You and others are right that the definition of emergency is somewhat overloaded (I don't actually call ours an emergency fund so much as a cash buffer, but EF is a commonly used phrase), but you're also missing some of the nuance of what I'm saying. The cash buffer will include planned expenses like a vacation budget as we approach the date of spending, but that's not really the portion that one would label as an EF. We intentionally leave excess in the cash buffer, not for spontaneous discretionary spending, but for unexpected costs that arise, whether they be associated with discretionary spending or not. For example, if my car breaks down unexpectedly on a road trip, I want to have some extra cash to deal with that. Whether you want to call that an emergency or not is somewhat irrelevant semantics, it's ultimately an unexpected sudden expense.bling wrote: ↑Tue Aug 02, 2022 1:22 pmi don't see how you can call a bucket of money sourcing a spontaenous vacation be classifed as an emergency fund. that makes the term emergency lose all meaning.dboeger1 wrote: ↑Tue Aug 02, 2022 12:41 pmYou may be right about these specific cash-only restaurants to some extent, although I would challenge your line of thinking, especially as it applies to many other things on my list. Just doing more interesting things in life will result in more opportunities for "emergencies". Sure, maybe the safest thing is to just never go out and life the bare minimum lifestyle cooped up indoors, like in that iRobot movie when the robots basically put all humans under house arrest for their own safety. But it should be obvious why this is not a justification for many people to hold less cash. I probably could've avoided expensive car break-down emergencies by never going on road trips, but why would I want to do that? Having enough easily-accessible cash (some combination of physical and in a savings account) allows us to confidently go out and do interesting things, everything from walking into a new Asian restaurant without asking if they take credit cards to going on a spontaneous weekend trip. If I had Jeff Bezos level of assets, sure, I would probably have an asset-backed low-interest line of credit to just charge everything to, and I probably wouldn't eat at low-end local cash-only Asian restaurants. But we don't, and I'd prefer not to worry about what the market is doing every time I go out to eat.bling wrote: ↑Tue Aug 02, 2022 12:29 pmat worst this is an inconvenience. there's always an ATM waiting nearby ready to charge you high fees. eating out is a luxury.dboeger1 wrote: ↑Tue Aug 02, 2022 11:36 am A mini-emergency we encounter fairly often is trying different Asian restaurants in our area, which are notorious for being cash-only or having high minimum purchase amounts for using credit cards. We don't always know the policy when going to these places, so carrying cash allows us not to worry about it.
you can choose not to eat at the restaurant if you forgot to bring cash. you don't have a choice ignoring the car repair if that's how you to get work and make money.
If all you ever do is hang around places where you have access to ATMs, can charge your phone, are not far away from an open mechanic, credit cards are universally accepted, etc., then yes, you can reduce or even eliminate the emergency fund and just withdraw from the portfolio as needed. However, there are many situations that don't fit those criteria, and I think that's where a lot of the disconnect is coming from. You keep brushing things off as unreasonable assumptions, but I can assure you they are not. Here are some that come to mind from personal experience:
- Being unbanked. A significant portion of the American population is unbanked. This can be due to poverty, service costs, bad credit, providers closing or freezing accounts, IRS wage garnishment, etc. There were several years of my life where my father could only keep cash and had to cash all his pay checks at Walmart because if he deposited funds into a bank account, they almost certainly would have been seized.
- Traveling to/through places with limited services. You'd better believe I had plenty of cash on me driving through Death Valley.
- In addition to limited services, there are also limited service hours. We broke down on a Friday evening next to a farm in rural Indiana once and had to get towed to a really small town where practically everything was closed on weekends. I don't even think they had a bank with an ATM accessible outside of business hours. We paid cash for a hotel room and had to wait till Monday morning to get the car serviced.
- Depending on how one travels, it might not be fair to assume that one will have all their things with them when something goes wrong. For example, it's not uncommon for us to put my wife's phone and cards in our luggage when flying so she can travel light, since I usually have my things. However, there have been times when we've been separated by customs for hours at a time when entering a foreign country, our luggage has been put on the wrong flight, airport security held our bags for a long time for additional screening, flights have been cancelled or delayed and we've spent overnight in an airport, etc.
- Just because you have your stuff figured out doesn't mean everyone else around you does. Whenever we're visiting family back home and we're out with my brother, for example, he's liable to end up stranded somewhere needing a ride or money to get out of a tough situation, because he's crazy and lives on the edge of insanity. He also is notoriously difficult to get a hold of because he always seems to ignore (or lose) his phone at the worst times, so it's not like we can rely on multiple phone calls to get anything resolved, since he'll probably change locations or need something else in between calls. Having cash on hand may very well be the only way to get him out of a mess.
- Dealing with really bureaucratic institutions is often a nightmare. When my wife immigrated to the US, the stupid USCIS web site double-charged the immigrant fee to our bank account, and it took months of calling multiple completely clueless government agencies to resolve. I can imagine similar things happening with apartment rents paid in cash, for example, so it wouldn't be crazy for people in such situations to have at least a month's worth of extra rent on hand just in case.