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Emergency Fund, Do You Have One?

apollo_web

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Jun 10, 2019
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Hey there fastlaners,

Wanted to share one of the most beneficial (albeit not the most exciting), ideas I've picked up from slowlane financial books + resources, and that's building up an emergency fund.

Now I know those looking to build explosive income, aren't necessarily focusing on building a buffer or get any excitement about the thought of it at all...

But figured I'd share anyway.

See, in my first years of business I went "ALL IN" many times, and figured my way out of it, but I'm sure the rapid loss of hair I picked up was due to living on the line like that.

But here's the thing, although ploughing my business profits thereafter into a savings account hasn't been great for my business short term... Building funds so that I could live for 1 year if all went kaput, pay the rent, buy food until I figure out the next thing is a HUGE piece of mind especially as an entrepreneur...

That affects:

- How I smile when I walk around
- How well I sleep at night
- How I interact with others
- The people attract into my life (yes even intimate relationships when they feel I'm coming from an abundant mindset).
- Not acting completely desperate in negotiations, being able to walk away, not having to do deals because I really "NEED" the money.
- Focusing on the longer term vision rather than being distracted by shiny objects.
- In the future, being way more aggressive in the offense than competitors, knowing that defence in covered when others are concerned about making losses.

Although sports teams win on the offense... Teams in the past like Real Madrid & Liverpool would score tons of goals because of amazing offense, but also lose many games even championships because of their poor / near non existent defense.

Thought I'd share, as having near 1 YEAR emergency fund in cash, allows me come 2020 to go completely on the OFFENSE relentlessly.

A few years minimizing risk, could open up decades of near worry free risk-taking.

Now of course, there comes a point when stashing cash becomes self defeating I believe, and it's easy to build a hoarder mentality after a while, but building that iron-clad discipline is a great thing also as long as you know where to draw the line.

Posted a topic a while back, and one of the best things than MJ mentioned was buying things that aren't necessarily investments (liabilities like buying a personal residence/cars) when it becomes a no brainer/non event for you. When you have the resources that the purchase doesn't feel like a big issue is the best way forward.

Building a good cash buffer, one that hopefully keeps up with the rate of inflation as much as possible, helps with that, to become "anti fragile", for me at least anyway.

What are your thoughts on this?

Do you have an emergency fund, or are you crushing it with none at all?

Either way be great to know!
 
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Envision

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I think skills supercede security any day. You can still have an emergency fund, be making no money and have absolutely 0 peace of mind due to what's going on in your life.

When you know you have the skills to make money tomorrow you dont have that fear.

Of course everyone is different and I think it is smart to have some cash saved for a rainy day. I have 2-3 years of cash I could live off of, but Im also willing to spend all of it on a great opportunity that may come up tomorrow.
 

minivanman

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I have an emergency fund to this day. We actually have 2. A very small one is here at the house, hidden.

I even have an emergency fund hidden in every vehicle. Only a few hundred each in the vehicles but it is for an emergency.

No shame in having an emergency fund. It sure lets you sleep a little better at night if you are about to put it all on the line.
 

Damien Dev

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Yes I do. From my previous corporate/ government life I stashed away a large amount. I count it as zero. Even if I need to borrow, I charge myself interest. It's not the emergency fund that gives me security, it's knowing I can go out and earn it again. Having being around "inheritees" growing up, I can tell you having cash in the bank is not the answer. They have more money anxieties than those that are flat broke! Because if they lose it, they're never going to get it back.
 

ryanbleau

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Prior planning prevents poor performance. Only makes sense to prepare for the bad times. Emergency funds are a big part of that planning.
 

Matt Hunt

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Yes, but I only have a few months worth of living expenses. Unless I'm just sitting on my a$$, I don't see myself needing more than that, however, I will build it up to a years worth eventually. It's not just for those times where you may not have an income, it's also for unexpected expenses like major car repairs, big doctor bills, etc. It's definitely smart to have at least something.
 

EVMaso

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Yes I do, I have enough to cover all my expenses for almost a year without working.

I think everyone should have at least 6 months for an emergency fund, regardless of how much wealth you have. (okay maybe the super wealthy won't need one). But especially when you're a slowlaner or you're trying to bootstrap some sort of venture, knowing you have money set aside to cover life stuff without having to eat ramen noodles every meal for a couple of months or sell everything you own but the clothes on your back is incredibly calming and liberating.

All my expenses come from my other moneys, but nothing touches my emergency fund, except an emergency.
 

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Do you have an emergency fund, or are you crushing it with none at all?

Either way be great to know!
Yes, I have more than enough to live on for 1 year - the rest I invest.

6 months is probably sufficient, but it's nice to have more of a buffer.

I also don't have a lavish spending style. I spend way less than can afford, on purpose.

I spend a small amount on "toys" - motorcycle, watch, etc. but I keep it at minimum.
 

Rabby

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Always. I'm conservative to the point of paranoia I guess. Years worth of living expenses. Insurance for everything. Enough shit hidden in safes to give us a head start in the apocalypse. I stopped short of storing canned food because I can raise it, grow it, forage it, pickle it and can it myself.

Knowing you can handle the unlikely but extreme situations frees you up to focus on normal everyday things. Nothing to worry about, nothing to stop you from doing what you do.
 
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amp0193

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I don't have an emergency fund, but I wish I did, and I'm working towards it.

When you're "all-in" on business, all it takes is one big thing to go south, and you've got not much to fall back on. Skills are helpful as a plan B if everything falls apart, but not so helpful in handling short-term personal financial shortfalls, when you're working on your business full-time.

My business is in a tight spot right now, and my wife and I have back to back ER visits (with mine needing 3 nights in the hospital and a surgery)... it'd be nice to have an extra 30k to whip out when needed, rather than having to max out the personal credit cards, and then not know how I'm going to pay the rest.

Starting this year I'll be taking profit out of the business, and being siphoning it to untouchable accounts. But first, I have a bit of digging to do to get out of the hole I put myself in.
 

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Timmy C

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Building one, it's tough trying to build a business and going all in when your worrying about bills coming up, dog needing meds, car service etc.

It's building nicely, not as fast as I want but I'm in a better financial position than I was when I came here.
 

Kevin88660

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Hey there fastlaners,

Wanted to share one of the most beneficial (albeit not the most exciting), ideas I've picked up from slowlane financial books + resources, and that's building up an emergency fund.

Now I know those looking to build explosive income, aren't necessarily focusing on building a buffer or get any excitement about the thought of it at all...

But figured I'd share anyway.

See, in my first years of business I went "ALL IN" many times, and figured my way out of it, but I'm sure the rapid loss of hair I picked up was due to living on the line like that.

But here's the thing, although ploughing my business profits thereafter into a savings account hasn't been great for my business short term... Building funds so that I could live for 1 year if all went kaput, pay the rent, buy food until I figure out the next thing is a HUGE piece of mind especially as an entrepreneur...

That affects:

- How I smile when I walk around
- How well I sleep at night
- How I interact with others
- The people attract into my life (yes even intimate relationships when they feel I'm coming from an abundant mindset).
- Not acting completely desperate in negotiations, being able to walk away, not having to do deals because I really "NEED" the money.
- Focusing on the longer term vision rather than being distracted by shiny objects.
- In the future, being way more aggressive in the offense than competitors, knowing that defence in covered when others are concerned about making losses.

Although sports teams win on the offense... Teams in the past like Real Madrid & Liverpool would score tons of goals because of amazing offense, but also lose many games even championships because of their poor / near non existent defense.

Thought I'd share, as having near 1 YEAR emergency fund in cash, allows me come 2020 to go completely on the OFFENSE relentlessly.

A few years minimizing risk, could open up decades of near worry free risk-taking.

Now of course, there comes a point when stashing cash becomes self defeating I believe, and it's easy to build a hoarder mentality after a while, but building that iron-clad discipline is a great thing also as long as you know where to draw the line.

Posted a topic a while back, and one of the best things than MJ mentioned was buying things that aren't necessarily investments (liabilities like buying a personal residence/cars) when it becomes a no brainer/non event for you. When you have the resources that the purchase doesn't feel like a big issue is the best way forward.

Building a good cash buffer, one that hopefully keeps up with the rate of inflation as much as possible, helps with that, to become "anti fragile", for me at least anyway.

What are your thoughts on this?

Do you have an emergency fund, or are you crushing it with none at all?

Either way be great to know!
Cash is king. I agree. Not only I have an emergency fund I also have an opportunity fund. An opportunity fund is to invest when a golden opportunity arises.

I am in financial sales so I am being paid cash monthly on the commission deals I made. I am very cash safe but I never has the true scalability that internet business owners can have.
 

Rawseed

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I have six months of living expenses (needs only) in a Capital One 360 account.

But, I did read an interest article a while back that recommended being more aggressive with your emergency fund:


I didn't do it because Betterment is obviously biased towards investing in equities.
 

Rawseed

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I have an emergency fund to this day. We actually have 2. A very small one is here at the house, hidden.

I even have an emergency fund hidden in every vehicle. Only a few hundred each in the vehicles but it is for an emergency.

No shame in having an emergency fund. It sure lets you sleep a little better at night if you are about to put it all on the line.
@minivanman Where is your house? Where do you keep your vehicles? I'd love to come visit. Just to say hey.
 
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apollo_web

apollo_web

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Jun 10, 2019
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I think skills supercede security any day. You can still have an emergency fund, be making no money and have absolutely 0 peace of mind due to what's going on in your life.

When you know you have the skills to make money tomorrow you dont have that fear.

Of course everyone is different and I think it is smart to have some cash saved for a rainy day. I have 2-3 years of cash I could live off of, but Im also willing to spend all of it on a great opportunity that may come up tomorrow.
Nice! Yes personally, I think it's also smart to have cash saved for a rainy day, I do understand skills are what you can rely on, for me having the skills to make money + a cash cushion would psychologically put me in a perpetual relaxed state, I think that is unparalleled.
 

Jaden Jones

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Money sitting around not making interest?? I dont think so.
 

minivanman

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@minivanman Where is your house? Where do you keep your vehicles? I'd love to come visit. Just to say hey.
You would be very disappointed when you got here. lol I don't live in a big house.... I am not a big house fan. Had one in Kansas City and hated that house. We both actually like apartments or a condo. We have a 1957 house that was updated 2 years ago. We like old stuff. In less than 5 years we are going to downsize even more when the grandson is totally finished with school. Maybe in a high-rise downtown Fort Worth or out in the country. But you can still come say hi. I'll be in Destin, Florida all next week..... come on down to the beach.
 

amp0193

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Cash is king. I agree. Not only I have an emergency fund I also have an opportunity fund. An opportunity fund is to invest when a golden opportunity arises.
This is great!

I have never thought of having an "opportunity fund" before. What a cool concept!

There have been several opportunities in the past few years that have passed me by because I wasn't in a position to take advantage of it.
 

MJ DeMarco

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My "emergency fund" is 143 years of expenses at today's current run rate and at today's current lifestyle threshold. That's assuming I don't sell business assets, don't make another dime in business or from investments, and don't cut (or raise) expenses. This also assumes ZERO inflation, which as we know, won't happen.

While this sounds like a lot, keep in mind I don't have a mortgage on any real estate properties and carry little to no debt. My biggest expenses are insurance, property taxes, and my electric bill for a fairly large house.

When I was just getting started I did not have an "emergency fund" -- but I like the idea. Any idea that enforces financial discipline (slowlane or not) is a good idea.

For me, I immediately started saving for the bigger picture (while periodically splurging for goals met) and the savings/investments just got bigger.

In short, I don't have an emergency fund as described here; I'd consider my "emergency fund" as "relatively" liquid assets that follow the Snap Rule as described in Unscripted, Chapter 43.
 

RemoteFox

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I think skills supercede security any day. You can still have an emergency fund, be making no money and have absolutely 0 peace of mind due to what's going on in your life.

When you know you have the skills to make money tomorrow you dont have that fear.

Of course everyone is different and I think it is smart to have some cash saved for a rainy day. I have 2-3 years of cash I could live off of, but Im also willing to spend all of it on a great opportunity that may come up tomorrow.
Damn, you nailed me good.

Having an emergency fund is good, but it sucks burning through it. I know because I'm doing it right now.

It also takes away urgency of action, which actually may be a negative.

I've got 2 or 3 years in cash, but that represents a lot of years working 80 hour weeks and I'd rather grow it than burn it.
 

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Rabby

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The only thing about skills is you can't use them if something awful happens, like a paralyzing stroke say. Short of an inheritance, it's safe to say that someone who saves up a year's worth of living expenses probably has skills of some kind... or how did they do it? The skills don't really replace the security of having some liquid assets, disaster-proof income streams, or similar risk management devices. Once you're established anyway.

There are scenarios where you might be unable to use your skills to rebuild or manage a business, and yet you still want your kids in private school, your spouse taken care of, and maybe your business able to run without you. Thinking through that stuff can give you a different perspective, anyway, so it's worth actually thinking about in my opinion. It only takes a Saturday afternoon and a calculator to figure out what the damage would be if you _had_ to rely on your liquid or semi-liquid assets only. ;)
 

Ozz81

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I like to have a cash reserve of at least 12 months of expenses in my checking account. This is in addition to MJ’s Snap rule.

Even before that, I like to have insurance for all the risks I can’t or don’t want to afford (personal liabilities, car insurance, health and long term care, etc.). I don’t want to pay with my own money for anything that could potentially jeopardize my lifestyle.
 

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