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Old 04-25-2017, 08:52 PM
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Default How much liquid cash should you have ?

Just curious ... what is the suggested liquid cash that a family (including young kids) should have on hand ? Is it three months' worth of expenses (rent / mortgage, groceries, gas, clothing, electricity, etc) ? Six months' ? A year ?

Please advise.

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Old 04-25-2017, 09:16 PM
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Depends. Stable jobs maybe 1-3 months. Self-employed? single income? Maybe 6 months. Have taxable accounts? maybe 1-3 months. No other savings? Maybe more. Too many factors.
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Old 04-25-2017, 09:21 PM
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I would say at a minimum, you should keep 3 months' total expenses. Preferably, 6 months is better. Of course, those are general rules of thumb. More importantly, you want to keep enough cash to make you feel safe. For some, that does indeed mean 1+ year's worth of expenses.

For me, that minimum figure seems to be around 4 months' expenses... I've found that if/when my cash drops below that level, I start to feel more apprehensive about my financial situation. As I focus on building up cash & raise that amount back up toward 5-6 months, that anxiety goes away. I've recognized this only after a few iterations of my cash balance floating up & down over time. So finding the exact amount you need takes time & experience. But until you can identify what works for you, these rules of thumb are a good starting place.
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Old 04-26-2017, 12:20 AM
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It really needs to be catered to your personal situation, comfort level and stage in life.

When I was single my goal was a 6 month emergency fund but I couldn't get there. Had I lost my job I would have struggled to make my mortgage payment on unemployment.

When DW and I first got together and paying two mortgages our goal was also 6 months because of the double mortgage payment and with 1 job loss we would have struggled.

When DW and I were able to bring cash to the table to sell her house and we were left with one mortgage with no taxable investments we had a 3 month emergency fund.

Now that are able to meet our monthly bills with one of our salaries and we have a sizable taxable account we only maintain a 1 month of expenses cash "buffer".

If I had kids and a mortgage with no taxable investments I would likely strive for at least 6 months.
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Old 04-26-2017, 05:49 AM
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I think it depends on your risk appetite.

personally I have:
1. 1.5 months of living expenses in cash
2. then 3 months living expenses could be covered by my two credit cards
3. then 1 year + is available in my taxable investment accounts. If sh*t hit the fan, I would burn thru cash, start utilizing credit until I could sell off some stock to get the cash (1 week turn around)

thankfully I haven't had to do that ^^^
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Old 04-26-2017, 05:54 AM
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I think a minimum of 3 months of basic living expenses should be everyone's plan. How much you need liquid beyond that really depends on your situation.
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Old 04-26-2017, 03:52 PM
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As explained, an Emergency Fund [liquid cash] is best based on your specific circumstances. If you are just starting an EF, it's important to save $ 1,000. cash for unanticipated, short term problems like cash needed for vehicle repair, toothache, fridge stops working etc. I also keep a 'float' in my chequing account to avoid accidental overdraft, NFS etc to avoid monthly bank charges and specifically to avoid fees for most of the services I use. [ $ 30. x 12 = $ 360. annually]

Part II considers the stability of income. What is the likelihood of losing employment or any regular source of income?
As stated, you need to be able to fund a minimum of 3 months of basic expenses like rent/mortgage, loan payments, vehicle operation, insurance & maintenance, utilities, food, phone. Presume you've cancelled non necessities like cable and general entertainment.

I hope you'll consider developing an EF
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Old 04-26-2017, 08:48 PM
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I only have about a month's worth on hand. I have several months worth of food and toiletries just because I buy in bulk a lot. Most of our emergency cash is tucked away in an internet account that would take a few days to get my hands on just so we don't buy an emergency 60" TV.
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Old 04-27-2017, 07:07 AM
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It depends what you are trying to do.

I'd say that having at least 3 months of an Emergency Fund is a good idea. Beyond that, it depends on your plans and goals. Are you in the market for a house? A car? A vacation? An investment property? Plan and save accordingly.
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Old 05-30-2017, 05:21 PM
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in addition to liquid cash, I always make sure I have a line of credit I can draw upon in case of emergency. LOC is one of those things that are easy to get UNTIL you need it.
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Old 05-30-2017, 06:48 PM
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Just be aware it might take well over 3 months to find a job if you lose yours. I think 3 months is a good start but I personally won't feel comfortable until I have 6 months to possibly a year.
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Old 06-01-2017, 07:48 AM
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I wouldn't be comfortable without easy access to at least $100K, meaning stashed in a basic checking / savings account. If you want to get "a little" interest a CD ladder is a good idea.
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Old 06-06-2017, 01:43 PM
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Quote:
Most of our emergency cash is tucked away in an internet account that would take a few days to get my hands on just so we don't buy an emergency 60" TV.
LOL! So true! It is amazing how easily it is to talk yourself into things like new TV's. When my spendaholic ex and I split up, he bought himself the most expensive single wide mobile home the the company had ever sold as he went for all the bells and whistles, NEW furniture, a NEW huge 6 foot I think it was TV, and NEW miscellaneous stuff. Oh and a used motoercycle that I'm not sure he ever go running. So on top of the credit card bills that were his to pay off, he had bought another $60K of stuff all on credit. And HE, at least, managed to justify it all.
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Old 06-06-2017, 01:49 PM
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Quote:
Originally Posted by Fishindude77 View Post
I wouldn't be comfortable without easy access to at least $100K, meaning stashed in a basic checking / savings account. If you want to get "a little" interest a CD ladder is a good idea.
I would love to have that much, but I don't. I'm not sure I would feel comfortable to even have that much not invested in some way to earn more than the lousy interest we get these days. I remember when around 5% was standard for a savings account, not this .01% nonsense. Don't know why the banks bother. I can see if I had it, having Maybe up to $25K in cash, but that is about all.

I do have multiple accounts that are set aside for specific things. One of them has between $3-4K in it in cash. I also have my stock fund and my retirement accounts that if I need to tap them to stretch out my SS checks, has enough to keep us going for at least 2-3 years. This I might remind you folks is 100% more than we had about 10 years ago.
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Old 07-08-2017, 11:31 AM
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Quote:
Originally Posted by LivingAlmostLarge View Post
Depends. Stable jobs maybe 1-3 months. Self-employed? single income? Maybe 6 months. Have taxable accounts? maybe 1-3 months. No other savings? Maybe more. Too many factors.
Youīre right it depends on what you do.
Stable jobs letīs say 1-3 months.
If you are self-employed letīs say for example a real estate broker you know that it is not a guaranteed income so I would say a year of expenses would be fine. Always thinking aswell in your health condition. Iīve seen people that have a lot of money and investments but for some reason end up in the hospital for 6 months and they then struggle a lot because they didnīt have any cash on hand.
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Old 07-08-2017, 04:16 PM
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6 months in a hospital can wreck just about anyone's finances, between co-pays, etc. for the medical costs and then the none medical. The cost of a spouse visiting daily - have you seen what it costs to park at a hospital these days?, Small ones that need a babysitter, older ones in college that is sucking money out of the family finances, less home cooking and more grabbing food on the way to or from the hospital, all these kinds of costs add up fast and drain you dry and yes, most folks don't even begin to have 6 months expenses tucked away so a lot of these expenses get dropped onto cc.

After working in a hospital office that dealt with insurance companies and what they would pay, etc. I changed the mandatory medical amount on our car insurance from the mandatory $10K to the top $100K as I realized that the $10K could be eaten up just in the getting to the hospital and the ER. Doesn't even count a couple of weeks in hospital. Up to the point of Obamacare, my husband had no insurance so I figured at least if he was in a car wreck, that would hopefully be one worry off my back.
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Old 07-08-2017, 04:23 PM
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Quote:
Originally Posted by Gailete View Post
6 months in a hospital can wreck just about anyone's finances, between co-pays, etc. for the medical costs and then the none medical. The cost of a spouse visiting daily - have you seen what it costs to park at a hospital these days?, Small ones that need a babysitter, older ones in college that is sucking money out of the family finances, less home cooking and more grabbing food on the way to or from the hospital, all these kinds of costs add up fast and drain you dry and yes, most folks don't even begin to have 6 months expenses tucked away so a lot of these expenses get dropped onto cc.

After working in a hospital office that dealt with insurance companies and what they would pay, etc. I changed the mandatory medical amount on our car insurance from the mandatory $10K to the top $100K as I realized that the $10K could be eaten up just in the getting to the hospital and the ER. Doesn't even count a couple of weeks in hospital. Up to the point of Obamacare, my husband had no insurance so I figured at least if he was in a car wreck, that would hopefully be one worry off my back.
Yeah I agree! All those costs start adding up until you get completely broke.
It is sad to see that a situation like that can happen to anyone at any time but still people live their lives without thinking about this and without having not a single month expenses saved in some form of investment or simply in CDs for example.
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Old 07-11-2017, 02:29 AM
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I am self-employed and because of the nature of my business I have some really good months and some OK months. I always have at least 3 months of expenses saved, but on the good months I put a bit extra away so I am up to about 6 months now.
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Old 07-11-2017, 05:58 AM
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Quote:
Originally Posted by sdol1 View Post
I am self-employed and because of the nature of my business I have some really good months and some OK months. I always have at least 3 months of expenses saved, but on the good months I put a bit extra away so I am up to about 6 months now.
Other than my disability check, we are self-employed as well. When we have a big payday from hubbies work, I stash a percentage for taxes and then pay ahead on outstanding bills. I can't see stashing 6-12 months of expenses away when it could be used to pay off much higher interest loans/credit cards. That being said. We do have enough in a stock fund account to meet about 3 months worth of expenses combined with my SS. Since the thought of taking a dime out of that account, I will stand on my head to find other money instead of tapping that account if needed.
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Old 08-21-2017, 06:40 AM
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Quote:
Originally Posted by Gailete View Post
The cost of a spouse visiting daily - have you seen what it costs to park at a hospital these days?
Zero where I live, and when I went out of town to visit my mother.
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