Invested and lower EF

[LivingAlmostLarge]

So I gave up on buying investment property for now. I also gave up waiting to move. I decided to bring my EF down to 6 months living expense. I still think it's rather high. I have it at $60k cash and $60k i-bonds. Should I lower it more? Our cash flow is pretty good and we will build up again cash quickly. In fact we are due about $60k this month in stock every 3 months. We save it all after we sell it and pay taxes. It gets swept into our savings. But I guess I'm debating what to do? Should I lower our EF more? I mean it seems like a lot.

How do you guys handle your cash flow and EF.

[disneysteve]

I've actually been debating the same thing. We're living way below my income, especially since COVID hit. Year to date, we have already saved/invested about 44% of my gross. Our cash has piled up. I'm not quite sure what to do with it all. Our Ally account alone holds almost 1.5 years of spending (more at the current COVID spending rate). I am planning to buy a car soon and will pay cash, so about 30K for that, but still, it's way more than we need to have on hand. And at this point, it's earning just 0.8%.

I suppose I just need to invest more. Every month, I've been putting $1,600 into savings and $1,600 into our taxable investment account. I need to stop splitting that evenly and put most into the investments. We have plenty in cash.

[Jluke]

Our cash has piled up. I'm not quite sure what to do with it all.

Any upgrades or fixes to the house?

if I remember, you don’t care to have a pristine house when you sell, but maybe there’s one or two things your wife may have in mind that you can get some enjoyment from.

[scfr]

When you say "I also gave up waiting to move" do you mean that you plan to move soon? If so, my suggestion is to wait until after you have sold your house, bought the new one, and settled in. You may decide you want to buy a more expensive house, buy some new furniture, do some repairs or upgrades or landscaping, whatever. You might find it handy to have a bit of extra cash on hand.

[kork13]

I'd tell you to go back to the basic principle. EF=3-6 months of actual expenses. Beyond that, I'd invest it into the market or into your home or into some elective lifestyle expenditures. That probably means reducing your EF from $120k. Personally, I like having 1 month in savings, and 5 months in CDs/I-Bonds (whichever pays slightly more).

The biggest thing is to layout your goals (short/mid/long term, and do whatever is necessary to lead you toward them.

[LivingAlmostLarge]

I'd tell you to go back to the basic principle. EF=3-6 months of actual expenses. Beyond that, I'd invest it into the market or into your home or into some elective lifestyle expenditures. That probably means reducing your EF from $120k. Personally, I like having 1 month in savings, and 5 months in CDs/I-Bonds (whichever pays slightly more).

The biggest thing is to layout your goals (short/mid/long term, and do whatever is necessary to lead you toward them.

what is elective lifestyel expenditures

[kork13]

what is elective lifestyel expenditures

Haha sorry, overcomplicated that... I just meant spending on lifestyle stuff, things that make life more enjoyable, or simply some fun.

[riverwed070707]

Apologies if I'm speaking beyond my level of expertise, but When you say you're due $60k this month in stock every 3 months... do you have to sell it and pay taxes or could you reinvest and save the taxes for now? If you feel you're already heavy in cash, i don't see why you'd throw another $60k on top of that plus any overages you have in your normal income each month.

[LivingAlmostLarge]

Apologies if I'm speaking beyond my level of expertise, but When you say you're due $60k this month in stock every 3 months... do you have to sell it and pay taxes or could you reinvest and save the taxes for now? If you feel you're already heavy in cash, i don't see why you'd throw another $60k on top of that plus any overages you have in your normal income each month.

We sell because it doesn't make sense to keep tying more of your net worth to the company you work for. enough risk to be had.

[riverwed070707]

We sell because it doesn't make sense to keep tying more of your net worth to the company you work for. enough risk to be had.

Makes perfect sense. I didn't make the connection that it was employer stock. What a great perk!

[LivingAlmostLarge]

Makes perfect sense. I didn't make the connection that it was employer stock. What a great perk!

Some would argue it would make sense to hold it and ride it up and down. Truthfully it's probably better to have held it. But what if is always a problem.

[disneysteve]

Some would argue it would make sense to hold it and ride it up and down. Truthfully it's probably better to have held it. But what if is always a problem.

Anytime someone tells you to load up on company stock, remind them of Enron.

[LivingAlmostLarge]

Sigh but it's not enron. It's just banking on your livelyhood going up always and if it goes down you will not get laid off. That's the real reason why we sell.