Cash - Throw it all on the table!!!

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
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Eschew_Obfuscation
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Re: Cash - Throw it all on the table!!!

Post by Eschew_Obfuscation »

6 months of expenses in a credit union checking account (yields 3% up to 25k).
"But I confess that half the time I worry that I have too much in equities, and the other half of the time that I don't have enough in equities." John Bogle
Prov227
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Re: Cash - Throw it all on the table!!!

Post by Prov227 »

Bank #1 checking: $4,000 (everyday checking)
Bank #1 savings: $500-$6,000 (property tax accrual)
Bank #2 checking: $25,000 (vacation/car/house and alternate emergency fund)
Bank #2 savings: $10,000 (main emergency fund)
Pretty cash: $500

When checking accounts get over-funded, we move $5,000 to Vanguard taxable and buy more VTSAX.
"...and the borrower is slave to the lender." -Proverbs 22:7
dboeger1
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Re: Cash - Throw it all on the table!!!

Post by dboeger1 »

My wife and I currently keep about $50k in savings accounts as our emergency/daily use funds. This admittedly feels a bit high, especially now that we both have high incomes. Our investments are otherwise more or less 100% stocks (some bonds from TDFs in accounts with limited investment options, but still very heavily in equities), so having a lot of cash feels kind of counter-productive. However, we have ran into a few scenarios where it was nice to have that cushion, and I could foresee other sudden needs in the near future as well.
jschert
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Re: Cash - Throw it all on the table!!!

Post by jschert »

I have 1M in cash in a money market fund earning 1.5%
I have about 320K in various Vanguard Account. My investment in Vanguard is about 220K.
Think about that. 320/220= 1.45. My Vanguard accounts are worth 320K. I only put in 220K. I have seen a 45% return on my Vanguard investments. Remember when the market started to tank in late Feb 2020.I put 40K into Vanguard on March 2nd.
I kept buying 4 different Vanguard funds. I was buying all the way down. I invested about 35K in the Vanguard S&P 500 on March 23rd, the lowest day. I bought another 20K in Vanguard on March 24th.
That $35,000 investment in Vanguard on March 23rd ($206.42) was a great buy. $363.71/$206.42= 1.762. 1.762 X $35,000= $61,670.
Just think about that- A $35,000 investment on March 23rd 2020 turned into $61,670
Overall, my total Vanguard funds are up by 45% in one year.
I have about $1.2M in my TIAA Retirement fund. My TIAA funds grew by 14.5% last year. About $1M in my credit union account earning 1.5%.
If I died today, my insurance would pay out at about $500K.
I have zero debt. I own the house I live in (no mortgage). I own the rental house my 23 year old daughter lives in (no mortgage).
I bought that 2 BR, ! BA rental house 24 years ago for $12,000. I paid cash. It had bad title. I was confident that I could fix the title problems. It cost me about $4,000 to fix the title problems. Total investment was 12K plus 4K, or 16K. Trulia says it is worth $208,263 (Trulia Estimate). Zillow says the same thing $208,263. I put a 50 yea5 Galvalume roof on for about $9K. I had all the hot and cold water pipes (1940 galvanized pipes) replaced for about $5K. I spent about $4K on a new central AC/Heat Pump. Another $5K on miscellanies stuff. My last tenant moved out just before the pandemic. I have been getting $1,250 per month for many years. So, I am collecting $15,000 per year on an investment of about $40,000. I took a risk. I bought a house with bad title for $12,000. I got the title fixed for $4,000. New 50 year Galvalume Roof about $9,000. New insulated hot and cold water pipes about $5,000. $4,000 on a new AC/Heat Pump. $5,000 in other misc improvements. About $39,000 in total costs. I walking into Bank of America and borrowed about $100,000 when my wife was diagnosed as having ALS. I also walked into Regions and borrowed about $60,000 on the rental house. The terms were prime plus one point, 20 year balloon note. I told State Farm to please be sure to send my annual insurance proof to both BoA and Regions. I paid both BoA and Regions off a couple of month sgo. I am making about $15,000 per year on $1M @1.5% at my local credit union. When I let my 23 year old daughter move into the rental house. I told her that it is her house when I die, Zillow says my 4BR, 3Ba home is worth stimate $331,600. I bought that house for $102,000 in August 1985. Built in 1978, about 2,300 square feet.
I got an infection in my spinal canal in September 2017. It was not diagnosed for five days. I underwent a six hour emergency surgery so that a neurosurgeon could cut off the spinous process bones on the back of my thoracic vertebrae. Then I underwent a four hour surgery so that he could cut the Spinous Process bones off my Lumbar Vertebrae. A few days after that, I went into cardiac arrest. I was out for about 7 minutes. They stuck a stent in one of my main coronary arteries and put me into a coma and on life support for three days. Ventilator, feeding tube, etc. I walked into the ER at 8 AM with a pain in my side. They told me that I was constipated and wanted to give me some laxatives and narcotics and go home. I would not leave. They stuck me in a unit where they park old folks for whom they are looking to place long term in a rest home. They ignored me for five days as I told them that I could not move my legs (you have been in bed too long, you are just being lazy). They put in catheters because I lost the ability to urinate. Same thing with pooping. Lots of laxatives. I was in for a total of 67 days. My medical insurance company paid about $1M for my care over those 67 days. I left in a wheel chair, unable to walk. Over the next year, I underwent intensive PT three times a week, I learned how to walk with a walker and then with a cane. I can drive a car. I bought a 22 foot Robalo 222 with a 250 HP Yamaha for $58,000. I bought a new Ford 2019 Expedition Max Platinum with towing package and every accessory you could think of. I bought a 2020 Volvo XC90 brand new. These were the first two new cars I have ever bought. I take the Robalo 50 miles out into the Gulf of Mexico to fish over an old tug boat and barge wreck. My revocable trust owns the two houses, all of my $1.2M in TIAA, my $1.0 M in the money market at my credit union and my $320,000 in Vanguard investments. If I die, my estate will get about $500,000 in life insurance. I am 68, turning 69 next month. I work full time. Social Security tells me that I will get about $3,000 per month if I were to retire today. I hope to work full time for another couple of years. The Trustees for my revokable trust are my closest friends. They are in charge of my trust until my daughter turns 40. They dole out the money she needs to live and pay property taxes and insurance and all that until she is 40. The Trustees are allowed to do whatever they think is in her best interests in terms of my assets.
Planning. You think that you have your bases covered. Then you learn that your 56 year old wife has ALS and she is dead 8 months later. You trip and skin your knee. You go to the ER. They tell you to go home. After five days, you learn that you have staph infections growing inside your vertebrae, compression your spinal cord and causing permanent damage to your urogenital nerves. I will have to use catheter to pee for the rest of my life, laxatives and enemas to poop for the rest of my life and my Johnson does not work anymore.
Planning.. The 31 year old son of a very close friend put a bullet into himself the other night. Earlier in the day, he called the police, told them that he had a gun and that he was afraid of killing himself. The police arrived. They would not go in. They were afraid that he would commit suicide by cop. They left. The 31 year old son of my friend took his life with a single gun shot about six hours later. He did it in the bathroom so that the cleaners could clean up more easily. No matter how much planning you do, you are never in control of your life. When I was growing up, both my parents were always sick and broke and they were always afraid of losing their house.
In spite of all the planning you do, your life can go to crap in a millisecond. My wife had a thriving practice testing kids for learning disabilities. People came from all over Florida and Georgia to get her to test their kids for IQ and Learning Disabilities. One day, Her speech became garbled. We went to a zillion docs before one told us that it was ALS. She was dead 9 months later. Our daughter was 11. I did not turn to drugs or alcohol. I spent time driving across the USA a couple of times with my daughter. We flew to Scotland. We flew to Sicily where I did some work for the Sicilian Mob. They had to pay for first class tickets, my fee and all of our travel expenses before I would buy our first class tickets to Sicily.
I went over the asses of the trust I set up for my daughter with my 23 year old daughter. She knows that I was mowing lawns at 8 and had an afternoon paper route at nine years old. . I said that the cash and stocks are worth about $2,4M. About 500K in life insurance. I told her that she will inherit our 4 BR 3 BA home and the rental house. No mortgages. Her university tuition and fees are already paid through her Master Degree. I said that after I am dead, she could live in either house. She said that she did not want to hear about our assets and the trust. I also told her that if my heart stops when I am 50 miles out in the Gulf of Mexico fishing, well, that will be fine with me. I said that I hope to fall overboard just before I die so that the fish in 70 feet of water can dine on me. You can plan all you want, trip and skin your knee and walk Into the ER and leave 67 days later in a wheel chair unable to walk, pee, poop or get your Johnson hard.
This has all become rather macabre.
$331,611
Nivek
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Re: Cash - Throw it all on the table!!!

Post by Nivek »

Currently have $450K in cash, about 16% of our portfolio. For a couple of years, I expected headcount reductions coming at the megacorp I worked for so held on to some cash for that day. Day finally came but stayed on in different position in the new reorg which I didn't plan so it's a positive. I'm 4 and 1/2 years from retirement so still leaving it there. That will be our big purchase/emergency fund (new car, home AC goes out, etc.) I'm happy with our AA so isn't an issue (57% stock, 20% bond, 16% cash, 6% real estate). It's about 3 years in expenses so pretty conservative but allows me to sleep contently.
Freetime76
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Re: Cash - Throw it all on the table!!!

Post by Freetime76 »

To jschert, that is a powerful post. Thank you for taking the time to share some of your story. My dad used to say similar things to your fishing comment to your daughter - about how he hoped for a no nonsense end and here are all my affairs, well in order (accounts, insurances, etc.). I appreciated it, even though I was not at all interested in thinking about receiving any of it.

Life is precious. And short, and unpredictable.
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abuss368
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Re: Cash - Throw it all on the table!!!

Post by abuss368 »

This has been an excellent thread.

Tony
John C. Bogle: “Simplicity is the master key to financial success."
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climber2020
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Re: Cash - Throw it on the table!

Post by climber2020 »

magneto wrote: Wed Nov 05, 2014 11:39 am Have let cash build up to well in excess of 50%.
Why I hear you ask?
Believe that central banks' intervention has severely distorted markets, leaving :-
Stocks expensive (if not wildly so as in 1999), hold stocks nevertheless in modest amounts.
Bonds offering negative real yields, with strong possibility of capital loss.
Cash negative real yields.

Don't know how all this is going to end, but prepared to suffer the negative real yields of cash while waiting for better days (market timing perhaps, or maybe value investing, or just insurance as you suggest). Feel the central banks are driving us into asset classes at prices where we would not rationally choose to go. This provokes the contrarian streak, hence cash.
It's interesting reading this thread from the beginning in 2014.

Given what actually transpired over the last 6+ years, did you make any changes to your plan in the interim?
Slacker
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Re: Cash - Throw it all on the table!!!

Post by Slacker »

1 month in a savings account.
Current month's bills in checking.

Everything else is invested. If an emergency arises, we'll put it on a credit card and sell stocks and/or bonds as needed to pay off the card.
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anon_investor
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Re: Cash - Throw it all on the table!!!

Post by anon_investor »

Since last year after interest rates started dropping I have been trying to reduce my "cash" (checking, savings, CDs) by purchasing I Bonds. Ultimately, I expect to keep no more than 2-3 months of expenses in "cash" to avoid cash flow issues and to serve as a first tier emergency fund.
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firedup
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Re: Cash - Throw it all on the table!!!

Post by firedup »

abuss368 wrote: Fri May 08, 2020 1:35 pm Bogleheads -

Since starting this thread, we have simplified cash to one checking account and one Prime Money Market at with Vanguard.

Has anyone changed strategies with the low interest rates available?
Nope, no changes. We're doing exactly as you are: one checking account and MMF with Vanguard. :sharebeer
"We are more alike, my friends, than we are unalike" --Maya Angelou
ohboy!
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Re: Cash - Throw it all on the table!!!

Post by ohboy! »

30% in cash now. 2% paper, 10% FDIC, 18% USDC.
New Providence
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Re: Cash - Throw it all on the table!!!

Post by New Providence »

jschert wrote: Sat Feb 13, 2021 4:53 am
I got an infection in my spinal canal in September 2017. It was not diagnosed for five days. I underwent a six hour emergency surgery so that a neurosurgeon could cut off the spinous process bones on the back of my thoracic vertebrae. Then I underwent a four hour surgery so that he could cut the Spinous Process bones off my Lumbar Vertebrae. A few days after that, I went into cardiac arrest.

Planning. You think that you have your bases covered. Then you learn that your 56 year old wife has ALS and she is dead 8 months later.

Planning.. The 31 year old son of a very close friend put a bullet into himself the other night.

You can plan all you want, trip and skin your knee and walk Into the ER and leave 67 days later in a wheel chair unable to walk, pee, poop or get your Johnson hard.

Many approach life like a destination. But many, many things are outside ones control. Life is like music, enjoy the moment not when it ends.
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abuss368
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Re: Cash - Throw it all on the table!!!

Post by abuss368 »

firedup wrote: Sat May 01, 2021 8:10 am
abuss368 wrote: Fri May 08, 2020 1:35 pm Bogleheads -

Since starting this thread, we have simplified cash to one checking account and one Prime Money Market at with Vanguard.

Has anyone changed strategies with the low interest rates available?
Nope, no changes. We're doing exactly as you are: one checking account and MMF with Vanguard. :sharebeer
Simplicity.

Tony
John C. Bogle: “Simplicity is the master key to financial success."
rage_phish
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Re: Cash - Throw it all on the table!!!

Post by rage_phish »

Right now we have a few years in cash from a home sale

Normally we keep 10-12 months
It’s a bit more than I’d like. But it helps my wife fee comfortable
Tattarrattat
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Re: Cash - Throw it all on the table!!!

Post by Tattarrattat »

Have about 1-2 years expenses in a High Yield Savings account. Enough to handle any emergency, even a large one. Could it be smaller and could we keep most of it in a bond fund instead? Yeah, but rates are so low now, it hardly makes a difference.
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abuss368
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Re: Cash - Throw it all on the table!!!

Post by abuss368 »

rage_phish wrote: Sat May 01, 2021 11:29 am Right now we have a few years in cash from a home sale

Normally we keep 10-12 months
It’s a bit more than I’d like. But it helps my wife fee comfortable
It passes the sleep test! Happy wife = happy life!

Love it.
Tony
John C. Bogle: “Simplicity is the master key to financial success."
KlangFool
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Re: Cash - Throw it all on the table!!!

Post by KlangFool »

OP,

3 months in the checking account. 3 months in the HSA. 2 1/2 years in the Vanguard Treasury Money Market Fund. 3 years is my limit. So, I am paying down my mortgage if my portfolio goes up some more.

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formerlybroke
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Re: Cash - Throw it all on the table!!!

Post by formerlybroke »

$700k spread amongst various “high yield savings accounts” = 6% of portfolio. Multiple years of living expenses and emergency fund. Sleeping well, and that’s goal #1 at this stage of the game.
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abuss368
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Re: Cash - Throw it all on the table!!!

Post by abuss368 »

We have only simplified since starting the thread. One checking account with Wells Fargo that includes enough to pay the bills until next payday and also an “escrow” that builds in the checking account for the annual tax bills.

All other cash is moved to the Vanguard money market fund.

This is the simplistic we have ever had.

Tony
John C. Bogle: “Simplicity is the master key to financial success."
Tamalak
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Re: Cash - Throw it all on the table!!!

Post by Tamalak »

Cold hard cash.. 10k. When it gets substantially more than that, I move it into bonds. When bonds grow to more than 10% of my net worth, I move that to stocks.
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Re: Cash - Throw it all on the table!!!

Post by abuss368 »

Eschew_Obfuscation wrote: Fri Feb 12, 2021 8:31 pm 6 months of expenses in a credit union checking account (yields 3% up to 25k).
That is an awesome yield.

Tony
John C. Bogle: “Simplicity is the master key to financial success."
formerlybroke
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Re: Cash - Throw it all on the table!!!

Post by formerlybroke »

Eschew_Obfuscation wrote: Fri Feb 12, 2021 8:31 pm 6 months of expenses in a credit union checking account (yields 3% up to 25k).
That’s a mighty rich yield on a checking account.

Mind if I ask which credit union?
pasadena
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Re: Cash - Throw it all on the table!!!

Post by pasadena »

Not retired, SINK. I keep 6 months of regular expenses in savings (emergency fund) and between 0.5 and 1.5 month in checking (I get 2 paychecks a month and each will fund 1/2 of next month's expenses. I keep another 1/2 to avoid clearing date issues at the end of the month).

I found that 6 months of expenses is a happy middle ground so I can sleep at night and at the same time, not fret about the lack of return. This sum can serve as 6+ months of income replacement if I lose my job, or pay for moving / relocation if needed, or buy me a new car if I wreck mine. Which basically covers most of my "expensive emergency" risks.

Edit - I currently have more than that - all of my budgeted expenses are fully funded until end of July, because I'm front-loading my mega-backdoor Roth, after I also front loaded my 401(k). So I have near-zero paychecks and sold my RSU and ESPP shares to fund expenses during that time. They would otherwise have been reinvested in VTSAX.
GenawithanE
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Re: Cash - Throw it all on the table!!!

Post by GenawithanE »

We are both mostly retired and doing Roth conversions so have higher taxes. We started retirement with about 3x annual expenses in cash, not counting Roth conversion tax bumps. Between using the cash to pay the additional taxes and me giving in to my DH’s desire to cut back cash holdings, we are decided to go down to a year of expenses, enough for two cars (ours are both >12 years), and enough to cover most of this year’s cash flow needs. Not pulling from retirement funds yet, other than Roth conversions. Living off part time work, my pension, and taxable account dividends/cgd’s/TLH.
He just said “sequence of returns risk” once too many times so I was worried we would need a multiyear cash cushion to ride out any stock market roller coasters. Now we are about four years into it and the market been very very good to us.
Turk_February
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Re: Cash - Throw it all on the table!!!

Post by Turk_February »

$17k in HM Bradley earning 3% (for now)
$15k in Citizens for a $300 bonus (eventually will move to HM Bradley in a couple months)
+ between $500-$2000 in cash at home for my weekly poker game. Every time I reach $2k I'll deposit $1k more into savings.
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