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Emergency fund
jecornel
Member Posts: 9,615
How many months do you have set aside if you lost all incoming monies?
Any way to protect emergency funds from inflation? online savings accounts are shit. If you never use it and it just sat there for 15 years you lost a lot of potentials gains by investing.
Ramit Sethi is adamant to build up a year of emergency cash.
Any way to protect emergency funds from inflation? online savings accounts are shit. If you never use it and it just sat there for 15 years you lost a lot of potentials gains by investing.
Ramit Sethi is adamant to build up a year of emergency cash.
Comments
Back of the napkin says about negative four months. My plan is to start a fight club that blows up the credit card company if it comes down to it.
I may stay away from that much cash given the concerns you articulated, but I'm conservative and assume that I would not be able to replace my gig within, say, 6 mos. So a year is my paradigm, even though I know it's a bit excessive.
As proof that God protects idiots I was a the top of my savings last March. Rode out 2020 with some fed checks and UI after the shut down in July of the bidness
Haven't done shit in 2021 except collect UI but I still have at least a year in savings. So I have that going for me which is nice
PS: My fund, which my colleagues and I used to call the "Fuck You" or "Fuck Off" fund, and which is now called the "Oh Shit!" fund, is kept in account that I never look at or think about, and about which my Chief Spending Officer knows nothing. She literally doesn't know it exists. It must be nice to have blonde hair, blue eyes and big tits and go through life wondering why things always just seem to work out for you. Just lucky I guess.
C'mon - even in @creepycoug 's gentlemens club I had to jump on that softball.
Re HELOC, this is a little old fashioned, but I try not to think of the primary home as an investment and instead think of it as a basic necessity. For that reason, I like to own it outright and then I know I only ever have to keep the electricity on and pay my property taxes. I can survive for a good long while on that basis no matter how bad it gets.
RE: the emergency funds, obviously more is better, but speaking as someone who went through two layoffs in her younger years, people should also come up with emergency *contingency plans* along with cash reserves.
What discretionary spending could you cut out immediately (streaming services, gym memberships, etc.)? If push came to shove, what could you sell? Who would be willing to help you out with free child care? What if you had to move temporarily?
Reason I bring this up is you can stretch your emergency fund dollars if you’re smart about it. Most people (pre-COVID) are only out of work about 2-3 months. You probably don’t have to burn as much savings for job loss if you’re smart about it. (Not saying job loss isn’t an emergency, but I am shocked how many people burn through their savings quickly because they didn’t prepare or were willing to make some short term sacrifices.)
Got the corporate downsize/wellbye once and that will never fucking happen again.
While the most common emergencies for families are major household repairs and car expenses, those can be mitigated somewhat by good maintenance and can be budgeted out/negotiated. It’s the sudden medical issue or change of life stuff (divorce, forced relocation) that I think are the most devastating. I try to think about how to respond to those.