that elsewhere.
I have a 100K LOC at my disposal I can use for any emergency. I invest all my cash. That way my money is never sitting idle. If I ever needed to use the LOC for an emergency it's a tax deductible loan. I normally use the LOC for a major rental repair and then pay it off quickly with the rental income.
Originally Posted by DaFace:
Broader PF question for you guys: How do you think about emergency funds when you're otherwise set up really well?
I'd consider my wife and I to be pretty well off these days. Stable jobs that pay well. Unlikely that we'd both lose them at the same time.
Assuming your pay is somewhat equal and either of you alone could cover a good chunk of the bills then, yeah, I think youre ok to shrink the emergency fund. There are conservative things you could do like laddering into government i-bonds that are probably better than holding cash most of the time.
In your position the emergency fund is really just there to help you sleep at night. Whatever you're comfortable with [Reply]
Originally Posted by ChiliConCarnage:
Assuming your pay is somewhat equal and either of you alone could cover a good chunk of the bills then, yeah, I think youre ok to shrink the emergency fund. There are conservative things you could do like laddering into government i-bonds that are probably better than holding cash most of the time.
In your position the emergency fund is really just there to help you sleep at night. Whatever you're comfortable with
Can get a bottle of Melatonin for about $2 [Reply]