Why have Emergency Funds?

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mega317
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Re: Why have Emergency Funds?

Post by mega317 » Wed Feb 28, 2018 10:05 pm

DrGoogle2017 wrote:
Wed Feb 28, 2018 6:59 pm
But people here are exceptional people, nothing like this will happen to them ever. /sarcasm end
This is disingenuous. The point has been made many times that you need to anticipate a stock crash at the time you have your emergency.

DrGoogle2017
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Re: Why have Emergency Funds?

Post by DrGoogle2017 » Wed Feb 28, 2018 10:10 pm

mega317 wrote:
Wed Feb 28, 2018 10:05 pm
DrGoogle2017 wrote:
Wed Feb 28, 2018 6:59 pm
But people here are exceptional people, nothing like this will happen to them ever. /sarcasm end
This is disingenuous. The point has been made many times that you need to anticipate a stock crash at the time you have your emergency.
Not according to the OP. This is not the first thread about emergency fund in the last few days.

MindBogler
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Re: Why have Emergency Funds?

Post by MindBogler » Wed Feb 28, 2018 10:25 pm

mega317 wrote:
Wed Feb 28, 2018 10:05 pm
DrGoogle2017 wrote:
Wed Feb 28, 2018 6:59 pm
But people here are exceptional people, nothing like this will happen to them ever. /sarcasm end
This is disingenuous. The point has been made many times that you need to anticipate a stock crash at the time you have your emergency.
No it really isn't. The fact remains that for many industries and professions there is a risk of experiencing a job loss during a major market downturn. This is hardly the time you want to be selling after losing half of your investment so you can eat. People seem to dismiss this very real possibility too easily. I don't think keeping a year of cash is necessary but everyone should have at least a few months of living expenses. The opportunity cost of this insurance is very minor in the grand scheme of things. You probably waste an order of magnitude more earning potential over your lifetime doing much dumber things.

momvesting
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Re: Why have Emergency Funds?

Post by momvesting » Wed Feb 28, 2018 10:51 pm

An e-fund is for someone like me.

Our income is in the high 5 figures, but not 6. We save for retirement and college. We have a taxable account with about 18 months of expenses in it. But all this "pay myself first" type savings does not give me a whole lot of room for minor emergencies. By messing with the timing of our bills and savings, I can usually work in around $1k without using savings. But sometimes regular but unexpected expenses happen too. For example, I had an unexpected $1k car repair this month, which I could have absorbed, but my daughter decided she wanted to join the track team (total surprise), which is around $450, and she signed up for driver's ed for $220 (expected). So I am able to squeeze out $900 this paycheck and $300 next paycheck (without interrupting retirement or college contributions), but I'm going to need almost $500 from savings. $500 is hardly worth the transaction fees to sell stocks. I also do not want to carry any credit card balances. I will be able to repay the savings account in April. I keep around $10k in this e-fund, and it doesn't have to be any sort of catastrophic emergency for me to use it. Although I do budget separately for expected expenses, this car repair was completely out of the blue.

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abuss368
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Re: Why have Emergency Funds?

Post by abuss368 » Thu Mar 01, 2018 10:24 pm

We have a simple Prime Money Market fund with Vanguard where we hold cash. The yield was always second in terms fo importance compared to having cash available.
John C. Bogle - Two Fund Portfolio: Total Stock & Total Bond. "Simplicity is the master key to financial success."

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